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Key SCF excuses fall flat

Written By: - Date published: 1:00 pm, April 19th, 2011 - 10 comments
Categories: business, john key, national - Tags: , ,

John Key is adept at being economical with the truth. Read his latest spin where he attempts to blame Labour for National’s continuing to shovel our money into South Canterbury Finance:

The reason we’re in this position is Labour signed up to a deposit guarantee scheme. South Canterbury Finance had massive loans. Those loans went broke. There were inter-party and related-party loans.
The receivers have now discovered they’re worth a lot less than they were and every bid we had from any consortium that came to the Government always had a provision that said because they were unable to quantify the losses, then the Government had to underwrite all of those losses.
So, frankly, David Cunliffe doesn’t know what he’s talking about. (The Press 5 April 2011)

At the time Labour established the Retail Deposit Guarantee Scheme the Government had little option. Australia had offered a similar scheme for some time and the government had to do something to staunch a serious fiscal bleed. Further the recession had not hit and it is always easy to talk having been informed with the wisdom of hindsight. But embarrassingly for Key the Crown approved SCF’s participation in the scheme on 1 April 2010. I quote from SCF’s press release issued on 1 April 2010:

“Thursday, 1 April 2010, 5:31 pm
Press Release: South Canterbury Finance
1 April 2010

Crown approves South Canterbury Finance for Extended Retail Deposit Guarantee Scheme
South Canterbury Finance Limited has today been approved to participate in the Crown’s Extended Retail Deposit Guarantee Scheme.
The scheme will provide all eligible investors with the benefit of the Crown guarantee until 31 December 2011.
Welcoming the Crown’s decision, South Canterbury Finance Chairman Allan Hubbard says a major milestone has been achieved.”

Worse Key also fails to tell taxpayers that while NZ was in the middle of the first recession and again under Key’s leadership, National extended the retail deposit guarantee. I quote from Bill English’s Press Release from 25 August 2009:

“Government to extend retail deposit guarantee

The Government will extend the Retail Deposit Guarantee Scheme and change some of its terms and conditions, Finance Minister Bill English says.
The current scheme ends on October 12, 2010. The new scheme will start on October 13, 2010 and end on December 31, 2011.
The Retail Deposit Guarantee Scheme was introduced as a direct response to international financial market turbulence. Immediate concerns about the stability of the financial system are now abating,” Mr English says. …”

When Labour established the retail deposit scheme they were responding to an immediate need to keep NZ internationally competitive and prevent an investment bleed. National however announced that they would extend the scheme in 2009. Worse SCF was admitted to the scheme under National’s watch and worse still by that stage it was obvious that SCF was a lemon. This raises questions as to why? There were a lot of big money people who had loans to SCF that the taxpayer paid out with interest. It is time for Kiwis to look behind the spin and see Key for what he really is a slick fertiliser salesman with a mouth full of free samples.

– Michael Bott

10 comments on “Key SCF excuses fall flat ”

  1. ianmac 1

    John Key is adept at being economical with the truth.”

    John Key said no offer of rescue had been discussed in Cabinet. But that was because the offer was into his hands. He decided to reject. His responsibility. Accountable? (I am commercially illiterate by the way.)

  2. Irascible 2

    Didn’t Hubbard (a) claim that Key was his personal friend and (b) write to both Key & English for taking SCF into the Guaranteed Finance scheme?
    Proof positive that Key is to blame for the debacle that is SCF and, ultimately, the NZ economy.

  3. marsman 3

    ‘Slick fertiliser salesman with a mouth full of samples’ Great!!

  4. Roger 4

    It appears that the pointing the finger at Labour even nearing the end of a full term is not too low for this government. Initially John Key tried to shift the blame to Labour for the BMW fleet. Johnathan Coleman even tried to blame Labour for the closure of TVNZ7 by suggesting that it was their fault for not allocating funding beyond this year. This government does not seem to like taking responsibility for their actions/inactions. Our tax money being given to well heeled parasites is something that this government needs to be challenged on. Questions we should be asking include:
    Why, given the state of SCF position were they included?
    Why did they fail to seek or follow advice to challenge their eligibility for the scheme?
    Why was there no audit (or follow-up if their was one)?
    Why did they go above and beyond their responsibilities when they handed over our tax money to international investors and paid out interest on top of the principle deposit?
    And finally, what gives them the nerve to allow this to happen and hand over money so generously when they are borrowing $300million a week and cutting government spending on services?
    It has been suggested that Labour can win this election if they stick to the issues, they should get stuck in to the ones above and nail Key and his band of pirates.

  5. KINTO 5

    More importantly Roger, why the hell is Key not ordering an independant (like properly independant) enquiry?

    • Roger 5.1

      Very good question, I believe that Labour brought this up in parliament but it was shut down by Bill English. Why indeed.

  6. Red Rosa 6

    Frogblog has worked through the recently released FOIA data and has a mine of information.


    The hard questions revolve around early 2009, when a notably sceptical Reserve Bank was prodding Treasury for serious answers as to why SCF was being allowed to stay in the scheme. 

    It is probably in that time frame that the SFO are working.

  7. RedLogix 7

    Great contribution Michael. Good to see a Labour candidate prepared to muck in here on The Standard… I really hope to see more from you. Judicious, informed comment from people in the loop has to be extra welcome.
    And the Wairarapa isn’t a lost cause. It may have been Tory forever, but it’s also a region in transition … plus the existing Nat incumbent Hayes is has scarcely done much despite having the luxury of a safe seat for yonks.
    Give it heaps Mike and you could just surprise some folk.

    • Jan Farr 7.1

      Hi RedLogix – Having had John Hayes since 2005 might make it seem that the Wairarapa has been National forever – but Georgina Beyer was Labour and held the seat from 1999 till 2005.  After that she went on the Party list.  What happens to the Wairarapa is supposed to be an indication of what will happen nation-wide.  Let’s hope Michael makes it.  I think it’s quite possible with his level of activity  John Hayes is just marking time. It’s hard to meet anyone over here who supports him.

  8. Good stuff Michael.

    Can you or anyone say what the difference was between the retail deposit scheme and the extended retail deposit scheme?

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