Addressing banking sector concerns in N.Z.


I remember the onset of the 2008 Global Financial Crisis all too clearly. In the space of about two years 31 separate New Zealand finance companies crashed and burned, taking about N.Z.$3 billion worth of savings with them. The crash of so many companies and the resulting fallout cost numerous jobs, led to criminal trials for fraudulent activity and caused a loss of trust in banks. Nine years later, not having learnt much from the previous crash New Zealand, like the world at large is at risk of another, possibly bigger, crash.

The causes of the 2008 Global Financial Crisis are well documented. In the United States lax banking regulations led to the failure of Fannie Mae’s, Freddie Mac’s, Lehman Brothers amongst others . Hundreds of billions of dollars was wiped from the value of the U.S. economy when Lehman Brothers collapsed. The bailout plan authorized by U.S. President George W. Bush cost about U.S.$700 billion to enact. Following these collapses President Barak Obama passed legislation called Dodd Frank Act which enabled large scale reform of the banking sector, in terms of transparency, tightening up reporting requirements and protecting whistle blowers.

In New Zealand the following are just some of the financial institutions that failed in 2006-2010 (N.Z.$)¹:

  • Capital Merchant Finance ($190 million)
  • South Canterbury Finance ($1.6 billion)
  • Provincial Finance ($296 million with $273 million recovered)
  • Bridgecorp ($467 million)

¹67 went into liquidation or receivership, or entered moratoria all up between 2006 and 2012

I believe that legislation needs to be passed in two respects to bring accountability to the banking sector, but also institute a better code of practice than the one that exists. Elsewhere I have mentioned the need for better whistle blower protection. This is to ensure that the fate of whistle blowers at the Ministry of Transport who exposed fraudster Joanne Harrison and lost their jobs for doing so, is not repeated.

But perhaps the biggest reforms that I think need to be made are to how individuals enter and exit the financial industry, and the range of tools that can be used in dealing with significant breaches. We have the Financial Markets Authority investigating significant breaches, which is well and fine. But, given the size of some of the aforementioned collapses and the fact that individuals who had leading roles in precipitating said collapses were handed what I think were very light sentences, I think the law needs an overhaul.

For small fraud (less than N.Z.$250,000), claims can be dealt with in the District Court and the High Court deals with larger claims. We saw out of the court trials arising from the collapses of companies like Bridgecorp that in many cases the sentences were too light. The sentences did not appear to take into account ill gotten assets such expensive cars. Nor did they appear to stop the defendants from working in the industry again. The sentences should be proportionate to the size of the losses incurred by the investors. Such a scale could look like this:

  • Category E (dealt with in District Court) up to $250,000 = suspension of trading license + fine (up to $250,000) or jail sentence (up to 2 years)
  • Category D – $250,000 to $10 million = loss of financial trading licence + confiscation of luxury assets or fine (up to $500,000) or jail sentence (up to 5 years)
  • Category C – $10 million to $100 million = loss of financial trading licence + confiscation of luxury assets + fine (up to $1 million) or jail sentence (up to 15 years)
  • Category B – $100 million to $250 million = loss of financial trading licence + plus fine (up to $2 million) + jail (up to 25 years)
  • Category A – $250 million+ = loss of licence + fine (up to $4 million) + jail (up to 40 years) + confiscation of luxury assets + loss of passport

Sound harsh?

Not as harsh as thousands of investors having their retirement plans and anything that they might have been relying on their investments to fund now having nothing to show for their efforts. Not as harsh as hundreds of people working for these forms in good faith finding themselves without a job because of the collapse. Nor as harsh as any community finding that sponsorship of community events and projects have just gone up in smoke.

National not serious about crime


When one thinks of a conservative party, they think of a party that is normally strong on law and order. It will be a party that spends more on the police, normally has a harder line on sentencing and talks about rights of the victims.

It all sounds well and good, if in the case of National, it were actually true. If National were serious about crime, then why is there this long litany of armed hold ups that have all been carried out in Auckland since 01 January 2017?

In January:

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11781928

In February:

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11804802

In March:

http://www.indianweekender.co.nz/Pages/ArticleDetails/7/7720/New-Zealand/South-Auckland-Superette-robbed-at-gunpoint

In April:

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11842093

http://www.radionz.co.nz/news/national/329327/armed-robbery-at-auckland-tab

In May:

http://www.newstalkzb.co.nz/on-air/larry-williams-drive/audio/detective-inspector-faamanuia-vaaelua-armed-robbery-in-south-auckland-sickening/

http://www.stuff.co.nz/auckland/93191139/armed-hold-up-at-tab-in-pakuranga-south-auckland

In June

It seems that not a single week goes past without a new armed hold up happening somewhere in Auckland. It might be Mangere or Manukau. It might be somewhere on the North Shore or out west in Waitakere. The target might be a family run dairy. It might be a superette or a bar – the targeting seems indiscriminate.

The victims are understandably fearful for their lives. It is quite a violating thought to know that you, in the course of your every day work life were subject to an attack on your premises by thugs. They might have been looking for cash or cigarettes to sell on the black market. Whatever the case the outcome is the same – another one for the crime stats, a legitimate business violated and the owner/operator scared to death.

So, this is what has happened in Auckland alone since June. It does not include any offences reported in Hamilton, Dunedin, Wellington, Christchurch, or anywhere else.

The causes can be debated, though one can fairly conclusively suggest that increased taxes on tobacco products are at least in part to blame. The black market is thriving.

So, just stop and think about this when you decide who to vote for in September. Who do you think will try to address the causes of these offences – National? Labour? New Zealand First? Greens?

And more importantly, WHY?

Harawira completely wrong about executing Chinese drug dealers


The comments by former Maori M.P. and Mana Party leader Hone Harawira that New Zealand should execute methamphetamine dealers from China are completely wrong.

There is no doubt that New Zealand is a nation that has a major drug problem. Methamphetamine, cocaine, heroin, cannabis – all of them are serious contributors to crime, declines in important socio-economic indicators, affect peoples ability to get jobs. Cannabis is perhaps the least problematic of these, but all need a comprehensive policy for dealing with all of them. It needs to deal with how we educate people, treat those on it or who are a victim of it, those who have recovered but now have problems finding jobs.

Much of the crime wave of violent offences striking New Zealand at the moment is likely to have to do with drugs – most likely finding ways of funding drug addictions, or being able to source money for paying back drug debts.

However executing Chinese methamphetamine dealers is the wrong way to go about it and sends the wrong message. I would however go one step further and say that Mr Harawira is completely wrong about using the death penalty at all. It is nothing less than state sanctioned murder and there is no justification in my book for it.

Whilst the mechanisms that I am about to mention might already exist in law, how well are they used for their intended purpose? Are they even used? I am talking about:

  • Being permanently denied the right to hold a passport – no country is going to want another nations violent criminals
  • Confiscation of 100% of property gained using drug money as well as and in particular any cash – use the proceeds to help the victims with court/medical/other costs
  • Being subject to police monitoring even after the sentences are finished and the corrections department is obligated to release the prisoner/s in question
  • Non New Zealanders are deported and permanently barred from entering the country

If these instruments exist, how well are they used? There is little point in changing the law if they are a) well used and b) effective.

Part of Mr Harawira’s political repertoire has always been to speak his mind by saying provocative things, and then defend them and there is no doubt in this case, he has achieved that. It is a piece of race baiting in some respects by singling out Chinese dealers, and ignoring home grown ones and their supply chains. Perhaps Mr Harawira means well. It is certainly a departure from what I expected him to say on the issue – I was not expecting him to advocate for a reduction in penalties, but violating human rights statutes that New Zealand has ratified is not acceptable in any shape or form.

Christchurch City Council must understand prostitution in order to solve it


It is the worlds oldest industry for a reason. Many an elected official has railed against the red light district in their city. Many a law has been passed in an attempt to either outlaw or drive it underground. And just as many times moves to shut down a perceived moral disgrace have failed because the person/people whose brainchild it was completely did not understand how and why this industry exists in the first place. And thus prostitution will remain a societal issue until the social mechanics of it are understood and fantastical thinking driven by morality gives way to practicality.

Once again there is pressure on Christchurch City Council to address the issue of prostitution in the central city. Residents in St. Albans are frustrated with the activities of sex workers in the upper part of the street. They want to see the bylaws enforced, and who can blame them. This time there is concern that moving the sex workers along might breach the Bill of Rights. But at the same time, if this is an attempt to drive it underground, like all of the attempts before it, this one will be likely to fail too.

No doubt many of you have been coming home from or going to something, and your route has taken you through the local red light district. You might see a few scantily clad girls, some looking rather young, and a few older ones. Did you ever wonder how and why they are there?

Whilst I would never use their services, I have wondered at times about how the girls on Manchester Street fare. It is a rough business, looked down upon by many people. It is possible to understand the frustration of local business owners with having to clean up used condoms, cigarettes and so forth from their premises, and local residents whose houses are within clear viewing distance of any activity on the street. The dregs of society come out often in prostitution, with all sorts of unsavoury types attached. Some are so-called minders, who actually end up being not much more than vigilante types. Some are drug users. Many of the girls might have dabbled in drugs themselves, or be owing debts.

So, how did these girls get here? The stories are as sad as they are true. Some were from broken families and bounced around from one foster family to another foster family, with no real love or guidance. They dropped out of school and could not get a job. Some had gotten into trouble with the police. Some had been raped multiple times by strangers, or plied with alcohol to the point they were unable to think or act for themselves. In post-earthquake Christchurch many live in abandoned houses and get arrested for trespassing, but back they go because the Christchurch winter is too inhospitable to be on the street.

Mellory Manning is a tragic case. She was a prostitute who was raped, beaten and murdered because she owed a debt that she couldn’t clear fast enough. Although the police caught the offender who is now doing a lengthy jail term it highlights the risks these girls take to survive. It also highlights graphically the problems with social services and society at large that everyone in positions of authority say they want to tackle, but none actually seem to have a clue how to do so, or the will power to find out how.

What I would like to see is a couple of safe houses get set up in anonymous locations where the girls can ply their trade. As a way of funding it, the girls could give a small percentage of their earnings to council appointed landlord of sorts, who keeps the place clean. A community group with a board that has a police community officer, plus a doctor/nurse, and a counsellor might need to be set up to give oversight. Because this is a social problem that might need City Council involvement, an elected councillor with City Council select committee oversight might be of use as well.

We will never stop prostitution, but if we can give those who genuinely want to get out of it, a way of going clean, maybe containment, which is the best outcome likely, can be achieved. But going on a moral crusade and trying to drive it underground is just asking for an even bigger and uglier problem.

The case for whistle blower protection legislation


The recent case of Joanne Harrison, a lady who has been convicted of taking $725,000 from the Ministry of Transport and has gone to jail for significant fraudulent activity, had another revelation the other day. It was revealed that a few days after she was told she was under investigation and her access to the building where she worked would be revoked, Ms Harrison tried to enter the building to interfere with documents. Upon failing to get in she asked a contractor to access the building for her.

The employees who blew the whistle on Ms Harrison and her deceit were allegedly not treated well by their employers according to New Zealand First leader Winston Peters. Mr Peters. Labour M.P. Sue Moroney also questioned the treatment of two people who were thought to have raised red flags, and then found themselves jobless just a couple of months later in a review Ms Harrison had a hand in.

It is true that whistle blower protection legislation already exists in New Zealand. However it is undermined by a grossly inadequate set of protections for anyone who feels the need to report serious wrong doing. It is totally unenforced to the point that very few people – if anyone at all – have actually felt safe enough to come forward under the legislation and report serious wrong doing in their place of employment. And it is also under resourced in terms of help that can be offered those considering reporting serious wrong doing.

Insider activity can devastate companies. Of that there should be no doubt. But what happens when the people who see the most damaging activity are too intimidated to report it? What happens when a culture of fear and/or corruption that makes it too dangerous to report such activity, or the activity is reported by people to their superiors, who then sweep it under the rug?

Despite corporates having practices in place with the intention of making the process safe and easy for such complaints to be reported, there is still the risk that someone in a position of authority, perhaps with undeclared interests to hide, will clamp down on a whistle blower. They will attempt to shut them down through bribes, intimidation and harassment – it can be called bullying, but if the attempts at shutting a complainant succeed it is also an attempt to pervert the natural course of justice.

A whistle blower might continue working at the place where the activity is happening. Why should they leave or be made to fear coming to work each day, fear doing their job, because someone in a position of authority is corrupted?

New Zealand does not necessarily need a General Auditing Office like the United States, but it does need an agency where qualified people with impeccable ethics, acting in a neutral manner are able to receive a complaint, disseminate it and determine whether the company, person or people in question have a case to answer. It needs to be networked with other agencies, such as the Serious Fraud Office, the Police, and others who can investigate and if necessary, bring about a criminal prosecution.

Because whistle blowers are not going to be potentially at risk when they blow the whistle, there needs to be protections in place. In the same way the police protect witnesses to violent crimes or gang violence from intimidation and harassment, there needs to be appropriate protection for whistle blowers from the moment they report the offences through to them either being dismissed or the perpetrators found guilty and sentenced. Even then they might not be safe if in the course of prosecuting, associates of the accused or others scared that their own misconduct might be exposed, decide to track down the whistle blower.