Today’s Sunday Star Times has an article on a “mum and dad investor” who somehow managed to purchase $1.6 million worth of shares in Genesis Energy when it was floated at the same time as ordinary mum and dad investors had their shareholding purchases capped at $5,000. The anomaly has occurred because they purchased through a share broker. Share brokers had no restriction on how they allocated their shares whereas ordinary kiwi mums and dads who applied publicly had their applications scaled down.
The purchasers, Christopher and Leegena Weinberg, apparently made their money through selling dog meat. They are described in the SST article as having last year renounced their American Citizenship, presumably so that they are not caught by the US Foreign Account Tax Compliance Act. This law has the abbreviation of FATCA. I think they missed a letter off and it should be called the FATCAT law. It will require American Citizens to file tax returns report certain assets to the IRS even if they live overseas. Through laws passed recently New Zealand financial institutions are obliged to provide some information to the US authorities on locally based American citizens.
This episode further shows the stupidity of the decision to privatise. The Weinberg shares have gone up in value by $300,000 and they can expect a dividend payment in the first year of something in the vicinity of $250,000. This is capital appreciation and dividend income that would otherwise belong to the Crown.
The incident underlines the falsehood offered as justification for the share float. We have not created a new class of shareowning ordinary New Zealanders. We have made already rich people even richer.
As for the other primary reason given for the privatization, the unlocking of hidden value through improved governance, the fallacy is that essentially the same group of professional directors that sat on the Meridian board pre float are still there. The staff have not changed significantly. The business is despite its scale a fairly straight forward one. While it could be argued that National’s hands off oversight of the company means that the new partial owners will do a better job, this is an indictment of the lack of oversight that English and co provide, not a vote of confidence in the market.
This is just another example why this Government should be removed from office as soon as possible. If we do not achieve this not occur they will wreck the country.
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