BY ROD ORAM
Over the past three or four years, Trade NZ has helped Damian Archbold, an American businessman, to set up a venture in Auckland.
The company, Global-e Investments, launched last week, plans to sell $US1 billion ($2.05 billion) of prize draw bonds to New Zealand and Asian investors.
Some $US275 million of the bond proceeds will be invested by Global-e to build an Auckland-based e-commerce company.
The company will use New Zealand software engineers and suppliers to develop its systems and it will employ people at an Auckland call centre.
The project is noteworthy: it is one of the biggest investments Trade NZ has facilitated so far.
Government liaison work was required, for example, to ensure the prize draw bonds did not come under gambling laws; and the financial impact of the project on the country is potentially big.
Moreover, Mr Archbold had no track record in running a business of this nature or scale, although Trade NZ points to his Wall St contacts. His key partner is Ron Ryan, a Wall St fund manager, whose company will invest $US720 million of the bond proceeeds to generate funds for prizes and bond repayments.
Seeking to better understand Trade NZ's role, the Business Herald put the following questions to the Government agency. The replies are from Gary Langford, director of Investment New Zealand, the Trade NZ division responsible for facilitating foreign investment here.
1. How did Trade NZ decide whether to help Mr Archbold?
Trade NZ responds positively to all investment inquiries unless it becomes aware that an inquiry is not genuine.
This inquiry was of particular interest because it concerned the location of international back office and call-centre operations in New Zealand - key targets for Trade NZ's investment strategy. The project's Wall St associations offered the potential to attract further location inquiries from the US financial industry.
The initial inquiry was received on August 29, 1997, through the Consul General's office in Los Angeles, which provided generic information on New Zealand. A Trade NZ case manager initially faxed back some statistics.
Subsequently, the inquiry was found to relate to a location analysis for a financial back office and the establishment of an international call centre.
It was clear the project required legal due diligence.
Trade NZ introduced the company to a New Zealand lawyer who provided an opinion that the proposed project complied with New Zealand law. Because the project was principally aimed at Asia, legal opinions (also positive) were sought regarding its status in some other markets.
2. How did it decide that Mr Archbold had the appropriate skills and experience?
Trade NZ treats all investment inquirers in good faith and takes into account the total management team and the international credibility of associated companies.
Our primary role is to facilitate the inquiry process. On this occasion Trade NZ reacted to an inquiry and passed it on to investment professionals to action.
In this instance, the private sector indicated a level of comfort with the proposal and, by inference, the team of people backing it. As the project matured, a series of parties became involved.
These included Salomon Smith Barney (US), Ryan Labs (US) and Danny Chan (New Zealand). Trade NZ was aware that parties engaging in the project had undertaken due diligence of their own.
We understand the trustee, Tower Trust, undertook considerable due diligence before becoming involved.
As the project evolved, the concept did alter from the original and at various stages Trade NZ tested the legality of the proposed revisions.
3. How did Trade NZ weigh up Mr Archbold's project against others before allocating resources to him?
The inquiry was handled within the normal caseload. The process is described in the answer to question one.
4. How many hours and dollars have Trade NZ spent helping Mr Archbold since 1996?
Trade NZ does not charge for onshore investment work. At the time this work was begun no process was in place to measure onshore time spent, although (a software) application has now been introduced and will be activated in the new financial year.
5. How much money has he paid for those services since 1996?
A total of $10,360 was paid by MMC (as Global-e was called initially) for Trade NZ assistance in Taiwan, Hong Kong and New York.
6. How many hours and dollars have Trade NZ spent helping Mr Ryan?
Mr Ryan's visit was specifically to investigate New Zealand as a location for a Ryan Labs Financial Services back office and took place under the Special Investment Programme.
That was funded by the Government to showcase New Zealand as a location for business. The total cost was $22,340 as well as approximately five days of onshore staff time.
7. How much money has Mr Ryan paid for those services?
None of the guests invited under the programme is billed for the cost of the visit.
What Global-e help cost taxpayer
AdvertisementAdvertise with NZME.