SCF investors’ need to know of loans queried
Internet Party founder Kim Dotcom and Mana Party leader Hone Harawira announced the merging of their two parties to form the InternetMana Party this week. The parties say they are chasing the youth, or ‘‘unengaged’’, vote, but are those people interested?
South Canterbury Finance (SCF) investors did not need to know about all related-party lending, according to Edward Sullivan’s lawyer.
The trial of former SCF directors Sullivan and Robert White, and former chief executive Lachie McLeod, continued yesterday before Justice Paul Heath in the High Court at Timaru, with expert witness Grant Graham cross-examined by Sullivan’s lawyer, Marc Corlett.
Graham is a partner in investment company Korda Mentha and was engaged by the Serious Fraud Office (SFO)
Sullivan faces a charge of obtaining by deception and making a false statement as a promoter. He is said to have enticed investors to SCF with prospectuses that did not fully detail lending he knew to be related-party lending.
Related-party transactions are not illegal, but need to be disclosed where a director has an interest or control over the company being lent money to.
Corlett questioned Graham on whether leaving out the details of a related-party loan of $6.9 million to Woolpak Holdings in the prospectus would have influenced investors, as it equated to only 0.39 per cent of the overall loan book of $1.6 billion. Initially $690,000 was advanced.
‘‘Would that have made a difference in their decision to invest?’’ Graham said he thought it would have. ‘‘Feedback I have had from investors is that (related-party loans disclosures) is one
Kim Dotcom has shaken up the election with a claim his new Internet Party will have a $3 million war chest.
The multimillion dollar pledge was revealed yesterday as the party confirmed its new leader was former Alliance leader Laila Harre.
Electoral records show Dotcom has already donated $250,000 to the Internet Party, which did a deal this week with Mana that could see it ride leader Hone Harawira’s coat tails into Parliament.
The Internet Party founder told 3 News he was putting his money where his mouth was and putting up $3 million for the election campaign.
That would give the new InternetMana alliance a war chest to rival its right wing opponents. National spent $2.7 million in 2011 and was the biggest spender among the parties, followed by the Colin Craig-led Conservative Party.
There are limits on how much political parties can spend on their campaigns based on a formula that includes the number of candidates they stand. The Internet Party would need to stand candidates in every electorate to be able to spend even close to the $3 million pledged by Dotcom.
Dotcom’s financial backing is a boost to Mana’s hopes of taking out more of the Maori seats – and could cause an upset in the crucial Waiariki seat where Te Ururoa Flavell is under pressure to hold on or risk the Maori Party being turfed out of Parliament.
That could cost National a potential ally and affect its ability to form a government.
Harre said yesterday she hoped the Internet-Mana alliance, with her at the helm, would bring the spark back to New Zealand Left-wing politics.
She made no apologies for using MMP to form an alliance with Mana to strengthen its election chances.
‘‘It’s time for the people to take area they head to. There is an awareness of what is in that note and they are quite interested in it. The number of [related-party] transactions they are interested in, as they think it shows a pattern. They are also interested in the quantum [overall value].’’
Justice Heath queried the effect of the value of the loan on the investor.
‘‘The appearance of $690,000 may not have caused much concern but the next year, showing $6.9m, could have looked like a lot of money to an average investor who is making a lot less than that,’’ the judge said. MMP back for ourselves,’’ she said.
The Internet-Mana agreement includes a clause allowing Mana to reassess the relationship between the two parties six weeks after the September 20 election.
Harre said the parties would continue their alliance after the elections despite the clause. It was not clear what form a possible alliance would take after the election, she said.
However, the Internet Party had only ruled out working with a National-led government.
Harre said she had nothing to do with Dotcom’s extradition case, and nor would she if she was elected.
Stepping into leadership was a ‘‘natural progression’’ from her ‘‘long and rich apprenticeship’’.
She was ready to pass on her knowledge to Internet candidates and learn from them about the potential of the internet age.
The party was at the ‘‘cutting edge’’ of political reform, she said.
Dotcom said Harre was like ObiWan Kenobi from Star Wars and would mentor and lead the young Internet candidates.
Harre’s age – she is 48 – was not a deterrent, he said, and she was a fast learner when it came to technology and the issues of young people.
He said Harre’s leadership role would give him the chance to step back from the day-to-day running of the party.
Harawira said Harre had taken the leadership role because she believed in it. Harre held several portfolios during her time in the Cabinet, including women’s affairs, youth affairs, statistics and associate minister of labour and commerce.
She and her husband Barry Gribben have interests in an organic vineyard on Waiheke Island, an upmarket Italian restaurant in Auckland and several properties.
‘‘Yes, that is typical of all finance companies I have been involved with,’’ Graham said.
‘‘If you look at Nathan’s, Bridgecorp etc these are pivotal issues around [finance] companies being cash boxes and these were issues investors were focused on.’’
In the morning, Graham was asked by the judge to leave court after tetchy questioning from Corlett, who tried to highlight what he saw as 18 differences in key pieces of evidence presented by Graham.
‘‘What I’m trying to establish is what he has relied upon and what
‘‘These are the sort of numbers that resonate with investors,’’ Graham replied.
The wide range of sophistication of the investors was also noted. he has not relied upon,’’ Corlett said.
The judge said: ‘‘We have got conflicting evidence. Ultimately I have to make findings of fact.’’
Corlett said: ‘‘This witness is a crucial witness for the Crown. [I’m trying] to go through with this witness to identify evidence that was available to help, that he has not relied on to come to his conclusion.’’
Once determining a different line of questioning, the judge said: ‘‘I certainly haven’t gone off to sleep. I’m listening with intense interest to the points you are making.’’
His cross-examination continues tomorrow.