1 Comment 1 Commentby Paul McBeth
The committee will look at ensuring investors are well-informed about investment proposals and that they understand the implications of proposed moratoria.
It will also investigate as to what actions can be taken to reduce the chance of a failure, and what redress exists when failures occur. “The committee takes the view that it is not necessary to duplicate the work that is underway” by the government, said chairman Lianne Dalziel in a statement.
“It wishes to focus on issues that do not appear to have been identified within current work programmes.”
The committee already convinced Commerce Minister Simon Power to ask the Ministry of Economic Development to prepare a report into the moratoria of finance companies in May, and while there’s no definite timeframe on when the report will be complete, a spokesman for the minister expects a draft “soon”.
ACT MP and committee member John Boscowen has been lobbying for an inquiry the reasons behind finance company collapses since February.
“The Committee will look at what changes need to be made to the law – if any – to prevent such losses happening in the future,” he said.
“I am strongly urging investors to have their say so that this situation can be resolved and future investors are protected.” In March, Registrar of Companies Neville Harris issued a damning assessment of New Zealand’s failed finance companies, likening their practices to “Ponzi schemes.”
A major factor in the collapse of the industry was governance which lacked the experience and skills required to oversee complex operations, and the rolling up of non-performing loans into new debt to mask the true performance of a portfolio, Harris said in his report.
Submissions close on October 15.
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Paul is a staff writer for Good Returns based in Wellington.
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The media release put out by Chairperson, Hon Lianne Dalziel, advises that ‘ the Commerce Committee has agreed to conduct an inquiry into finance company failures’.
The headline is contrary to the terms of reference and there is limited room to move in the inquiry for current victims.
EUFA have called for an inquiry since late 2007 into the failure of governance allowing the PONZI type schemes to proceed. Today’s announcement was bitter sweet news for investors.
Tax payers will foot the bill for the inquiry. Victims who are not being protected by past or present actions of authorities, will gain little from the outcomes of the committees work, as the terms of reference offer little in terms of holding the industry and authorities to account.
Suzanne Edmonds of Tauranga, Coordinator of EUFA, said “The current laws are not being enforced now so it is a waste of resources to hold an inquiry with the view of making new laws, until the current laws are enforced and the tsunami is cleaned up............people’s lives need rebuilding after the dramatic effects and losses incurred and its unlikely this inquiry will be able to achieve that under its terms of reference and structure.
The Government needs to be prepared for ongoing fallout as people face losing their homes, continue to become ill and ultimately lose their lives as a result of the mass malpractice this country has endured. The Government has obligations to uphold the law.
In the media statement today the Committee stated it “has made a call for written submissions on the terms of reference, with a closing date of 15 October 2009.”
On their own, the written submission will be meaningless. Victims of the finance crisis must demand the Committee meet with groups and in some cases individuals, to hear firsthand the savage nature in which the Finance Company Directors’ and others have devastated people’s lives.