SCF receiver 'tore offer apart'

South Canterbury Finance's receiver Kerryn Downey is standing by his decision to reject an offer for the company which Labour says could have saved the taxpayer as much as $600 million.

The Government continued to face questions yesterday from Labour's finance spokesman David Cunliffe over the South Canterbury affair which has saddled the taxpayer with a bill which this week rose by more than $300 million.

Cunliffe continues to attack the Government for the decision to reject offers for the company both before and after it was placed in receivership in late August last year triggering a $1.8 billion payout to investors under the retail deposit guarantee.

Cunliffe has focused his attack on the Government's decision to reject a post-receivership offer made by a consortium led by investment banker Duncan Saville which also included the NZ Superannuation Fund and Ngai Tahu. He contends the deal would have limited the Crown's losses to $500 million compared to the $1.1 billion latest estimate of likely losses.

That takes the Government's estimated net loss under the retail deposit scheme from $900 million to $1.2 billion not including the fees collected.

However, the company's receiver Kerryn Downey of McGrath Nichol who vetted the offer defended the decision.

"When that offer was presented to me as receiver in the first week of September we in fact tore it apart. Our legal advisers were involved as well and in fact we evaluated that offer very very carefully. We rejected it for a series of reasons which we in fact spelled out in some detail to the party that made the offer."

He said the bidders had been told they were free to submit an amended offer.

"We never heard from them again."

Downey said he could not provide details as to why the offer was rejected due to reasons of confidentiality.

However seven months after the deal was turned down, "If that same offer were to be presented to me today, it would be rejected for the same reasons".

Meanwhile, responding to Cunliffe's questions about the affair in Parliament yesterday, Finance Minister Bill English said the offer from Saville's consortium meant the Crown "carries the downside risk under the structure but has no ability to access any potential upside".

"In short the Government would have been mugs to accept any of the proposals that were put to it."