Sir Michael Fay should lose his knighthood and Securities Commission chairwoman Jane Diplock should be honoured instead, Labour MP Shane Jones told Parliament yesterday.
And he said Sir Michael and his business partner David Richwhite would not be welcome back in New Zealand until they "atone for their wrongdoing".
Mr Jones was speaking in a snap debate moved by New Zealand First leader Winston Peters, whose own speech replicated fiery ones of years past on the Bank of NZ bailout and Winebox transactions that involved other Fay and Richwhite companies.
"It makes Donna Awatere look like an angel," said Mr Peters.
Under parliamentary privilege, he said the businessmen had been held out to be paragons of virtue but were "nothing but crooks, and cheap crooks at that".
Sir Michael was knighted in 1990 after his America's Cup challenges in Australia and San Diego but knighthoods and damehoods were abolished by the Labour Government.
Mr Jones, chairman of the finance and expenditure select committee, said Ms Diplock "should become Dame Jane and we should strip Fay of his knighthood and give it to her".
He also said Government regulators should vet Sir Michael's ownership of Mercury Island off Coromandel, implying that he should be regarded as an overseas owner because he did not live permanently in New Zealand.
"Are they actually fulfilling the citizenship requirement? No doubt they have fled overseas to avoid tax obligations to capture the full extent of their ill-gotten gains."
Mr Jones said Sir Michael and Mr Richwhite represented a betrayal of ethical standards that still haunted business today.
"Why do so many Kiwis have doubts about our capital markets? Why does the current CEO of the sharemarket still struggle to build people's confidence? Because people have not forgotten how these two individuals gorged for their own personal growth.
"They squeaked out of the Winebox but the cork, having been pulled off this bottle, shows the sludge of their wrongdoing hasn't been forgotten by us. Not at all."
Mr Jones said he was bewildered but not surprised at the number of officials and professionals "who chose to defend their perfidy or did not have the courage or indeed resources to pursue them".
Mr Peters condemned the National Party throughout the debate, reminding its MPs that he had been subjected to character assassination and expelled from their caucus in the early 1990s when he asked questions "about these people".
And nothing had changed, he said.
"Here they are today: the old faces in the same old places. And read [Nicky Hager's] The Hollow Men. "Who's back? All the people that did that."
National Party deputy leader Bill English said the Fay-Richwhite insider-trading case showed why MPs facing complaints from businesses should be wary of promising to change government regulations.
* Sir Michael Fay and David Richwhite have agreed to pay $20 million to settle an insider-trading case pursued by the Securities Commission for five years over the 2002 sale of Tranz Rail shares by Midavia, a company the pair own.
* Mr Richwhite was a director of Tranz Rail and Midavia. Neither he nor the company accepted liability in agreeing to the settlement, the largest of its type in Australasia.