7. Hon DAVID CUNLIFFE (Labour—New Lynn) Link to this
to the Minister of Commerce
Did any members of the Securities Commission declare potential conflicts of interest in respect of the recommendation to place Allan and Jean Hubbard into statutory management; if so, on what date and in relation to what potential conflicts of interest?
Hon GERRY BROWNLEE (Acting Minister of Commerce) Link to this
No. One commission member raised a potential conflict of interest in relation to South Canterbury Finance. The commission considered that the circumstances did not disclose any conflict of interest. Legal advice sought by the commission confirmed that view. As the member will know, South Canterbury Finance is not and never has been in statutory management.
Hon David Cunliffe Link to this
I raise a point of order, Mr Speaker. The Minister has misquoted the question in two respects. Firstly, it asked whether any members of the Securities Commission declared potential conflicts of interest. He answered no to that question and then described one. Secondly, he talked about South Canterbury Finance going into statutory management, whereas the question asked about placing Allan and Jean Hubbard into statutory management. I ask that you ask the Minister to answer the question that was asked.
Mr SPEAKERHon GERRY BROWNLEE Link to this
Yes, it is, and the answer is quite correct. The question asked whether anyone declared a conflict of interest. That would assume that people were sitting at a proper meeting of the Securities Commission and made a declaration there. At no formal meeting was there such a declaration. I went on to explain that one commission member raised a potential conflict of interest in relation to South Canterbury Finance, such that the commission itself sought legal advice to confirm, ultimately, that there was no conflict. I am not trying to be clever; it is a matter of form. Was there a formal meeting at which a conflict was declared? The answer is no, but it is clear, from the answer, that the issue was raised.
Hon David Cunliffe Link to this
I raise a point of order, Mr Speaker. I do not wish to detain the House. It may be a semantic point, but the question was around a potential conflict. The Minister cannot answer no to that question and then say that there was a potential conflict.
The Minister explained his answer and I am very grateful to him for that. He said no in relation to the specific question asked, and then added a little further information about another potential conflict of interest relating to another interest.
Hon GERRY BROWNLEE Link to this
There is no intention here to create any murk or otherwise. The question asked whether any members of the Securities Commission declared potential conflicts of interest. I assumed that meant whether anyone at a formal meeting of the commission declared a potential conflict of interest. The answer is no, but clearly the issue was raised at a subsequent point by a member. It was checked to see whether there was a conflict, and the legal advice was that there was no conflict. It is somewhat pedantic. If members would prefer me to answer as to whether someone declared a potential conflict of interest, I am in difficulty. The member, I understand, questioned whether there was one, rather than whether someone declared that there was one. I think that that is a fine and important point.
Normally I would not spend any time at all on this, but this is a primary question, and the Minister has had some time to prepare the answer for it. The question is fairly clear: it talks about the declaration of a potential conflict of interest in respect of the recommendation to place Allan and Jean Hubbard into statutory management. It specifically mentions those two people and asks on what date and in relation to what potential conflicts of interests. That question is clearly answerable.
Hon GERRY BROWNLEE Link to this
I am advised that the answer is no. There was no formal declaration of potential for conflict, but there was clearly—and I am not familiar with the circumstances—a discussion. Everyone knows that. The most salient point is that legal advice was sought by the commission, which confirmed that there was no conflict of interest. Was there a declaration? No, there was no declaration. A question was asked whether there was a conflict.
Hon David Cunliffe Link to this
Can the Minister confirm that the question or declaration in relation to Mr Botherway’s brother’s business being put into receivership by Allan Hubbard and South Canterbury Finance occurred only after written parliamentary questions regarding the potential conflict of interest were raised by my colleague the Hon Ruth Dyson, and that the Chief Ombudsman is now investigating the adequacy of that conflict management?
Hon GERRY BROWNLEE Link to this
I can confirm that the Securities Commission member concerned raised the potential conflict of interest in respect of South Canterbury Finance on 24 June 2010. I can further confirm that legal advice has made it very clear that the member did not have a conflict. I can confirm that the Ombudsman is looking into this matter, although I have no responsibility as a Minister for that.
Hon David Cunliffe Link to this
I seek leave to table a letter from Beverley Wakem, the Chief Ombudsman, dated 1 September 2010, confirming that that matter is under investigation.
Hon David Cunliffe Link to this
Has Mr Botherway declared any potential or perceived conflict of interest in relation to his former business relationships with Mr George Kerr—for example, at Spicers Portfolio Management, Brook Asset Management, Sterling Grace, or Tempus Capital—given that Mr Kerr is a director of the Torchlight Fund, the largest single beneficiary of the bail-out of South Canterbury Finance, which was repaid in full, plus interest, plus fees described by the New Zealand Herald as usurious?
Hon GERRY BROWNLEE Link to this
I am unable to confirm that, but I can say that clearly the incident that was referred to in part of the primary question has caused the commission to be mindful of these things, and has caused the commission to seek legal advice on this particular matter. I am also certain that in light of the Ombudsman’s investigation into this matter, parties concerned will be acting with all caution and prudence.
Hon David Cunliffe Link to this
Has Mr Botherway declared any potential or perceived conflicts of interest in relation to his former professional and business relationship with Mr John Key, for whom he was reportedly recruited as his deputy at Bankers Trust; if not, does the Minister think it would have been prudent for the country’s most senior regulator to make such relationships fully transparent?
Hon GERRY BROWNLEE Link to this
I am unable to confirm that, but I can tell the member that one of my best friends was the first person ever to employ Mr Key after he left university. If that disclosure is helpful I am pleased to have made it.