Fran O'Sullivan: Five pieces of unfinished business

Many big deals are still not resolved and the results of major investigations have yet to be revealed.

Former South Canterbury Finance chief executive Lachie McLeod and the late Allan Hubbard, whose case won't be heard until May. Photo / Supplied
Former South Canterbury Finance chief executive Lachie McLeod and the late Allan Hubbard, whose case won't be heard until May. Photo / Supplied

If you are bored by the Dotcom saga, take comfort that there are several more nuggety issues that look likely to hog business headlines in coming months.

Here are just five from my cache of Unfinished Business files.

1. Will SkyCity's "convention-centre-for-pokies" deal pass official muster?

Deputy Auditor-General Phillippa Smith took on the Beehive when she announced the Audit Office would inquire into the "expressions of interest" process to establish an international convention centre.

Neither casino operator boss Nigel Morrison nor Prime Minister John Key could see anything wrong with the proposed deal in which SkyCity would fund a new convention centre in return for being allowed to expand pokie machine numbers.

Key loved the deal because it meant the Government would not have to stump up $350 million to fund the centre.

But the Opposition believes Key compromised the process by getting directly involved.

Smith's inquiry was due out before Christmas. But on December 12, the Auditor-General's Office announced it had sent a draft report to the relevant interested parties.

The inquiry examines the overall process which the now defunct Ministry of Economic Development used to seek and assess centre proposals, the adequacy of the assessment of the likely costs and benefits of each proposal; and "any other matters" Smith considered it desirable to report on.

2. How prompt is prompt, Paula?

That's the question the Cabinet must be asking as Paula Rebstock's investigation into just who leaked inside details of the controversial restructuring at the Ministry of Foreign Affairs and Trade enters its ninth month. When State Services Commission boss Iain Rennie appointed Rebstock to investigate the leaks of up to three Cabinet papers into the MFAT restructuring he stressed he wanted the job finished "promptly".

The MFAT leaks - passed into the ready hands of former Labour Foreign Affairs Minister Phil Goff - were masterfully played up to the embarrassment of MFAT boss John Allen and Foreign Minister Murray McCully. They involved internal memos and details of staff pay, restructuring plans, the future of the ministry's overseas posts and its financial position.

But despite a well-sourced story last August revealing the investigation had been widened amid signs that a "prime suspect" had been identified, nothing has materialised publicly.

What we do know is that at least one senior public servant engaged a Queen's Counsel to represent him after Rebstock's inquiry narrowed its focus. Since then, there have been counter-leaks that loose lips at Cabinet level also played a part.

3. Will the Serious Fraud Office throw the book at Hanover Finance?

There's been no official word from the SFO since its April 2012 statement confirming its criminal investigation into Hanover Finance is ongoing.

The SFO statement was prompted by an announcement by the Financial Markets Authority that it had started civil action against former Hanover personnel Mark Hotchin, Eric Watson, Greg Muir, Bruce Gordon, Sir Tipene O'Regan and Dennis Broit for allegedly misleading or untrue statements made in Hanover offer documents. The FMA is seeking compensation for investors who put $35 million into Hanover between December 2007 and July 22, 2008. The market watchdog is also seeking penalty orders against the defendants and if the claim is successful, the former directors and promoters could each face fines of up to $500,000.

In April, the SFO said its investigation into Hanover was well advanced.

The SFO began its investigation at the end of 2010 after a report by the now defunct Securities Commission and complaints from several parties, including Allied Farmers, which bought the Hanover loan books in a debt-for-equity swap. The SFO statement said the director had determined an investigation may disclose serious or complex fraud.

4. Grant Thornton's handling of the Hubbard files.

The statutory management of the late and failed financier Allan Hubbard's affairs took a surreal twist when Grant Thornton "rediscovered" 72 boxes of crucial documents two weeks ahead of a pivotal court case to determine whether investors - or Hubbard's widow Jean - retain ownership of $60 million in contested assets.

For investors in Aorangi Securities who are anxious to get more of "their money" back this was all too much.

Justice Lester Chisholm ordered Grant Thornton and its legal advisers to pay $37,500 for wasted costs. But what annoys investors is the judge's ruling that Jean Hubbard's costs for the five-day hearing will be funded by Aorangi Securities.

Allan Hubbard told this journalist he put the $60 million assets into a series of trusts which would have ultimately benefited the Aorangi investors once a convoluted series of transactions was finished. But the Hubbards were slapped into statutory management, Grant Thornton unwound the transactions and Allan Hubbard died before the assets could be transferred back.

The case won't now be heard until May. But surely the authorities should be running their ruler over Grant Thornton's handling of the statutory management?

5. Will Bill English get to sell-down SOEs?

Old Treasury hands scratch their heads over the legal hurdles that have been thrown in the way of what should be Privatisation 101 - the sell-down of the Government's shareholding in the bunch of energy assets and Air New Zealand.

A High Court judge demolished the Maori Council's arguments against the Government's planned sale of shares in Mighty River Power. The issue will be determined by the Supreme Court which will hear the council's appeal at the end of the month.

Regardless of the ultimate judgment it will remain a major story this year.

- NZ Herald

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Head of Business for NZME

Fran O'Sullivan has written a weekly column for the Business Herald since its inception in April 1997. In her early journalistic career she was a political journalist in Wellington and subsequently an investigative journalist who broke many major business stories including the first articles that led to the Winebox Inquiry in both NBR and the Sydney Morning Herald. She has specific expertise in relation to China where she has been a frequent visitor since the late 1990s. She is a former Editor of the National Business Review; has twice been awarded Qantas Journalist of the Year and is a multiple winner of the Westpac Financial Journalism Supreme Award.

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