Bradford Sue: General Debate 
Bradford Sue: General Debate 
[Volume:633;Page:4982] 
SUE BRADFORD (Green) 
: 
 I want to talk today about one of the biggest rip-offs that has occurred in New Zealand for some time. The rip-off is so large that to coin a phrase no one seems to want to talk about the elephant in the room. It has seen thousands of New Zealanders lose a significant amount of money. It has placed the jobs of hundreds of New Zealand workers at risk. It threatens an iconic New Zealand manufacturer. In the 7 years I have been here I have heard a number of speeches about how beneficiaries and the poor are ripping off the system. A number of MPs in this House get on their high horses at times and attempt to expose the wickedness of beneficiaries for failing to report overpayments from Work and Income of a few thousand or even a few hundred dollars as a scandal of national significance. So why are we all pretending that the $200 million ripped off New Zealand shareholders and workers by Credit Suisse First Boston Asian Merchant Partners did not happen? Two hundred million dollars is the figure that a number of reputable business journalists have calculated has been expropriated from Feltex before during and after its 2004 initial public offering. Credit Suisse First Boston Asian Merchant Partners based in Delaware paid $19.5 million for Feltex in 1997 when it bought the company from the British-based firm BTR Nylex. BTR Nylex had bought Feltex from the statutory manager of Equiticorp in 1989—remember them? 
Most of us do remember that Feltex was raided by Equiticorp in the 1980s and that the head of Equiticorp Allan Hawkins was eventually convicted and jailed for fraud. Credit Suisse then created 120 million shares in 2004 which it subsequently floated in the initial public offering at between $1.70 and $1.95 a share. Now trading for only 10c to 12c a share these shares are worth less than $15 million. So around $200 million has disappeared expropriated from mum dad and institutional shareholders and from Feltex workers—those who created the wealth in the first place. Most of what has been expropriated was taken by faceless merchant bankers from Zurich and their Delaware subsidiary. How did this happen? How can we stop it happening again? Who is accountable for this expropriation and what are the consequences for those firms and individuals? In New Zealand we have a Securities Commission. It tells us that its vision is “that investors can have confidence in New Zealand’s securities markets so that the markets increasingly attract investment from New Zealand and overseas.” 
I wrote a letter to the Securities Commission on 9 August to ask it what had happened and asked it to undertake an investigation. On 25 August the commission released a statement saying that it found “no breaches of the securities laws in the prospectus” and that “no further action will be taken in regard to these matters.” What a whitewash! So now for the second time in recent years the proud iconic Kiwi-made company of Feltex has been ripped off by the merchant bankers. But no one wants to know. 
So what happens now? I know that shareholders are determined to seek redress for this rip-off. We in this House should do what we can to help them but we also need to be concerned about the future of Feltex too. We know that there are currently two bids in for the purchase of Feltex. There is a risk that the green light could be given to a foreign takeover bid for this company without anyone in the chain of approval comparing the merits of an alternative locally owned rescue offer. Both the Australian firm Godfrey Hirst and the Turner brothers Craig and Graeme who own Sleepyhead have made bids for Feltex and shareholders are expected to consider the Hirst offer in late September. I am told that the Hirst bid is also required to go to the Overseas Investment Commission for approval. But I am also told that the Overseas Investment Commission can only consider the alleged net benefits to New Zealand of the Hirst takeover in isolation and cannot seek to assess whether the rival offer from the Turners delivers greater net benefits to New Zealand. 
My own reading of the Overseas Investment Commission guidelines suggests that if there were a will the Overseas Investment Commission could find a way to judge the net benefit of the rival bids. Dr Cullen’s 1 August 2005 ministerial directive lists among the objectives that the Overseas Investment Commission can use that it should assess the benefits received from overseas investment applications on the basis of benefit to New Zealand as a whole. Also the Overseas Investment Commission must ensure that the value of sensitive New Zealand assets is recognised and enhanced by an overseas owner. The Green Party believes that it is essential that at some point in the process the foreign bid is put on the table and weighed against the merits of the locally owned counteroffer.