Written By: - Date published: 9:00 pm, October 26th, 2008 - 142 comments
Categories: corruption, election 2008, john key, national, slippery - Tags: corruption, Flectcher Challenge Forests, shares, tranzrail
When the Tranzrail shares came to light, Key was asked whether he had any other undisclosed shares entailing a conflict of interest. He said he didn’t. That was not true.
National Party Leader John Key failed to disclose his conflict of interest arising from his share holding in Fletcher Challenge Forests while using his privileges as an MP to obtain information and make public statements relevant to that company’s industry and its major contractual relationships with Tranzrail.
Research I conducted exclusively for The Standard shows Mr Key owned 40,000 F-class shares and 60,000 S-class shares in Fletcher Challenge Forests (which is now called Tenon) when he became an MP after the 2002 election. He owned these shares in his own name, not in a trust.
Standing Order 166 states that “a member must, before participating in the consideration of any item of business, declare any financial interest that the member has in that business.” In other words, conflicts of interest must be disclosed. It was violating this rule that got Key into trouble over his Tranzrail shares. And it is this rule that he has broken again by failing to reveal his FCF shares when talking issues that related to FCF’s share price.
Every time Key had a conflict of interest with Tranzrail he also had one with Fletcher Challenge Fletcher. FCF had a contract with Tranzrail for moving timber and pulp around its logging sites, milling operations, and to ports. Because of this major contractual arrangement, what happened to Tranzrail also affected FCF and vice versa (FCF needed that lease of Tranzrail stock to move its timber, the contract was a major revenue source for Tranzrail).
FCF was also part of the Rail Freight Action Group, which was campaigning for the Government to buy the rails off Tranzrail. FCF believed such a deal would improve rail services for its logging, boosting its profitability, and, thereby, its return to shareholders. Key asked a number of questions in his capacity on the potential for a government deal with Tranzrail.
The information Key sought by asking questions about the potential sale of Tranzrail could have been used by him to make a gain on both his Tranzrail and his FCF shares. His shares in FCF alone meant Key had an interest in Tranzrail’s ownership. This means each one of Key’s statements and the questions he asked as an MP relating to Tranzrail’s ownership also created a conflict of interest in relation his FCF shares, which he failed to disclose.
In March 2003, Key spoke against a Bill that removed the cap of $6,000 on redundancy payments, at the same time Fletcher Challenge Forests was laying off workers at two mills and planning further redundancies. Key failed to disclose his conflict of interest.
Key also spoke on the Te Uri o Hau Claims Settlement Bill. This Bill gave Te Uri o Hau ownership over Pouto forest and 45% of Mangawhai forest in Northland. The logging rights to these forests may have been held by FCF (FCF logged many forests in the region but I’m still trying to get the documentation to confirm they logged Pouto and Mangawhai). Here’s the exchange from Hansard, October 2, 2002:
Key: Jim Peters declared his ancestry and his conflict of interest, if there is any, in this settlement process. I am happy to declare I have none….
An Hon. Member: The member is absolutely positive?
JOHN KEY: I am absolutely positive of that.
Ron Mark: You don’t know what skeleton is in your wardrobe.
If FCF was logging those forests, Key had a very real conflict of interest. By denying it, he will have misled Parliament, a serious offence.
Key was a shareholder in FCF during each of these incidents. Each of these failures to disclose his conflict of interest is a breach of standing orders and could be grounds for Key to be brought before the Privileges Committee in the next term of Parliament.
Key did not sell his Fletcher Challenge Forests shares until June 2003, the same time as he sold his Tranzrail shares. He sold them in four parcels, on the 11th, 12, and 16th of June, for total of around $105,000 [share price]. As Key sold both his Tranzrail and FCF holdings at the same time, it may be that he sold his entire New Zealand share portfolio at this time This matches with his statement on Sunrise that he hasn’t owned any New Zealand shares since 2003. Why he chose to sell then and what other companies he held, we don’t know.
Key may have had other undisclosed conflicts of interest arising from shareholdings in other companies as well as Tranzrail and Fletcher Challenge Forests. My research was not, and could not be, a search of all New Zealand registered companies’ registers during the relevant period; only eight registers were examined. The fact that this search of just eight potentially interesting companies turned up another conflict of interest (and more information, which I will be releasing in due course) suggests that there is more waiting to be uncovered.
Key failed, on multiple occasions, to reveal his shares in Fletcher Challenge Forests while using his privileges as an MP to ask questions that were pertinent to the value of those shares. And he misled the public, just four weeks ago, when he claimed he had no more skeletons in his closet.