Dealer cost fund $4.2M

Press, 6 December 1989, Page 8

Dealer cost fund $4.2M

By

PATTRICK SMELLIE

in Wellington The National Provident Fund lost $4.2 million at the hands of the dealer at the centre of the futures market debacle last month, it was revealed yesterday. Mr Stephen Francis was on secondment to the Fund at the time, from the Treasury. His role was to supply the Fund with corporate development and business planning advice. The information was supplied by the Minister of Finance, Mr Caygill, and the Treasury after

questions in Parliament by the member of Parliament for Papakura, Mr Merv Wellington. The losses occurred between September, 1987, and March 21, 1988. “Mr Francis was involved in the initiation and execution of a range of investment transactions in the Government securities market,” said Mr Caygill. “As a result of some of these transactions being conducted in a way which was not authorised, the Fund was exposed to losses in the financial year ending March 31, 1988, of approximately $4.2 million.

“Subsequent to his dismissal, the authorisation and audit processes within the Fund have been reviewed and revised,” he said. ' A deputy secretary to the Treasury, Mr Mark Byers, said Mr Francis started work with the Treasury on August 31, 1987, as an investigating officer. * ' He was immediately seconded to the Fund. His employment ceased on March 31, 1988, 10 days after returning to the Treasury. Mr Francis was a dealer for London-based Gilt Securities, Ltd, which defaulted on margin

calls required by the Futures Exchange in the middle of last month. This caused the suspension and possible expulsion of Jordan Sandman Futures, Ltd from the exchange, the temporary closing of the exchange, and a series of extraordinary actions to preserve market stability. One of the world’s largest fund managers, GT Management, has since alleged that Gilt Securities used its letterhead without authorisation to trade futures in New ZEaland on its own account.