Thursday, January 26, 2012

The enemy of my enemy is not my friend

During the election campaign, Labour came out heavily against foreign asset sales. So its entirely natural that they'd oppose the Chinese bid for Crafar Farms. Unfortunately, they're supporting its competitor, Michael Fay, instead.

Think about that. Fay - a former tax exile - is one of the worst villains of the 90's. Here's what Wikipedia has to say about him:

Michael Fay and David Richwhite are best known for gaining wealth in a series of loosely regulated privatization and asset swapping transactions that occurred between 1986 and 1993 - involving their companies European Pacific, Capital Markets and Fay Richwhite and the former state owned operations Bank of New Zealand, Tranz Rail and Telecom New Zealand, and the pension accounts associated to them.

Deals were done in which Fay and Richwhite personally gained over half a billion dollars (2.2% of NZ's 1985 GDP) from a country on the verge of bankruptcy, while their minority shareholders lost $277 million, by in part imitating the offshore financial practices outlawed in Europe and America 30 years prior.

One notable transaction among these actions was their role as advisors to the government on the sale of New Zealand Rail Limited to overseas interests; a deal in which Fay and Richwhite later brought 31.8 per cent of the shares, and were subsequently investigated for insider trading by NZ authorities.

This is a man who specialises in using political influence to gain strategic assets, then loads them with debt, pays himself an enormous "special dividend", and flicks them off. And he is likely to do exactly the same thing to Crafar Farms. The net result is that we'll be having this same debate about Chinese ownership in a year or two, while Fay laughs all the way to Switzerland. Supporting any business deal by such a man is a mistake. The only thing any Labour politician should be talking about with Fay is how we can get our money back from him.