BNZ pulls plug on Tainui credit with $15m owing

By VANESSA BIDOIS Maori issues reporter

The Bank of New Zealand will not lend cash-strapped Tainui any more money because the Waikato iwi is struggling to repay $15 million it already owes.

Tribal staff face the prospect of going without pay within a fortnight if the financial rescue package under way since February cannot be put back on track.

High-level tribal sources claim that Tainui kingpin Sir Robert Mahuta is obstructing attempts to sort out the tribe's cashflow crisis.

Sir Robert has not responded to Weekend Herald inquiries.

The BNZ is Tainui's main creditor, but the tribe has other liabilities potentially worth at least $25 million, including several lawsuits by former staff.

This is in addition to the $40 million writedown and $31 million debt announced early this year.

The death knell has already sounded for the $32 million subsidiary MDC Investment Holdings, with the ASB Bank about to liquidate that arm of the tribe's crumbling empire.

Five years after the $170 million raupatu (land confiscation) settlement with the Crown, Tainui was forced to restructure after a series of investment blunders.

Job losses among the 100 staff are expected. About 75 remain at Tainui's Hopuhopu headquarters, near Ngaruawahia.

Insiders say the situation is so bad that the iwi will be unable to pay staff from July 20.

Sir Robert, adopted son of King Koroki and stepbrother of the Maori Queen, Dame Te Atairangikaahu, is the tribe's custodial trustee, principal negotiator and chairman of the Waikato Raupatu Lands Trust, MDC Investment Holdings and Tainui Group Holdings.

The ailing 61-year-old, on dialysis for kidney problems, also chairs a strategy committee working on the financial rescue.

Members include Michael Stiassny, of Auckland insolvency specialists Ferrier Hodgson, lawyer Gerard Brown, of Rudd Watts & Stone, businessman Hugh Fletcher and Mahuta loyalists Shane Solomon and Niwa Nuri.

Elections for a 12-member iwi executive, Tekaumarua, in April, were seen as a turning point in tribal accountability and an erosion of Sir Robert's power base, with new members replacing some of his allies. Sir Robert, the only non-elected member, was appointed by Dame Te Ata.

Many of those working with him say he is ignoring the processes and structures set up to tackle the crisis.

He has attempted to replace the strategy committee with his own supporters and strip Tekaumarua of power, they say.

Defeated on several key resolutions, he refuses to attend the executive body's meetings.

Tekaumarua members and non-Tainui members of the strategic committee have struggled to unravel details of the problems.

They found that the iwi used MDC money not only to prop up companies in other divisions of the tribe but also to cover the annual marae and education grants for which it was not responsible.

This year's grants of $2.5 million had to be borrowed from the BNZ.

Sir Robert is also trying to have two property developments, Huntington and Te Rapa, brought under his control at the Waikato University College at Hopuhopu.

The $15 million college is due to open this month but still does not have its planned agreement with Waikato University.

His aides have tried to borrow money against the upmarket Hamilton subdivision of Huntington without consent of the tribe or the BNZ. After the April poll, Sir Robert also signed a deal to sell the 83ha without Tekaumarua authority.

The old Air Force base at Te Rapa was one of the first blocks of land to be returned to the tribe and was vested in a special title named after the first Maori king, Potatau Te Wherowhero.

This means it should belong to, and benefit, all Tainui people and can never be sold nor used as security for a loan. Sir Robert has power as a custodial trustee to pull the estate under the college's control.

BNZ corporate relations head Sarah Hensley said last night that the bank would go on making every effort to "get a good result" for Tainui.