Peters slams Govt for Huaguang forestry debacle

1:00pm

The Government should not be allowed to walk from its responsibility to unsecured creditors of the failed forest company Huaguang, says New Zealand First leader Winston Peters.

If the Government was operating a proper Overseas Investment Commission this would not have happened, he said. The commission had not done its job and properly scrutinised Chinese company Huaguang, which collapsed into receivership just over a year ago, he said last night.

The Government should not be allowed to say this was a commercial issue and walk away, he said.

Receivers sold Huaguang's assets in September this year for $47 million while unsecured creditors were owed more than $49m.

Huaguang was painted as a prime investor but they were men of straw from the start, Mr Peters said.

They left a large number of legitimate businesses in a position where they faced going under through no fault of their own.

It was the Government's cavalier attitude to overseas investment that had led to this situation, he said.

Mr Peters said he hoped to meet some of the creditors while in Gisborne today.

Meanwhile, a spokeswoman for the finance minister said Michael Cullen was unlikely to intervene with Inland Revenue to stop contractors being placed into liquidation as a result of the Huaguang failure, despite a strong appeal by Gisborne MP Janet Mackey.

Ms Mackey said that while she appreciated it was not the role of the Government to take responsibility for company collapses, it would be of enormous assistance to the businesses and the region if they were given the opportunity to trade out of the situation they found themselves in.

Inland Revenue has been persuaded to not apply penalty interest on money outstanding from affected businesses.

In a letter to Dr Cullen, she appealed for this leniency to continue.

Dr Cullen's spokeswoman said the Government had legislated in 2002 to provide the IRD with greater discretion in dealing with taxpayers in distress.

"But as Revenue Minister, Dr Cullen is explicitly debarred from directing the IRD on operational matters, including when and how to use its discretionary powers," she said.

Dr Cullen's office declined to comment on questions raised over the Overseas Investment Commission's role in the Huaguang debacle.

Economic Development Minister Jim Anderton said yesterday that the Overseas Commission's job was to test the area of investment, not do credit checks on foreign companies.

Gisborne Herald inquiries show the company was already in trouble overseas when it bought the cutting rights for East Coast Forests for $96 million in 2002.

- NZPA