SCF: National must answer serious questions

The Government must provide taxpayers with answers to serious questions about its $1.75 billion bailout of South Canterbury Finance, says Labour Finance spokesperson David Cunliffe.

“This is the largest bailout in New Zealand’s corporate history, but taxpayers are left not only $405 per head out of pocket. They lack answers to a series of serious questions they now have a right to ask of National. Kiwis deserve clarity and transparency about how the Government and its regulators handled the bailout.”

David Cunliffe said Labour would continue to ask questions to ensure that the costs to taxpayers were minimised, that the process was prudent and proper, and so that the lessons of SCF are learned to prevent something like this happening again.

“Should SCF have been included in the extended retail deposit guarantee scheme? Did SCF breach its deed of guarantee?

“On what date did Korda Mentha start advising the Government on SCF? What advice did the Government get from Korda Mentha? Did Korda Mentha reach the same conclusion as Ernst and Young that there were fundamental uncertainties about SCF’s financial position?” David Cunliffe asked.

“Was SCF in breach of the Reserve Bank’s prudential requirements for inclusion in the guarantee when it was accepted for the extended scheme in April?

“Had Treasury seen SCF’s latest audited accounts when it announced the finance company would be included in the extended guarantee scheme? Could the Government have tightened the terms of the deed of guarantee under the extended scheme? Could the taxpayers’ liability have been limited in this way?

“Could an alternative approach to receivership have been put in place? What deals were on the table? Was someone interested in buying SCF, and, if so, why did a recapitalisation deal not proceed? Or, given the speed of the Government’s eventual moves, was its action pre-planned?”

“Are government estimates of final costs accurate or specious? What is the potential for value loss while assets are held in receivership?

“Who were the winners and losers in this deal? Were any potential conflicts of interests declared, or should they have been?”

David Cunliffe said the Government claimed its objective was to minimise costs to the taxpayer. “Yet there are so many unanswered questions that it is certainly not clear whether that objective has been served, or whether in fact taxpayers were among the worst losers from this debacle.”

ENDS

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