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Ryall confirms asset stripping on the cards

Written By: - Date published: 9:50 am, March 2nd, 2012 - 136 comments
Categories: energy, infrastructure, privatisation - Tags:

So, National wants to re-assure us that, when they sell our assets against our will, they’ll keep 51% and control. But, um, minority shareholders have rights and private boards have to maximise profits ahead of the national interest. If they decide to sell off the dams later they can, and the Nats won’t stop them.

See the companies called Mighty River, Meridian, Genesis, and Solid Energy could still exist and be 51% government owned but everything they own of value could be hocked off if their boards decide that’s the best way to make a quick buck.

When Russel Norman asked Tony Ryall if the government would put anything in the legislation to stop the boards of part-privatised companies liquidating their assets, our power generation capacity, Ryall was …. less than convincing

Dr Russel Norman: Will the legislation to establish these partially privatised energy companies include explicit provisions that prevent these companies from selling major New Zealand electricity-generating assets?

Hon TONY RYALL: The legislation will pretty much reflect the existing situation, where directors of State-owned enterprises not only operate under the requirements of the Companies Act but also are expected to act within the confines and requirements of listing requirements on the New Zealand stock exchange.

Dr Russel Norman: Will the legislation to establish these companies include explicit provisions that prevent those companies from selling major New Zealand electricity-generating assets?

Hon TONY RYALL: The proposed legislation does not need to include any additional features to address the concern that the member has, because the Companies Act already requires that any significant transactions would involve consultation with the shareholders. The Government is retaining 51 percent majority ownership. [so, before selling assets, the boards would have to consult with a government that’s obsessed with selling assets]

Dr Russel Norman: Is he saying that his Government will provide no legislative guarantee that major New Zealand electricity-generating assets will not fall into foreign ownership after partial privatisation?

Hon TONY RYALL: There are requirements in the Companies Act that significant transactions require the support of the majority shareholder, and there are similar requirements in respect of the listing requirements of companies. So the Government is retaining 51 percent majority control…

Dr Russel Norman: Is it his understanding that section 131 of the Companies Act requires directors to act in the best interests of the company, whereas if it is determined that it is not in the best interests of New Zealand to sell those assets, those directors will be required to act in the best interests of the company, not in the best interests of New Zealand?

Hon TONY RYALL: The directors’ acting within the best interests of the company also requires them to act within the other provisions of the Companies Act. The Companies Act, in respect of the question that the member asked in the first part of this exchange, does provide express provisions for majority shareholders to have a say in significant transactions, and the directors will be aware of that.

Hon David Parker: What percentage of the company’s assets have to be sold before it is a major transaction that requires shareholder approval?

Hon TONY RYALL: The Companies Act sets that out to be around 50 percent. [so, a board could sell, billions of dollars of hydro-dams and not even have to get the approval of the government…]

Looks like part-privatised companies would have a licence to asset strip under National.

136 comments on “Ryall confirms asset stripping on the cards ”

  1. This episode blew a further hole in the Nats’ propaganda on the issue.
    Ryall called it a “significant transaction” but the phrase used in the Companies Act is “major transaction”.  Under section 129 a Company may not enter into a “major transaction” without a special resolution being passed either approving the transaction or validating the transaction.  A “major transaction” includes “[t]he disposition of, or an agreement to dispose of, whether contingent or not, assets of the company the value of which is more than half the value of the company’s assets before the disposition”.
    So for Mighty River Power which own 8 hydro electric power stations it could sell the power stations one by one without needing shareholder approval unless the constitution provides otherwise.  The directors could have this power without restriction.  It seems from Ryall’s answer that there will be no restrictions placed on the directors.
    And a director acting in the best interests of the company is duty bound to accept an offer if the price is right.
    Privatisation by a thousand cuts awaits us …

    • queenstfarmer 1.1

      a director acting in the best interests of the company is duty bound to accept an offer if the price is right

      With all due respect, that is not just blatantly incorrect, it also shows a dangerous naivety. I for one would not want to be advised by someone who tells me I am “duty bound” to accept an offer the instant that some Joe walks into my office and puts down a cheque for $1 more than any item is worth.

      As for Russell: please stick to the rivers and the lakes you’re used to.

      • McFlock 1.1.1

        But if, say, Joe came in and offered you a cheque for substantially more than the market rate for one of 8 power stations, your minority shareholder might not think you were acting in the best interests of the company when you turned it down. So they could sue your ass, and anyone from whom you habitually took instructions.

        • queenstfarmer

          Yes they might. Anyone can be sued for anything at any time – what’s your point?

          your minority shareholder might not think you were acting in the best interests of the company when you turned it down

          Well unfortunately for your argument, the law isn’t whether you act in what a minority shareholder thinks might be the best interests of the company. It is whether you act in what you consider to be the best interests of the company.

          • McFlock

            “Yes they might. Anyone can be sued for anything at any time – what’s your point?”

            Some cases are more likely to succeed than others.

            “It is whether you are acting in what you consider to be the best interests of the company.”
            Yes indeed.
            So you’re relying on a tactic along the lines of “we can break the law if we want to, we almost certainly won’t get caught”.
            Personally, I always loved the look of surprise on people’s faces when they found that wasn’t the case.
            But more importantly, for many people even the slight possibility of getting caught was enough to keep them in line. See, you’re not ricking the court case. You’re hoping that future directors of a 51% enterprise will be prepared to work towards the benefit of the nation, not the company, on the probability that they won’t get made accountable for it. You’re also asking that of people whom the directors habitually take instruction from, like ministers. 
            So really what do you think is more likely in the real world, in an instance where the two are mutually exclusive – will the directors put the good of the nation ahead of company profits, or vice versa?  
            Hint as to my position: we couldn’t even rely on them to work for the good of the nation when the SOE was 100% govt owned – they still laid off NZ workers to purchase sub-par rolling stock from overseas.

      • Lanthanide 1.1.2

        queenstfarmer – if you were in a sales process, and the offer was exactly identical in all ways to another offer except for $1 more, then I think you would be required by the board to take the $1 greater offer.

        Obviously if you aren’t actually in a sales process, someone making a offer for your asset is meaningless.

        • queenstfarmer

          if you were in a sales process, and the offer was exactly identical in all ways to another offer except for $1 more, then I think you would be required by the board to take the $1 greater offer

          Usually yes, but not necessarily. Many tenders are often on the basis that “highest offer may not be accepted”. There are lots of reasons for this. Sometimes you don’t want to sell to a competitor, or a potential competitor, there may be credit concerns, etc.

          Obviously if you aren’t actually in a sales process, someone making a offer for your asset is meaningless

          Not according to Mickey & Russ, and McFlock. According to them, if someone walks up and offers you more than the market rate, you are “duty bound” to just sell it. Go figure.

          • mickysavage

            QSF you have chosen to read my statement in a particular way and that is your prerogative.  But don’t you agree that if the price is right, the contract is sound and all financial and strategic imperatives are favorable that a director acting responsibly would have to consider approving such a transaction?

            The point being that one by one the dams could be sold without the Government as shareholder voting on the transaction.

            Good attempted diversion though. 

            • queenstfarmer

              But don’t you agree that if the price is right, the contract is sound and all financial and strategic imperatives are favorable that a director acting responsibly would have to consider approving such a transaction?

              Yes, I think that a responsible director should consider it. That is not the same as your earlier claim that they would be “duty bound to accept an offer”.

              Good attempted diversion though

              Diversion how? It’s strange statements like that which detract from the issues. I called you out on an incorrect claim, and you are suggesting it was an attempt to “divert”. From what? How? Why?

              • QSF my original comment was not meant to be a treatise on a director’s legal responsibilities.  “The price is right” is shorthand for a deal that in commercial terms makes so much sense that a director is pretty well duty bound to accept it.

                Besides you are diverting from the primary issue which is that the corporate model proposed can result in significant power generating assets being sold to overseas interests.  

                I am certain you realise this.  Your insistence on the language being technically perfect deflects from the point.

                Do you agree that the model proposed could result in our dams being sold to overseas interests even though the Government owns 51% of the shares?

                • queenstfarmer

                  Do you agree that the model proposed could result in our dams being sold to overseas interests even though the Government owns 51% of the shares?

                  Yes. Just like dams could be sold to overseas interests if the Govt owns 100% of the shares.

                  • And do you also agree that if the current privatisation model is followed then a decision to sell a dam to an entity which is not majority owned by the Government can be made by the directors.

                    • queenstfarmer

                      If the relevant conditions are met yes, just like a decision to sell a dam to an entity which is not majority owned by the Government can be made by the directors currently.

          • mikesh

            The point is that a future government who wanted to sell assets anyway would claim they had no choice but to “act in the best interests of the shareholders”.

            • queenstfarmer

              Why would they claim that? The Govt doesn’t have to act in the best interests of other shareholders. You are still confused on this basic issue.

              • RedLogix

                The government is only a shareholder. The Directors are still obliged to act in the best interests of the company.

                And as the exchange between Norman and Ryall shows.. the interests of the government as a shareholder, and the company can well be defined as two different things.

                Besides you can argue the strict legalisms of this to your hearts content… the fact remains if the government of the day is happy to see major public assets part-privatised… then the reality is that it’s also very unlikely to object, even as a ‘major shareholder’, to further sell-downs of assets in a piecemeal fashion either.

                If each hydro dam is sold individually, the government can cheerfully claim to still be the ‘majority shareholder’ of the remaining company… and continue this claim right up until the point where the entire company is sold. The fact that Key has categorically refused to ammend the proposed legislation to close this blatant loophole tells us pretty much that they intend to do just this.

                • queenstfarmer

                  The Directors are still obliged to act in the best interests of the company.

                  Yes. Thank goodness, please cast this in stone so we can all refer to it next time someone else (like mikesh above) starts claiming directors are required to act in the interests of shareholders.

                  the fact remains if the government of the day is happy to see major public assets part-privatised… then the reality is that it’s also very unlikely to object, even as a ‘major shareholder’, to further sell-downs of assets in a piecemeal fashion either.

                  A conspiracy theory should at least try to make sense. Yours doesn’t. The directors can sell off dams right now. The don’t need to partially float the companies to do that. So they could do that already, and the Govt could still “cheerfully claim to still be the ‘majority shareholder’ of the remaining company”. In fact floating the companies makes it harder to sell core productive assets, because of all the disclosures.

  2. Key is here on a mission and that is to sell nz off,cut thousands of jobs which in turn
    puts the country under more pressure financially via the tax take,spend up large on
    ‘nice to haves’ creating the books so that key can have the control he has come to
    nz for,it is widely known that he is an employee of goldman sachs,what he is
    doing is in line with GS agenda world wide.,Investigations,wire taps need to
    reveal just what is really going on.
    Where is ‘wiki’ when you need him?
    It does not take much to find the correlation between what has been instigated
    in other country’s where GS is involved to realise that the same is going on here.
    If there are 70-80% of nz’ers against asset sales,where the hell are they,why are
    they not protesting,these are strategic assets that kiwis have worked their butt
    off for,that are bringing is close to $1b a year for the tax payers and yet appart
    from a discussion in parliament,there is nothing,key and GS are going to rob
    NZ of precious assets.
    Air NZ was partially sold,this airline was not strategic in comparison with
    dams,electricity companies etc,key’s penchant for bringing nz to its knees
    is obvious.

    • Gosman 2.1

      “…it is widely known that he is an employee of goldman sachs”

      Ummm… I suggest you have no evidence for this at all. Both that John Key is an employee of Goldman Sachs and that it is widely known. It might be thought to be the case amongst a small group of nutty lefty conspiracy theorists but much of the rest of us prefer to rely on facts.

      I’m just waiting for you to claim that Goldman Sachs was also responsible for helping Greece get into the EU.

      • taxicab 2.1.1

        Gosman ,
        suggest you watch “Media7” last nights episode on line Goldman Sachs , according to Rod Oram , was in fact the very organisation that fudged the figures so Greece could join the Eu

        • insider

          Rod’s a nice guy but he probably is just repeating what he’s read in the paper. I doubt he has any insight on this. So just cos he said it doesn’t make it so.

          • mikesh

            I have just watched Media 7 and Rod Oram did say that there was evidence, and that there were reports, that GS did (in effect) help Greece fudge figures, and that they took millions of dollars in fees for doing so. I guess that settles the matter.

            • insider

              I’m not disputing he said it, but rod is just a journalist in nz; he is not an oracle on the Greek economy or it’s history. I suspect he ‘knows’ this because he read it in the ft or economist, like most of us. He may be right, but I doubt he’s done any original research on the issue (and that’s not intended as any sort of criticism of him).

          • mik e

            BBC world actually reported this!

        • Gosman

          Someone like you I can understand making such a fundamental error but Rod Oram seems like a pretty intelligent guy so I suspect he didn’t state that Goldman Sachs fudged figures to enable Greece to joing the EU.

          • taxicab

            Gosman ,
            watch the show dickhead !! You can see it “on demand” before you make statements like that . You might also be elightened to what is actually happening in the real world not the right wing bullshit news bites you obviously regard as gospel .

            • McFlock

              But if gos watched the show, he would know what he was talking about, and therefore he would run the risk of knowingly uttering an untruth. Much better for him to “suppose”, “assume” and “doubt” about the topic at hand.

              • Gosman

                You don’t think I know what I’m writing about here McFlock do you?

                Hmmmm… I’m pretty sure you have followed my discussions on this very topic in numerous other threads. You should have a pretty good idea that I do know what I’m talking about when I state categorically Rod Oram won’t have stated that Goldman Sachs fudged figures to enable Greece to joing the EU.

                Regarding the matter that taxicab is likely too stupid to realise that he/she actually means, I have already dissected a very good BBC news report on this that travellerev kindly linked to. If you have any issues with the points I raised there then bring it up. I suspect you just wish to waste more of your obviously not very valuable time trying to score points.

                By the way did you work out was a lie was and were my tips explaining how you show someone has lied in any way helpful. I aim to please.

                • McFlock

                  But until you actually watch the show, you don’t really know, do you?
                  “I aim to please.”
                  Another lie…

                  • muzza

                    http://www.independent.co.uk/news/business/analysis-and-features/what-price-the-new-democracy-goldman-sachs-conquers-europe-6264091.html – The fraud has yet to be elucidated, but it will come out eventually!

                    They didn’t just decide to commit fraud overnight in 2002 did they, and I will take a punt an take my position on GS, along with others being as guilty as fcuk of fraud pre euro for Greece, and others!

                    You can hold me to that position Gosman!

                    • Gosman

                      Come back when you have actual evidence then muzza.Considering you were one of the people who kept insisting that a single transaction in 2002 enabled Greece to join the European Union when they had been a member since 1992 (and the EEC for much longer than that) I don’t think I’ll just take your word on this topic.

                    • muzza

                      The fact you are still claiming a trivial victory, of which I had been lazy in my terminologies, and admitted as much to you, only illustrates that you know there is more to this, but will stand your ground, fair enough, just keep splashing around in the little girls pool of naivity gossie!

                      I was not telling you , you had to “take my word for it”, I’m only pointing out what would be simple logic for most people, given the track history of GS going to back a very long time! They have previous form, and have been caught out, over this issue relating to 2002, so lets just see how things come to light.

                      The actual evidence will be being destroyed as I type, but enough will remain, and come out in time, and I’ll leave the evidence gathering to the “SEC’s, FSA’s” of the world, even though they too are full of ex bankers etc such as it is. Yes I know this, I did a contract at the FSA in London many years ago, no you don’t have to take my word, I could not care less how stupid you end up looking, you have that well covered already.

                      Splash splash!

                • taxicab

                  Gosman , again I say take 25 minutes out of your obvious spare time to watch the show before mouthing off .Yes the word “fudge” I inserted but see if you can put a different spin on what was said . After all it was you who put out the challenge about GS and Greece no one else !!!

                  • Gosman

                    A couple of points you might like to consider.

                    The EU is not the same as the Eurozone.

                    The single transaction that you are probably meaning here took place in 2002. Greece joined the Eurozone prior to this.

                    Now would you care to revise your statement that Goldman Sachs , according to Rod Oram , was in fact the very organisation that fudged the figures so Greece could join the Eu?

                    • McFlock

                      Not so sure taxicab will – it looks like Mikesh actually watched the programme and has agreed with taxicab.
                      you might have to watch the programme and actually know what you’re talking about Gos.

                    • Gosman


                      What actually Mikesh stated Rod Oram said was this

                      “…what GS did (in effect) help Greece fudge figures, and that they took millions of dollars in fees for doing so”

                      I have no problem that Rod Oram most likely stated something along those lines. In fact I have discussed a very good BBC news article about this just a few days ago, (which I told you about), that basically goes into detail about the 2002 deal including the fees Goldman Sachs got for it.

                      What you failed to pick up, even though it has been pretty well telegraphed by Insider and myself, was that I basically set this up by rehashing a BS view that people have been pushing here about Goldman Sachs and Greece entry into the EU not membership of the Eurozone. As insider pointed out I have been having a good chuckle at your and others expense.

                      Regardless of my set up what Goldman Sachs did was entirely legal and was even widely known about in the market. That the Eurozone regulators didn’t understand it or act on it is hardly Goldman Sachs fault. Goldman Sachs actually wrote to the regulators asking whether this type of deal would be allowed and was advised it was okay. The problem is with Greece not cutting their expenditure, (or raising more revenue), not with Goldman Sachs.

                    • McFlock

                      So in summary:
                      There was fudging;
                      but the victim of the con was actually a close relative of the victim named;
                      and the actual victim failed to out-imagine GS in how to abuse the system;
                      So it’s all ok, and you can have a smug chuckle as to how folks were wrong in detail.

                    • Gosman


                      There was no con and there was no victim. There was fudging but it was legal fudging. No difference to accountants doing a little fudging to reduce tax liabilities. As stated Goldman Sachs ran this past the EU regulators at the time.

                      The fudging was small compared to the total over all debt and it didn’t impact on Greece’s entry into anything. The most it did was to delay the Eurozone regulators from getting on to Greece’s case about the size of their Sovereign Debt. However they should have been doing this anyway.

                      Really this is a case about failure of Regulators and Government inability to live within their means rather than some nasty bank causing problems. You should actually watch the BBC news piece on this that was provided by travellerev. It is very informative and makes the case that Greece’s problems were not caused by a single deal back in the early 2000’s.

                      But then again I only brought it up to allow someone like taxicab and yourself to make fools of yourself by getting you to argue that there was evidence that it was about Greece’s entry into the EU when it wasn’t about entry into anything (EU or Eurozone) at all.

                    • McFlock

                      So the response was delayed because the regultors failed to imagine how GS would advise greece to abuse the regulations.
                      And the delayed response allowed the situation to get even worse before intervention occurred. 
                      You seem to be missing the important point of the story – companies like GS make money by (among other things) advising clients on how to fudge figures and otherwise abuse regulatory frameworks that were put in place to prevent economic crises. Shit really does float to the top.
                      So feel free to whack off at elements of detail. You’re still a tool.

            • insider

              Out of interest, what is your understanding of Rod’s expertise in Greece’s economy? Has he studied it? Has he written extensively on it? Has visited and interviewed many of the key players? What is it that makes his words carry the weight of truth?

              • taxicab

                Insider ,
                the comment was about Gosmans assertion that someone would next suggest that Goldman Sachs would get blamed for assissting Greece into the EU which is an irrefutable fact not that Rod Oram was the fountain of all knowledge on the subject I don’t suppose you have spent the 25 minutes to view the program either you are both right wing dickheads . Again I challenge you both to watch the show rather than make dumbarse comments .

                • insider

                  Before you start going around calling people dickheads, you might want to look up what the EU actually is, then look in the mirror if you really want to see a dickhead. Gosman was setting you up and you fell right for it. A similar bunch of dickheads did the same thing last week, hence his prediction. No doubt he is laughing into his beer tonight. It’s kind of sad having to spell this stuff out to an adult.

    • muzza 2.2

      The fact a moron like Gosman is not able to join the dots should be of no real surprise, the agenda is clear for all who open their eyes to see!

      Its not widely known that key works for GS, and I would imagine that its the fact that he is highest level banking insider, ML/FED Global FX Committee Alum, which means he is party to the agenda, and has not one shred of excuse for any missunderstanding over the GFC. He has never claimed anything other than stating that is was “not hard to predict” etc. He is as high level as you will find!

      • The Baron 2.2.1

        Something in the water today, evidently.

        I expect this sort of unsubstantiated crazy from Eve, but I must admit I am enjoying the addition of a few new nutty bars.

        Muzza – good arguments are ones that make sense and are verifiable. Bad ones that damage your cause are the ones that you’re making. The crazy conspiracy angle really doesn’t help anyone.

        • muzza

          Thats ok Baron, given some of the utter nonsense you spout on here, I could not care less what you think.

          I have no idea what you have done with your work/personal life, you might well know some very high level information for all I know, and I could say the same of myself, except I know what I have done, don’t I!

          Some people can join dots champ, and some can’t. Thats life!

          • Gosman

            Some people have their facts straight and are in touch with reality and some people don’t. That’s life. You just happen to fall within the later category. Don’t worry too much you obviously have a number of other people keeping you company in this area.

      • Gosman 2.2.2

        So no evidence that John Key is an employee of Goldman Sachs. Thought not. Thanks for confirming this muzza. Nice rant by the way. Your style is getting more froth at the mouth crazy all the time.

        • McFlock

          Once again you concentrate on one assertion and ignore the rest of the post, which is simply that John Key is in the process of selling this country’s economy in the same way other economies have been sold to major international financial houses, of which Goldman Sachs is one. 
          Looters one and all, and Key’s actions are certainly aiding and abetting.

          • Gosman

            “Once again you concentrate on one total and utter fabrication and ignore the rest of the mindless consiratorial rant that makes the writer seem like a complete nut bar,”



            • McFlock

              Unlike you, at least starlight managed to make one or two actual assertions about current real-world situations. You tend not to – mostly because on the few occasions you’ve tried, it turned out that you were either a liar or merely completely incompetent. Sometimes both.
              In that single post Starlight has probably outnumbered the statements of fact you’ve made all week.

              • Gosman

                I have never lied on here McFlock. You may disagree with my opinion but that is different from lying. I thought someone like you that looks like they might have an academic background of some sort might have realised this.

                • McFlock

                  Some people might disagree that your assertions of fact here (while incredibly rare, I grant you) have always been perfectly accurate and objectively true.

                  Edit: – much lols. I post this acomment and the next one I href=”http://thestandard.org.nz/ryall-confirms-asset-carve-up-on-the-cards/comment-page-1/#comment-442684″> see…

                  • Gosman

                    There s no lie there McFlock. There is two people disagreeing on what happens on a blog. You do know what a lie is don’t you? You know a deliberate mistruth.

                    • McFlock

                      One of you is adamant but wrong about an objective fact – deletion of comments.
                      But here’s a serendipidous one.

                  • Gosman

                    Let me help you work out how to show someone has lied.

                    First off you take something that someone has stated that you think is a lie such as me stating that the sky is green and I have always thought it was green. Then you find an earlier statement from me where I state that I know the sky is blue. Then you present this and say with assurity ‘That man has lied’. Nothing you have linked to is remotely like this at all.

                    • Gosman, if I were you, I’d knock off the BS about alleging others lying.

                      I’ve caught you out on two occassions telling untruths, which is why you’re no longer welcome on my Blog. I suggest if you cease and desist.

                    • McFlock

                      Option b:
                      Observe a statement where person has made a patently obvious untruth.
                      Examine their previous statements – do they have a history of blatant untruths, misinterpretation of others comments, or making obvious attempts at misleading people or derailing conversations?
                      If they habitually deflect,distract or dissemble, is it always in a direction that serves their apparent objective?
                      Are the two most likely explanations for their behaviour A) they are stupid to the point of a sea sponge; and B) they are purposefully attempting to mislead?
                      If so, how likely is it that they have the intellect of a sea sponge? 
                      While only you can 100% identify your intent, you’d have to be a major moron to believe everything you say. At least Jimmy3 is barely literate, so I think he probably believes his own crap.

                    • Gosman

                      You haven’t caught me out in a lie Frank. As for the reasons you banned me if my memory serves me correct it was something to do with me making a light hearted comment about maths not being someone’s best subject. This is in contrast to other comments such as someone calling me a racist which you didn’t seem to have aproblem with. In short you just don’t like people expressing different viewpoints to yours on your blog. Fair enough it is your blog. Don’t think it means you won’t get pulled up on it though.

    • DH 2.3

      I think people need to stop putting all this down to John Key. Key is just the party figurehead, this asset sales business is National party policy and Key doesn’t make party policy. National have been pushing for this since long before Key came on the scene, Brash would have sold the country off if given the chance.

      John Key is best likened to a CEO, he’s the Rob Fyfe of politics. He runs the show & is in charge of day to day stuff but the board make all the major decisions. IMO blaming Key all the time just keeps the real culprits hidden in the shadows where we can never see them.

      • KJT 2.3.1

        Correct. Key is just another, not too bright, puppet that was wheeled into play when Brash proved unelectable.
        Mostly because, Brash, to give him his due as a true believer, was too honest about the real intentions.

    • johnm 2.4

      Yes starlight. A connection with Goldman Sachs was clearly shown when one of their reps came over here met Shonkey shook hands with him and gave him a million bucks freebie for the CHCH restoration fund. For those mega crooks a million bucks is tea lady chump change. GS are Jewish so is Key. Key is on a mission he supports the immensely destructive rort posing as an ideology of neoliberalism which is for Charity but totally ignores the real basis of a society: The Common Good.

      • Johnm 2.4.1

        Goldman Sachs Criminality?

        The People vs. Goldman Sachs
        Matt Taibbi: A Senate committee has laid out the evidence. Now the Justice Department should bring criminal charges

        Read more: http://www.rollingstone.com/politics/news/the-people-vs-goldman-sachs-20110511#ixzz1o1kkRbuz

        Goldman Sachs: Master Of The Universe

        By Stephen Lendman
        Link: http://www.countercurrents.org/lendman200410.htm

        “The scheme was to sell toxic asset-backed securities (ABSs) to unwary customers (including foreign banks, pension funds, insurance companies and others), then apparently use credit default swaps (CDSs) to profit when they defaulted, or in other words the equivalent of buying life insurance on an undisclosed terminally ill patient. More still, given Paulson & Co.’s role in helping to structure and select assets, then buying CDSs to short them, betting they’ll decline. Paulson thus far faces no charges. Goldman’s so far are civil. If criminal ones are filed, prosecutors will have to prove intent, perhaps coming given enough evidence to proceed.”

  3. Hmmm, deflection abounds here…

    It’s a critical issue that has notr been adequately canvessed and debated in NZ; that privatised SOEs could be forced to sell power stations, dams, etc, if minority shareholders believe they can make a profit.

    If not, the majority shareholder (us, the people) can be sued.

    I believe this is precisely the same tack which National took over the Crafar farm sales; that preventing their sale to offshore interests could not be stoppedf because of the threat of legal action.

    If our country and assets are at risk from corporate legal action, then we’ve lost a part of our sovereignty.

    • KJT 3.1

      Hence the screaming form the RWNJ’s on frogblog when the possibility of just such a legal action was outed.
      They claimed it could never happen despite being referred to academic legal opinion on the likely result of such a court action.
      No such action has been taken in a NZ court to date, (one similar one, where the majority shareholder lost) but if NZ law follows UK and Canadian cases, which it usually does, the minority shareholder would win.

    • muzza 3.2

      Frank, that was always going to be the case, it was outed at the very early stages of the announcements during the policy promotions. Mixed model will not work, and will not be controlled because , it can’t be, and they wont! Bill English already admitted that much months ago.

      Fraud comes in many forms, and lying to a gullibale public to sell and agenda is a classic technique, like hiding the TPPA details for 4 years citing commercial sensitivity. Running up debt with no audit, and jeopardizing NZ’s “rating” while allowing the cities to have the mechanisims (LGFA) to run themselves into further debt also, is another!

      The end result of course is that foreign entities, which will have proveable links to foreign banks will take ownership should the sales go ahead. It could take a period of time, or perhaps not, but the one thing is certain should our assets fall into foreign hands, is that the laws/rules will be used to their absolute nth degree to ensure that the companies use their leverage, and this will be against the interest of the country.

      I am not sure what is so hard for some to understand on this issue. There is now plenty of reading around the place which shows the govt will lie about and ignore, anything that does not fit their agenda!

      The Crafer Farm deal should be ringing alarm bells nationally, as it relates to asset sales, in case people needed a recent example of the lies to support an agenda!

      • Gosman 3.2.1

        So mixed ownership models don’t work. Why did noone raise this when Labour sold around a quarter of Air NZ?

        • McFlock

          If noone raised it, then someone did, although anyone might not have.
          Care to be more specific, tool?

          • Gosman

            Care to get a life McFlock.

            Perhaps your time would be better served looking for actual evidence that supports your nonsense like the view that National party policies kill people.

            Alternatively you could possibly waste it here trying to engage in pointless debates with me to try and soothe your battered ego.

            I can pretty much guess which one you’ll do.

        • Frank Macskasy

          Incorrect. Labour did not sell a quarter of Air New Zealand.

          If they did, please provide the source for that claim. (I’ll warn you now – you won’t find any credible source.)

        • lprent

          What are you talking about? That comment is
          a. completely incorrect in fact.
          b. stupid in interpretation.
          c. and shows that you must spend too much time in fantasy land.


          In the madness that was some of the decision making in the 4th Labour government, Air NZ was privatised.

          The 5th Labour government largely renationalised after private ownership damn near killed it with stupid decisions. They left 25% in private ownership, mostly I suspect because they didn’t have the money for the whole lot. The reason for renationalising was because exporters like the companies I work for are absolutely dependent on reliable air freight. The other airlines coming in and out of NZ aren’t particularly reliable. Airlines drop in and out of airfreight for NZ all of the time.

          There are some interesting conditions on the agreements between the government and AirNZ. Perhaps you should look at them. They don’t look a lot like the hands off stuff that National wants to try. In fact they look more like regulation – you know the stuff that the mixed ownership model that National wants is not going to have in it.

          You are comparing apples with oranges .. Had a stupidity attack today have we?

          • Gosman

            I stand corrected. I initially thought they had nationalsed the entire company and mistook the proposal of selling around a quarter of the company to Qantas which never eventuated. However the point remains that under the current ownership set up the minority owners could essentially do what people are fear mongering over the power companies (i.e. asset stripping). Please tell me why this isn’t a concern?

            • Frank Macskasy

              If it becomes a problem, Gosman, I’m sure that the upcoming Labour-led government will sort it out. Re-nationalising the remaining 25% shouldn’t be a problem. We can pass legislation in one day to do it, and get Royal Assent the next.

              • insider

                Impossible! We would have lost all that sovereignty…

                • McFlock

                  interesting question as to what sanctions we might get via our FTAs and WTO membership, though.

                  • insider

                    Well when Cunliffe carved up Telecom there were no such sanctions. Would nationalisation be illegal if fair value is paid?

                    • McFlock

                      I have no idea. 
                      But I do know it’s not as simple as passing a law that says “the people now own this. No correspondence will be entered into”.

                    • lprent

                      A ridiculous assertion.

                      He didn’t carve it up. From what I understand he just said that their monopoly power was sufficient to require considerable regulation. Telecom agreed to break itself up rather than be regulated.

                      Th actual breakup I think happened under National if I am right about the timing. Cross party

                    • insider

                      You’re probably right. All I remember was him hacking $1b off Telecom’s value by regulation. he pretty much set the path for separation. The point was I don;t recall overseas shareholders running WTO type arguments

                    • lprent

                      Quite frankly the investors in telecom ripped off consumers for several decades using their effective monopoly and delaying tactics. The investors knew the risk in doing that. Their problem.

                      If I had a choice I’d have done it a decade earlier when their tactics to stave off the commerce commission became obvious.

                      They charged for growing the wired network, and barely managed to maintain at their peak in the early 1990s – despite all of the costs dropping.

                      I don’t buy anything from telecom directly. Even indirectly I avoid them where I can. The taxes I have paid them above a reasonable rate for crap service in the last 20 years personally, in business, and these days for the site is crazy…

                    • burt


                      Quite frankly the investors in telecom ripped off consumers for several decades using their effective monopoly and delaying tactics. The investors knew the risk in doing that. Their problem.

                      Unfortunately this statement is also true for the last few decades of state ownership under the banner of The Post Office.

                    • lprent []

                      So? The argument that two wrongs make it right when you are talking about something from 20 years ago is more than faintly ridiculous.

                      The problem then was more lack of service rather than failing to invest in the network. They wound up rebuilding the 1940’s infrastructure successfully

                      Telecom largely fixed the service and completely stopped the investment except where there was direct competitors. Effectively increasing the risks in the network over time. Good example is the ridiculous risk levels and costs of the southern cross cables.

                      Neither business model were any good. Are you suggesting that Telecom could have not done better?

                    • Draco T Bastard

                      Unfortunately this statement is also true for the last few decades of state ownership under the banner of The Post Office.

                      Wrong. When it was still state owned Telecom’s total surplus went into growing and updating the network and without that we wouldn’t have the network we have now. It was only after the sale that the dead weight loss of profit was added.

            • lprent

              Apples with oranges. Reprise…

              The government is the majority shareholder under a more normal stakeholder agreement than the Nats are proposing.

              • mik e

                Bulls hit Burt the post office charged reasonable rates telecon just kept putting the price up

          • Frank Macskasy

            “The reason for renationalising was because exporters like the companies I work for are absolutely dependent on reliable air freight.”

            Indeed. The impact on exporters, such as the flower industry, would have been disastrous.

            This was a prime lesson to New Zealanders (or should have been) that nationalising strategic state assets upon which other industries depend, is crazy in the extreme.

            I still recall certain right wing idiots who insisted that Air NZ should be left to fail, as per market forces. The impact on our economy would not have been pleasant, and illustrates to me why extremist political ideologues should not be allowed within arms-reach of our SOEs.

            RWNJs – playing silly-buggers with other peoples’ jobs and lives.

            • Gosman

              Having a nationalised airline is no guarrantee of that. You just need to look at the problems with Air Zimbabwe to see that.

              If a private company doesn’t find it efficient to provide air freight services in New Zealand then I fail to see why the Government should do it.

              • Or, Air Somalia?

                Oh, that’s right – the Libertarian Paradise of Somalia doesn’t have an airline. For some reason, their lack of government doesn’t permit the development of infrastructure…

                • Gosman

                  We’ve had this discussion before Frank. Somalia is not libertarian. Given the fact that it has a number of clans enforcing various degress of laws in the areas they control it isn’t even anarchy. It would be like me trying to argue that Cuba is the model social democratic state.

                  • By Jove, I do believe you’re starting to understand it, Gosman.

                    You’re right; Somalia only exhibits two out of three traits of Libertarianism; minimal government and no taxation. The third “leg”, the rule of law is missing.

                    And you know what, Gosman? You cannot have a strong rule of law without a strong State to back it up.

                    In effect, the quintessential Libertarian State is a contradiction; it cannot exist because without Government and taxation; plus all the offices of the State, you cannot have institutions that allow the rule of law to thrive.

                    Otherwise, you get a place like Somalia; anarchy.

                    There’s your explanation as to why no nation in modern times has ever existed using the Libertarian model. It don’t work.

                    There’s your lesson in Reality, Gosman.

                    • Draco T Bastard

                      Otherwise, you get a place like Somalia; anarchy.

                      Oh, come on, you should know better than that. Anarchy is not chaos which is what Somalia has now. It’s not libertarianism either as it does have a “government” – it just happens to be one where everyone discusses and agrees to what laws there are rather than a small, dictatorial parliament whereas libertarians seem to want to be able to do whatever they want whenever they want without restriction.

                    • Gosman

                      See D.T.B’s reply to you below Frank. Somalia is not an Anarchist society either. It would be more accurate to equate it with the mutiple statelets and feudal realms of Germany under the later period of the Holy Roman Empire (just with more guns).

                      By the way, you don’t need taxation for a modern state to exist. All you need is a revenue stream. Many modern countries have virtually no taxation at all. They do take royalties from resource extraction though.

              • McFlock

                Public good vs private good, gos.
                Failure to recognise the difference between the two is an amazingly basic mistake for you to make. Almost … well, I shrink from saying “intentional”, but …

                • Gosman

                  Air travel is not a public good in my book. If it is, and if it is true about peak oil, then the Government will be stuffed trying to provide it.

                  • “Air travel is not a public good in my book.”


                  • McFlock

                    okay, so transport infrastructures with different strengths and weaknesses have no public good. Stupid. 
                    But what’s also stupid is the apparent belief that if something is a public good now, funding it to the point of national bankruptcy (is that what you meant by “the Government will be stuffed trying to provide it” in a peak oil environment) will occur. Does the concept of “investment until the risks balance the rewards” ring a bell?


                    • Gosman

                      I understand the concept. The trouble is Government is not terribly good at determining where that tipping point is in my mind. That is why I prefer provate sector to make those decisions based on profit motives rather than some sort of fuzzy ‘Societal benefit’ calculation.

                    • McFlock

                      Apart from the fact that the “profit motive” revolves entirely around private good, and therefore public good is not a market consideration.
                      You’re a tool.

                  • mik e

                    Goose name the countries many of them which don’t have taxation.
                    Another out and out lie GOOSEMAN

              • mik e

                goose Because the only Airline with enough cargo carrying capacity was air NZ.
                high value exports would have been lost had air NZ been liquidated.
                The tourism business would have suffered also .
                Goose for an investment banker who’s worked in Europe your economic naivety astounds .Obviously the w should be where the b is!

              • mik e

                Singapore Airlines

        • KJT

          Because they did not??

        • mik e

          Groseman that’s a lie

    • insider 3.3

      The government gets sued all the time. Min Health is getting sued by disabled carers and corrections by victims of the RSA murders. How is that a threat to our sovereignty?

      Quite a few power stations in NZ are owned by private organisations. Some were even formerly owned by the govt. How has your sovereignty felt since then?

      • It’s a threat to our sovereignty when policy is removred from our elected representatives and placed under control of corporate interests and subject to judicial review.

        This may not bother you – but it bothers the rest of us.

        The Ministry of Health being sued by caregivers for disabled is just a wee bit different to a corporation trying to arm-twist us to divest a state asset.

        “Quite a few power stations in NZ are owned by private organisations.”

        So what? Irrelevant deflection.

        “Some were even formerly owned by the govt. How has your sovereignty felt since then?”

        Loss of profits; and impact on our Balance of Payments, etc, etc.

        • insider

          SO what you are saying FRank is that one group using the law of the land to protect their rights is ok but others using similar laws to protect their rights suddenly becomes an assault on national sovereignty and arm twisting, even if the law was not written by those carrying out the ‘assualt’. How are the two different beyond your labelling them as such? Where is this policy removal you talk about?

          How can mentioning privately owned power stations be irrelevant when the topic is the sale of power stations to private owners? Is it irrelevant or an inconvenient fact?

          Explain to me how a loss of profits and impact on balance of payments etc has affected sovereignty. Sounds like a bunch of slogans but no thought. WHat did the hundreds of millions of dollars transferred to the govt for those assets do? They surely increased its sovereignty, whcih is a good thing isn’t it?

          • Frank Macskasy

            SO what you are saying FRank is that one group using the law of the land to protect their rights is ok but others using similar laws to protect their rights suddenly becomes an assault on national sovereignty and arm twisting, even if the law was not written by those carrying out the ‘assualt’.

            Correct. Because the two situations are not the same. But you already knew that, Insider.

            • insider

              In what way are they not the same? You seem to have a handle on this so I’d appreciate you explaining the difference between the rights under the law of a group of individual and the rights under the law of a company and its shareholders.

      • McFlock 3.3.2

        The fact the government can be sued is a good thing, and goes back to King John. 
        The government being sued because a government asset it once 100% owned is not maximising profits by fucking up the rest of the country is a bad thing. Government assets shouldn’t fuck up the country regardless of whether they’re 15%, 51% or 100% government owned. 
        Ryall has no intention of stopping minority shareholders suing the government to make the shared asset fuck up the country because to not fuck up the country would result in reduced profits.
        Government assets fucking up the country because the government has an obligation to minority shareholders to fuck up the country (at a massive profit), even though the government (let’s give the fuckers the benefit of the doubt) doesn’t want to fuck up the country, is a reduction in fucking sovreignty.
        Oh, and speaking of the current electricity system, I note that my bill fucking skyrockets even though my fucking usage has remained constant.
        Nice fucking attempt at distraction.

        • insider

          How would selling a power station formerly owned by the govt fuck up the country? About 30% of the power in NZ comes from similar pwoer stations now. I see my state owned supplier is putting up its prices 10%

          • McFlock

            But we’re not talking about “a” powerstation, are we? Incrementally, we’re talking a significant chunk of them.
            And the entire sovreignty point is that while any SOE might raise power prices 10% to maximise profits, a 100% owned one has the option of, without fear of court cases, a government instructing the company to take less profits in order to serve the interests of the country, not the SOE.
            And yeah, I think pretty much all electricity generation and distribution should be government owned 100%.

            • insider

              But 35% have been sold – I’d call one third a sizeable chunk – and the world didn’t end. Nor did we suddenly become the subjects of another state or lose sovereignty in some other way. (You might make an argument about price but I think it;s a lot more complex than a simple relationship)

              HAve you noticed what has been done to Telecom and the lines companies in recent years around price control and corporate structure. How did that happen to private companies when we have all this lost sovereignty?

              Ironically one of the big drivers of electricity pricing at the moment is the state monopoly Transpower’s grandiose powerline construction which it has the legal right to force us to pay for.

              I have no problem with your belief; it’s your fears that don’t seem to stack up.

              • McFlock

                No the world didn’t come to an end.
                But power prices skyrocketed, investment in infrastructure stalled, and the govt then had to pick up the bill when our largest city went lights out.
                I’m not entirely sure you’ve done your case a service by reminding us of how things have changed…

                • insider

                  Mcflock you should go an look at the number of power stations built in the last 15 years before you make such silly statements, which really just demonstrate ideologically blind ignorance. It’s about 1700MW worth from memory, but you can check it up on the MED website.

                  Why did the lights in Auckland go out? State owned infrastructure monopolies didn’t do their primary jobs – maintaining the networks we are forced to pay them for. We ended up paying additional hundreds of millions of dollars to fix basic poor management practices they were already being paid to do well.

                  And I’ve said prices are a point that could be argued, but you should bear in mind before you do that 40% of your bill is monopoly lines charges. Most of those are owned by the state or community/council enterprises.

                  I’m not entirely sure you’ve done your case a service by reminding us how poorly informed you are…

                  • McFlock

                    Oh okay, you’re right then – selling off power generation and the attempts at introducing competition into the electricity market have been an unbridled success, with no problems whatsoever.
                    I didn’t just get a letter saying my power prices were going up again, either.

                    • insider

                      But it’s state providers that are putting prices up just as much as private ones. It’s not a straight line relationship between private ownership and pricing. I looked at the long term prices on the MED site and tehy have been up under all regimes over the last 35 years – about 2.8% a year which was less than inflation for much of that time. And, Like it or not, they did go down after bradford’s reforms, but again I think the relationship is not that simple, even though Max would like to claim it was.

                    • McFlock

                      That’s in 2009 prices, i.e. inflation adjusted?
                      Basically, I see an oil shock, muldoon (bless his cotton socks 🙂 ), a bump in Lab4, then residential price increases subsidising commercial price cuts. Similar under Lab5, but with a bump for residential and commercial in the early 2000s which is I assume the “oh shit we broke it” period, and then about the same level of cross-subsidisation as before.
                      But the point is that 100% ownership gives the govt the power to publicly and honestly say “this is a shitty situation. Fix it, even if it hurts your profits”.

                    • KJT

                      Did you have your ears disconnected when the ROI and dividend to the Government for SOE power companies was gerrymandered to allow the newly privatised companies to compete.
                      Joyce has already stated that this dividend requirement will be increased again to enable the next round of private shareholders to make money.
                      So much for the private sector being more efficient??

                    • insider


                      Similar but the 2011 version with 2010 prices. It’s in real prices. Is that inflation adjusted or dollar adjusted meaning 2009 dollars (not the same thing are they?)

                      Not sure about your commentary on the changes but you are effectively agreeing with me of a slow and relatively steady rise and countering your own view of skyrocketing prices. Note that retail don’t subsidise commericial; up until the mid 90s it was the other way round because MEDs were voted in and they rigged prices to gain votes. Retail rises then were a rebalancing. The 2000’s rises were driven by the increase in gas costs due to the redetermination of Maui reserves.

                      My point which I will reiterate is, how much of Telecom was 100% publicly owned when the govt told it to fix things? If that can be done to Telecom, and if price controls can be put on lines monopolies, why do you think it would be so hard for powercos?

                    • McFlock

                      It was intriguing that power prices were falling in real terms prior to our gloorious revolution in the 80s. And yeah, if 5 or 6% per annum – I think there was a 9% there somewhere – in 2009 dollars (inflation-adjusted vs “dollar adjusted”? What is the difference as a matter of interest) I think can be regarded as skyrocketing.
                       But as to the telescum vs powerco question, I think that the government had to wait until things lagged behind so badly that it justified trying to get it fixed. As opposed to taking a ore efficient, consistent long term view of keeping things on the right course, which is how things intrinsically necessary for NZ should be done.

                  • mik e

                    Insider trading BS again .The reason the network was run down was because Mad Max’s privatisation reforms lead to the disbanding of the planning arm of the old electricity dept .So no overall planing lead to these disasters no investment throuht out the nineties when National was in POWER Michael Cullen reinstated an infrastructure planning dept when he came to parliament.
                    Thank you Mad Max and National fore once again fucking up!

          • mik e

            Thats to make them more saleable you idiot.
            “Insider “trading its called

    • Gosman 3.4

      So why was this possibility not discussed in regard to Air NZ or is it only a problem with Power Companies?

      • Why do you think?

        • Gosman

          Because it really isn’t much of a problem probably.

          Essentially all this fear mongering that you lefties are doing looks a bit ridiculous when the chances of this happening are slim to non-existent.

          On top of that the Government of the day could just pass a law making any attempt to force them to do something they didn’t want to do null and void.

          • Frank Macskasy

            Because it really isn’t much of a problem probably.

            The majority would disagree with you on that point.

            “On top of that the Government of the day could just pass a law making any attempt to force them to do something they didn’t want to do null and void.”

            In which case, why did Key & Co state that they couldn’t stop the Crafar farm sales from proceeding, without opening themselves up to a lawsuit?

            Why do you think this government can pass laws in some areas – but not others?

            And you ignore the Treasury report which stated quite clearly,

            “Intitial public offerings (IPOs)

            Once a minority shareholding in each company is sold, the government proposes that the company will be governed in the same way as other listed companies and that they will be subject to the Companies Act 1993 and other relevant legislation, the NZX listing rules and the companies’ constitutions. The crown will not reserve any special rights to itself, except that it is still to decide whether it will a have any special power to approve the chairman of the Board, as it has for Air New Zealand.”

            • Gosman

              The majority didn’t vote in enough quantity to stop National from implementing their cornerstone policy did they. Anyway just because you potentially have a majority supporting something doesn’t detract from the fact you are scare mongering with little basis.

              • McFlock

                They did.
                You forget the rotten boroughs of Epsom and Ohariu distort the representation of parliament.

        • muzza

          Some people don’t and can’t think frank, that is the problem!

          As usual the craving that some here exhibit for the sell off of whats left of revenue genarating in NZ, is bizarre! Why would a country want to LOSE control of its abilty to produce energy, and have some degree of energy security, and price control inside its influence!

          There is no fear mongering, just an understanding that foreign ownership will take profits offshore, lead to a hamstrung government owner, and of course the unintened consequences that will inevitably flow outwards.

          “There isn’t much of a problem, probably” – THINK MUCH!

          Government passing laws against corporate interest – There is a novel thought. Why would we sell in the first place if we thought it might come to that!

          Why is selling such a good idea to these fools?

      • mik e 3.4.2

        because Air NZ is not a regular profit making business.It needs partners in the international airline business to be successful I thought you would Know all this being an international banker.
        Obviously just another one of your lies!

  4. KJT, Muzza…

    Indeed. The more we learn about the privatisation policy, the more “fish hooks” we find.

    It’s interesting that Treasury’s report on this issue was quite illuminating…

    “Intitial public offerings (IPOs)

    Once a minority shareholding in each company is sold, the government proposes that the company will be governed in the same way as other listed companies and that they will be subject to the Companies Act 1993 and other relevant legislation, the NZX listing rules and the companies’ constitutions. The crown will not reserve any special rights to itself, except that it is still to decide whether it will a have any special power to approve the chairman of the Board, as it has for Air New Zealand.”

    Source: http://media.nzherald.co.nz/webcontent/document/pdf/20125/Treasury%20asset%20sale%20draft%20document.pdf

    Interesting eh?

    • DH 4.1

      That’s not a fish hook. That’s full privatisation, no mixed ownership there. Just because Govt retain some shares doesn’t mean it isn’t being privatised. They really are deceitful bastards.

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