web analytics

$400 mln xmas gift for banks

Written By: - Date published: 10:30 am, December 24th, 2009 - 21 comments
Categories: corruption, crime, national/act government, tax - Tags:

The banks, who tried to rip us off to the tune of $2.6 billion, have agreed to pay us $2.2 billion.

I don’t get it. We’ve spent tens of millions so far on court cases to get our money. We’ve won every case. The judgments have been damning of the banks. So, why did the IRD agree to settle for 80% of what the banks owe us? Why are we giving the banks a $400 million gift? If we had run through the rest of the court process, we would have got more than $2.6 billion when you add penalty tax and court costs.

I have a sinking feeling that this is a political decision to get the cash in hand now for National’s objectives. There can be no doubt that a decision of such magnitude was approved by ministers.

Bill English, Peter Dunne, and John Key are going to have to answer for this $400 million dollar Christmas gift to the banks.

21 comments on “$400 mln xmas gift for banks ”

  1. burt 1

    Yes it is a shame that the banks couldn’t simply validate their theft and move on. Hell if they refused to pay it back like Labour’s special friend Winston then Labour would have probably let them run the country and take anon donations from big business for tax reductions in the banking sector.

    • Pascal's bookie 1.1

      How do you know that’s not what happened?

      ACT and the Nats should really open their trusts.

  2. prism 2

    We must remember when we are trading to ask for the discount that goes with cash payments. The banks have got lots of money, and they know how to get a good deal. We must learn from them, maybe we will get rich too -(shout yourself a Lotto ticket this Christmas as well).

  3. Herodotus 3

    A perspective from someone who has just refinanced $150m that will be why the banks have just slapped an increase in their cost add ons to us by the order of 1.5% to 2%, this is on top of the gloabal credit fee and the increase in industry risk fee. Yet another cut being made to the veins of the economy. Yet they are receiving an increase in their funds acquired internally. They appear to me anyway to be recouping this cost off their client base. Pity all other industries did not have the same ability. Air NZ will have to increase their scheduled flights across the Tasman to copewith the flood of money leaving the country to Aust banks head offices.

  4. gomango 4

    This is a commercial decision – may or may not be a good one, but any settlement takes into account the probability the banks will win on appeal – presumably privy council in this case after a round with the supreme court – so at least 3 to 5 years of waiting for the process to exhaust itself. Do a probability weighted, npv calculation and I’d guess its roughly reasonable. Even if theres only a 5% chance of losing at the Privy council, with costs etc that skews the math very heavily. Very simple solutiopn is to look at what advice the IRD gave to the ministers in terms of settling/not settling. I’ll bet they were in favour of settling. Notwithstanding the cash, if the IRD settles now they look forward to some very strong precedents entrenched in our case law around thin cap transactions. That will mike their life a lot easier for the next decade.

    And herodoltus – you cant look at the current account flows without also looking at the capital account. I think you’ll find that in respect of the banks, the net flows (dividend outflows minus capital inflows) arent skewed like you assume they are.

    • poneke 4.1

      any settlement takes into account the probability the banks will win on appeal presumably privy council in this case after a round with the supreme court

      Appeals to the Privy Council were abolished in 2005. The Supreme Court is, thank goodness, our final appellate court.

      What is likely here is that the four banks have realised they are unlikely to win in the Supreme Court, after the damning and lucid judgements against them in the High Court and Court of Appeal.

      The Supreme Court is not the soft touch for corporates that the Privy Council was. Ask yourself why the biggest supporters of appeals to the Privy Council were corporates and the Business Roundtable.

      The lawyers for the banks will have advised settling for a discount, which the solicitor general agreed to last night, probably to save the cost of years more of litigation (it could take that long to go through the Supreme Court).

      It was an abrupt capitulation as only this very month, those banks got leave to appeal to the Supreme Court.

      Our politicians would not have been involved at all. This country is not corrupt, no matter which party is in power. The deal will have been done by IRD, Crown Law and the lawyers for the banks.

  5. Scott 5

    It’s a perfectly understandable decision by IRD.

    The IRD’s lawyers will have assessed the risk of a successful legal appeal by the banks, concluded there is some risk of an appeal succeeding, and advised the IRD to make the deal.

    Any settlement where the plaintiff still gets over 80% of what was claimed is still a pretty good result.

  6. searching 6

    Gomango – get up to date. Appeals to the Privy Council ended with cases decided 31 Dececember 2003.

    A pragmatic result.

  7. randal 7

    we are a mature nation of inteeligent people. we dont need anyone like a privy council (I mean who are they) to tell us what to do.
    $400Mil buys a lot of popcorn and toys for infantilised idiotes.

  8. tsmithfield 8

    Net present value of money.

    If the banks had decided to go through the full court process, they probably could have dragged it out for years. Also there was the chance they could have won on appeal to the Supreme Court.

    Receivers/the taxman etc love money in the till.

    • Jenny 8.1

      Where’s the guts to stand up to these fraudsters? I bet if they were facing some real jail time, they wouldn’t be so happy to wait in a cell for the results of some drawn out appeal.

      It beggars me that a solo mother can face jail and separation from her children for a $4 grand and most likely would stay in jail if she appealed her sentence.

      Yet these bank fraudsters can get away with $400 million and return to the beds in their mansions every night.

      Maybe Paula Bennet’s high profile beneficiary bashing can shave some money from the Social Welfare budget to pass on to the banksters.

  9. gomango64 9

    fully aware of the privy council status. I put presumably because I wasnt sure of the timeline and thought these tax cases may have started before abolition of the privy council rights for NZ, but given the timeline i guess thats not true in this case.

    And poneke – just because the banks settle doesn’t mean the crown have to, and if the case was that cut and dried why would they. Its by mutual agreement obviously.

    I do believe this judgement is correct, but as important as the current cases, is the effect it will have on future behavior around NZ as an offshore tax jurisdiction. And whether you buy the arguments or not, the case for the privy council (imo) is more about independence of the judiciary from political influence, and quality of the judges given our very small talent pool.

    And also bear in mind that there was a very significant settlement last year by one foreign owned bank with a stronger case (based on one crucial structural difference) than the aussie banks. That settlement was in excess of 100mm, and under the labour government. I would be surprised if either then (labour) or now (national) the politicians settle on terms that conflict with the advice from the IRD and crown law.

  10. expat 10

    $2.2bn now is better for our balance sheet than maybe $2.6bn some time later.

    Lifes full of these types of compromises, makes me think of the under investment in roading and telecoms and electricity generation and transmission during the Clark years so that the spend-a-thon on social services could go ahead.

    • George.com 10.1

      Correction for expat – the years of under investment in our infrastructure were the Roger Douglas and Jim Bolger years. Clarks govt made big inroads into our infrastructure deficit following those years of neglect under the neo-liberals.

      • Herodotus 10.1.1

        Given both the destruction in the value of money and the volume that had been floating around. It has and still is not that dificult to throw large $$ around. Both govts within the last 10 years can say “WE” are/have spent more on this or that than any other time. The question on all spending should be the quality of that spending and the on-going benefits that have arisen from this.

    • Jenny 10.2

      Why wait for the outcome of an appeal? Stick these thieves in Mt Eden Remand Prison on Friday and the full $2.6 billion would probably be paid by close of business, on Monday. And if not keep them there till it is.

      When they get out they they can still mount an appeal for the the $200 million if they want.

      This is how it works for everyone else.

      • Akldnut 10.2.1

        Good Idea Jenny, the bastards are just thieves – we do that and we go to jail.
        The do it and they go for a holiday for Christmas to someplace like ahhhhh Hawaii.

        The Govt should just throw senior management in the slammer until it’s paid.
        (Thats the ranting side of me coming out, cause I could do with some of that cash as tax relief)

  11. prism 11

    expat I understood that the Clark government tried to follow the right-wing trend demanded by business interests and give more opportunities for business through contracting or privatisation, rather than government doing everything itself.
    The government was committed to maintaining social welfare but also to setting up policies that would lessen the number on benefits. This after the Nat right-wingers had wiped out so many jobs with jolly unconcern, in the belief that the capital released would be more usefully directed to new job-making operations. Like destructive rich children whose parents will replace their broken Christmas presents.

    • prism 11.1

      Wasn’t the British government setting the scene for us in using a political practice called “The third way’ which we were also following, as we trailed behind their Labour government? This was to go down the middle of socialism and capitalism, allowing business to proceed fairly unfettered and ensuring welfare was effective and fair.

  12. expat 12

    Buying tranzrail back doesn’t count

Links to post

Recent Comments

Recent Posts

  • Battle of Ohaeawai remembered
    A memorial event at a key battle site in the New Zealand land wars is an important event to mark the progress in relations between Māori and the Crown as we head towards Waitangi Day, Minister for Te Arawhiti Kelvin Davis said. The Battle of Ohaeawai in June 1845 saw ...
    BeehiveBy beehive.govt.nz
    15 hours ago
  • More Police deployed to the frontline
    More Police officers are being deployed to the frontline with the graduation of 54 new constables from the Royal New Zealand Police College today. The graduation ceremony for Recruit Wing 362 at Te Rauparaha Arena in Porirua was the first official event for Stuart Nash since his reappointment as Police ...
    BeehiveBy beehive.govt.nz
    15 hours ago
  • Further support for upper North Island regions hit by significant weather
    The Government is unlocking an additional $700,000 in support for regions that have been badly hit by the recent flooding and storm damage in the upper North Island. “We’re supporting the response and recovery of Auckland, Waikato, Coromandel, Northland, and Bay of Plenty regions, through activating Enhanced Taskforce Green to ...
    BeehiveBy beehive.govt.nz
    18 hours ago
  • The Princess Royal to visit New Zealand
    Prime Minister Chris Hipkins has welcomed the announcement that Her Royal Highness The Princess Royal, Princess Anne, will visit New Zealand this month. “Princess Anne is travelling to Aotearoa at the request of the NZ Army’s Royal New Zealand Corps of Signals, of which she is Colonel in Chief, to ...
    BeehiveBy beehive.govt.nz
    18 hours ago
  • Government and horticulture sector target $12b in exports by 2035
    A new Government and industry strategy launched today has its sights on growing the value of New Zealand’s horticultural production to $12 billion by 2035, Agriculture Minister Damien O’Connor said. “Our food and fibre exports are vital to New Zealand’s economic security. We’re focussed on long-term strategies that build on ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Cost of living support extended for families and businesses
    25 cents per litre petrol excise duty cut extended to 30 June 2023 – reducing an average 60 litre tank of petrol by $17.25 Road User Charge discount will be re-introduced and continue through until 30 June Half price public transport fares extended to the end of June 2023 saving ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • More Kiwis in work as rising wages match inflation
    The strong economy has attracted more people into the workforce, with a record number of New Zealanders in paid work and wages rising to help with cost of living pressures. “The Government’s economic plan is delivering on more better-paid jobs, growing wages and creating more opportunities for more New Zealanders,” ...
    BeehiveBy beehive.govt.nz
    2 days ago
  • Government boosts fund for Auckland flooding
    The Government is providing a further $1 million to the Mayoral Relief Fund to help communities in Auckland following flooding, Minister for Emergency Management Kieran McAnulty announced today. “Cabinet today agreed that, given the severity of the event, a further $1 million contribution be made. Cabinet wishes to be proactive ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • New Cabinet focused on bread and butter issues
    The new Cabinet will be focused on core bread and butter issues like the cost of living, education, health, housing and keeping communities and businesses safe, Prime Minister Chris Hipkins has announced. “We need a greater focus on what’s in front of New Zealanders right now. The new Cabinet line ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Prime Minister to meet with PM Albanese
    Prime Minister Chris Hipkins will travel to Canberra next week for an in person meeting with Australian Prime Minister, Anthony Albanese. “The trans-Tasman relationship is New Zealand’s closest and most important, and it was crucial to me that my first overseas trip as Prime Minister was to Australia,” Chris Hipkins ...
    BeehiveBy beehive.govt.nz
    3 days ago
  • Government makes first payment to Auckland Flooding fund
    The Government is providing establishment funding of $100,000 to the Mayoral Relief Fund to help communities in Auckland following flooding, Minister for Emergency Management Kieran McAnulty announced. “We moved quickly to make available this funding to support Aucklanders while the full extent of the damage is being assessed,” Kieran McAnulty ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Government steps up to assist Auckland during flooding
    As the Mayor of Auckland has announced a state of emergency, the Government, through NEMA, is able to step up support for those affected by flooding in Auckland. “I’d urge people to follow the advice of authorities and check Auckland Emergency Management for the latest information. As always, the Government ...
    BeehiveBy beehive.govt.nz
    6 days ago
  • Poroporoaki: Titewhai Te Huia Hinewhare Harawira
    Ka papā te whatitiri, Hikohiko ana te uira, wāhi rua mai ana rā runga mai o Huruiki maunga Kua hinga te māreikura o te Nota, a Titewhai Harawira Nā reira, e te kahurangi, takoto, e moe Ka mōwai koa a Whakapara, kua uhia te Tai Tokerau e te kapua pōuri ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • Enhanced Task Force Green Approved following Cyclone Hale
    Carmel Sepuloni, Minister for Social Development and Employment, has activated Enhanced Taskforce Green (ETFG) in response to flooding and damaged caused by Cyclone Hale in the Tairāwhiti region. Up to $500,000 will be made available to employ job seekers to support the clean-up. We are still investigating whether other parts ...
    BeehiveBy beehive.govt.nz
    1 week ago
  • General Election to be held on 14 October 2023
    The 2023 General Election will be held on Saturday 14 October 2023, Prime Minister Jacinda Ardern announced today. “Announcing the election date early in the year provides New Zealanders with certainty and has become the practice of this Government and the previous one, and I believe is best practice,” Jacinda ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Prime Minister Jacinda Ardern announces resignation
    Jacinda Ardern has announced she will step down as Prime Minister and Leader of the Labour Party. Her resignation will take effect on the appointment of a new Prime Minister. A caucus vote to elect a new Party Leader will occur in 3 days’ time on Sunday the 22nd of ...
    BeehiveBy beehive.govt.nz
    2 weeks ago
  • Trade and Agriculture Minister to attend World Economic Forum and Global Forum for Food and Agricult...
    The Government is maintaining its strong trade focus in 2023 with Trade and Agriculture Minister Damien O’Connor visiting Europe this week to discuss the role of agricultural trade in climate change and food security, WTO reform and New Zealand agricultural innovation. Damien O’Connor will travel tomorrow to Switzerland to attend the ...
    BeehiveBy beehive.govt.nz
    3 weeks ago
  • Government funding relief for flood-affected Wairarapa farmers and growers
    The Government has extended its medium-scale classification of Cyclone Hale to the Wairarapa after assessing storm damage to the eastern coastline of the region. “We’re making up to $80,000 available to the East Coast Rural Support Trust to help farmers and growers recover from the significant damage in the region,” ...
    BeehiveBy beehive.govt.nz
    3 weeks ago