John Roughan 's Opinion

John Roughan is an editorial writer and columnist for the New Zealand Herald.

John Roughan: Sir Douglas should keep title

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Lombard issue less than what it may seem and contribution to NZ is more

Ngai Tahu chief negotiator Sir Tipene O'Regan accepts a settlement from then Minister for Treaty Negotiations Douglas Graham. Photo / Mark Mitchell
Ngai Tahu chief negotiator Sir Tipene O'Regan accepts a settlement from then Minister for Treaty Negotiations Douglas Graham. Photo / Mark Mitchell

Wind back the memory for a moment to 1990. New Zealand was reeling from six years of rapid economic reform. The fourth Labour Government had fallen apart and National, in the phrase of the day, had sleep-walked to victory.

It was a pivotal moment for the country. The incoming government could have halted not only the economic upheaval but the nation's first tentative steps toward a post-colonial reconciliation.

I can recall a day at Parliament seven years earlier, when Muldoon was still in power and the Labour Party invited the press gallery up to the Opposition floor for a policy announcement.

There, Geoff Palmer and Koro Wetere declared that if elected Labour would allow the Waitangi Tribunal to hear claims dating back to 1840. We took notes, asked some questions. Nobody raced to a phone. I don't think the news made the next day's front page.

It wasn't intended to. If Labour had wanted to trumpet the policy it would have been announced by David Lange in full voice at an historic location, not by his deputy in a dusty room.

National did not say very much about it either, in public. Off the record, National MPs muttered about "opening a can of worms" and doubted Labour would do it.

Nobody, as it turned out, knew half of what the next government would do. When Labour duly altered the jurisdiction of the Waitangi Tribunal, the legislation was barely noticed amid almost weekly reforms of one trading sector after another.

Treaty claims move at glacial pace and few had moved more than an inch by the time Labour lost office. The new National Government could have left the tribunal to freeze, shelving any reports it might produce. The voting public by and large would not have cared. Maori would have vented their anger at Waitangi once a year but Lange never went there and National need not have bothered.

History seldom gives due credit to individuals whose personal contribution was crucial. The more complete their achievement, the more it is likely to be ascribed to a broad social movement and given an air of inevitability.

National had not been back in power for long before the conversation in Auckland business circles was beginning, "Have you heard Doug Graham lately?".

The Attorney General had been accepting speaking invitations and addressing them not so much on corporate law and criminal justice as they'd expect, but about long-ago injustices to Maori. Those who'd heard him were bemused but they respected him and accepted the need to do something about it. That consensus endures today. It has enabled two National Governments to take a brisk and businesslike attitude to righting historic wrongs and reach settlements such as that signed this week with Tuhoe.

As John Key and Treaty Negotiations Minister Chris Finlayson signed a treaty with a tribe that resisted the one made at Waitangi, they knew they were standing on the shoulders of Sir Douglas Graham.

Sir Douglas now faces the indignity of home detention after the Court of Appeal decided he should have received a custodial sentence for statements in an investment prospectus issued when he was chairman of Lombard Finance in 2007.

Corporate crime can sound very serious unless you bother to find out what happened. It is all in the judgment issued last week.

Lombard raised short-term finance from personal investors to lend to property developers. When the real estate boom ran out of steam in 2007, the company stopped new lending and built up a good buffer of cash which it hoped would see it through the slump.

In December, as the cash was rapidly dwindling and developers were still struggling to sell property and meet their loan repayments, Lombard issued the offending prospectus.

The directors have been convicted mainly for what it didn't say. It described the company's liquidity risk but didn't indicate it was imminent, didn't admit the company lacked reliable forecasts of loan repayments, didn't acknowledge a deterioration in cash in hand and expressed confidence that investors would be repaid on time.

The following year, 2008, Wall St banks started to fail, confidence in the global financial system deteriorated. Lombard went into receivership in April owing $125 million to 4400 investors. Of that sum, just $10.5 million had been raised from the final prospectus, almost all of it reinvestment of existing funds.

The Appeal Court has taken a sterner view than the High Court did and the Prime Minister is pondering whether to revoke Sir Douglas' title. David Shearer suggests he relinquish it voluntarily. I fear he might. It would be in character for him and it would be a disgrace to the rest of us. It would be a surrender to an immature puritanism in the nation that cannot forgive its great a mistake.

- NZ Herald

John Roughan

John Roughan is an editorial writer and columnist for the New Zealand Herald.

John Roughan is an editorial writer and columnist for the New Zealand Herald. A graduate of Canterbury University with a degree in history and a diploma in journalism, he started his career on the Auckland Star, travelled and worked on newspapers in Japan and Britain before returning to New Zealand where he joined the Herald in 1981. He was posted to the Parliamentary Press Gallery in 1983, took a keen interest in the economic reform programme and has been a full time commentator for the Herald since 1986. He became the paper's senior editorial writer in 1988 and has been writing a weekly column under his own name since 1996. His interests range from the economy, public policy and politics to the more serious issues of life.

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