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CAN THIS
MAN BE
TRUSTED?
READ HIS
OWN LETTERS
FOR SHOCKING
INSIGHTS S-G David Collins
Wellington: 25 August 2007
We do not want to say too much
about the new Solicitor General
David Collins. It is far better you
see what the chief law-
enforcement officer of our fine
country is like by reading his
own words (with subsequent
commentary of course). READ
LETTERS
NATIONAL COURT NEWS :
dateline: November 2006
Michael Stiassny is seeking the
shelter of the New Zealand
Courts yet again for his role in
what is being recognized as the
largest tax scam in New
Zealand history, the $1.7 Billion
CWF forestry tax dodge.
The Inland Revenue
Department shut the tax dodge
down after nearly four years of
operation and ordered the
parties to pay back the taxes, as
well as millions of dollars in
penalties. The tax dodge
vehicle, CWF Holdings Ltd, was
then cast off into liquidation by
the perpetrators. The appoint-
ment of the liquidators by
Stiassny and others was
subsequently challenged in the
High Court at Auckland by Trinity
Foundation Limited, a charitable
foundation administered by the
Anglican Church that was used
by Auckland Solicitors Bradbury
& Muir as the cover for the tax
avoidance scheme.
Trinity claims not to have been
paid in excess of $12 million
owed it by CanWest, the local
division of the Canadian Media
conglomerate. Stiassny and
Grant Graham are alleged to
have breached their duties to
the company and engaged in a
breach of trust by acting
minimally in a de facto fiduciary
arrangement with CanWest.
In an appeal brought by Trinity,
and heard by the Court of
Appeal on 18 September 2006,
Trinity counsel Bruce Stewart
QC sought the right to pursue
Stiassny individually for his key
role in the failed tax scam,
noting that the current
liquidators are unlikely to do so
as they are beholden to
Stiassny and certain others
involved. As of this printing, no
ruling has yet come down from
the Court of Appeal. The IRD
has not legally prosecuted
those involved in the scheme.
Anonymity was granted as part
of a settlement reached.
Two of the three judges
considering the Trinity appeal,
namely Court of Appeal
President William Young and
Justice Terence Arnold, are at
the same time considering an
appeal on the papers for a stay
of a High Court costs ruling that
Stiassny secured against
Auckland businessman Vince
Siemer for an alleged violation
of a High Court injunction, an
injunction that Stiassny has
claimed prevents Mr. Siemer
from revealing information
regarding other dubious
accounting schemes that Mr.
Stiassny has been involved in.
In order to obtain the injunction,
Mr. Stiassny submitted an
affidavit to the Auckland High
Court on 8 April 2005 wherein
he swore that none of the
allegations Mr. Siemer had
made about him on the www.
stiassny.org website were true.
Stiassny then filed a $1.25
million defamation suit against
Mr. Siemer on 12 April 2005, as
he was required to do in
exchange for obtaining the ex-
parte injunction against Siemer,
but he has repeatedly failed to
advance his case against Mr.
Siemer since obtaining the
injunction.
On 6 October 2006, Stiassny
failed to comply with a court
imposed deadline that he
provide discovery in that case.
These matters are part of a
firestorm of controversy currently
surrounding Mr. Stiassny. Last
week, Stiassny refused to allow
media cameras into the Vector
Limited AGM held in Auckland.
The very next day Stiassny was
the catalyst for a raucous revolt
that disrupted the Auckland
Energy Consumers Trust AGM
and required the unsuccessful
intervention of security
personnel. Those who did not
realise Stiassny was in the
room had their attention
directed to the man wearing the
dark business suit and the
'Dumb-and-Dumber' haircut
sitting to one side of the room.
Stiassny was then whisked
from the building by Vector
staffers.
The AECT was the 100% owner
of Vector Limited until Chairman
Stiassny led a 24.9% sell-off in
the form of a public share
offering on the NZX exchange in
August 2005. The need to pay
down Vector’s ballooning $3.15
Billion debt – in part a result of
its contentious acquisition of
NGC the year before – was cited
at the time as a primary reason
why the public equity float was
necessary. Yet only 2% of the
debt was ultimately paid down
after the successful 25% share
float.
Mr. Stiassny has been publicly
claiming he grew Vector from a
$1 Billion company to a $5
Billion company in 3 years. At
the Auckland Consumers Trust
AGM much of the controversy
was directed at Vector’s claim
that assets had appreciated
17.9% in the last fiscal year and
that nearly $1.7 billion (or 30%)
of Vector’s current valuation was
in the form of “goodwill”. As a
comparison, Vector’s valuation
of its goodwill is now roughly
equivalent to the goodwill of the
Coca-Cola Companies at
US$1.2 Billion.
Local News: 26/7/06
Auckland judge prevents
the Auckland Coroner from
releasing his findings into
Robert Fardell QC's
suicide. The public were
again denied the right to know
the full circumstances
surrounding prominent
barrister Robert Fardell QC's
fatal fall from the 12 metre
high Takapuna Head cliffs on
11 December 2005 when an
Auckland judge ruled the
Auckland Coroner was
prevented from releasing his
findings until judicial review
proceedings are conducted.
This action follows months of
cover-up, where the last
person to see the defendant
alive (lawyer Christopher
Morris) refused to grant the
police an interview and the
family hired prominent
barrister Harry Waalkens QC
to cover up the suicide and
ensure the public inquest was
conducted in secret
(28/2/06).
Years of cronyism have
created a siege mentality that
pervades the Auckland
judiciary. Concerns are
rampant as to what secrets
Fardell may have wanted to
get off his chest before he fell
to his death and what damage
this may cause to the vested
interests within the provincial
and secretive court.
Several lawyers contacted
expressed grave concern that
there was no oversight or
accountability of judges and
this was yet another example
where the Court put the
protection of one of their own
before the public good and
interest. One called it "ugly"
and another said that it
demonstrates that the Court
operates first and foremost to
protect its favoured members.
Related News Links:
How MICHAEL STIASSNY
sold out his friend
Robert Fardell shortly
before he died. READ
MORE
Archive 22-6-06
Secret inquest into
death of Robert Fardell
exposed - In a dramatic
turnaround to initial
reports, the Auckland
Coroner, Murray Jamieson,
today was forced to
concede Robert Fardell QC
did not drown on 11 Dec.
2005 while swimming but
instead suffered massive
injuries from a fall before
drowning. This ruling came
almost 4 months after an
attempt by the Coroner's
office to conduct the initial
public inquest (held on 28
February 2006) in secret,
in contravention of the
Coroner's Act 1988 that
required public notification.
Despite the body being
found on rocks at the base
of Takapuna Head cliffs on
Auckland's North Shore,
and no suspicions of
homicide, the Coroner did
not suggest death was a
suicide. Prior to this ruling,
Fardell family lawyer Harry
Waalken QC had
attempted unsuccessfully to
suppress all the inquest
evidence, arguing further
that the death could be
accidental and that the
Coroner had no standing to
suggest to the contrary.
This position ignored Mr.
Fardell having had to
breach a fence to reach the
cliff edge. Fardell was 52
years old when he died.
OUR COMMITMENT
TO ACCURACY: This
website is a public
service, dedicated to
providing information
and transparency
regarding activities
affecting Kiwis that are
not being accurately
reported elsewhere.
Where any specific
information on this
website is questioned
and supported as
inaccurate it is either
pulled off the site
immediately or space is
allowed for a qualified
response, prominently
placed on this site.
Anyone may report
errors or omissions
contained on this site via
the Contact link.
Submissions will be
promptly acknowledged,
examined for accuracy
and, if approved, will be
immediately changed or
added.
THE FACE BEHIND NEW ZEALAND'S
SKYROCKETING POWER BILLS
17 August 2009
Power rates have increased an astronomical 80% since Michael
Stiassny took over as Chairman of Vector Energy seven years ago.
During this short time, Stiassny's own compensation doubled and
it is reported he additionally received loan kickbacks on high risk
bridge financial products he took advantage of in his early days to
bring huge amounts of debt upon the company. This occurred during the disastrous growth and
acquisition phrase promoted by Stiassny with the help of his girlfriend Karen Sherry, an Auckland
Energy Consumer Trustee and current board member of Vector. This, in turn, forced Vector to sell off
its most prized asset (the Auckland to Wellington lines) to Chinese interests last year simply to keep
from having their credit rating downgraded. Such a credit downgrading would have likely resulted in
much of Vector's debt being called due, as well as certain interest rate increases on its massive
debt.
As a monopoly provider of power to Auckland and Wellington, the huge costs of these blunders by
the Board of Vector Limited had to be paid for by the unwitting consumer. It is safe to say that
electricity rates have increased at twice the rate they would have if Stiassny had not rose to a position
of power and pushed such a misguided strategy of acquisition and amassing huge debt on the
company.
Ms Sherry has the personally distinction of being sacked from the energy board after the massive
power outages in Auckland in 1999 were determined to be caused by neglect by the leadership.
The New Zealand government last week revealed the result of their own investigation that New
Zealanders are paying far more for power than they ought to be. The government did not reveal that
this was largely due to the gross mismanagement of Vector by Mr Stiassny. Mr Stiassny put this
once financially sound government owned enterprise into such financial straits that, even with the
sell off of his most valuable asset, the company's financial position is still in poorer condition than
when Stiassny took over the Chairmanship with the help of a few banker friends who like his
propensity to borrow money.
In 2005, Michael Stiassny was giving powerpoint presentations around the Country which falsely
showed he had increased the value of Vector from a $1 billion company to a $5 billion company in
three years. The deception was on the scale used by Enron executives leading up to its infamous
collapse.
In 2006, Mr Stiassny went on a public relations blitz viciously attacking Commerce Commissioner
Paula Rebstock for not allowing monopoly electricity provider Vector to raise its rates to its captive
consumers in Auckland and Wellington as much as it said it needed to survive. In a defeat of
consumer protections, Vector prevailed when it became obvious that Stiassny had created a
financial mess of the company that could not be solved without a public bailout.
As a result of its investigation and findings, the government has promised to implement steps to
lower power bills for consumers and resolve the persistent problem of power black-outs and brown-
outs. We will see.
NZ RACING BOARD LATEST CASUALTY OF STIASSNY'S
TOUCH
12 February 2009
Michael Stiassny was appointed Chairman of the New Zealand Racing Board in January 2007 by
then Government Racing Minister Winston Peters. Within weeks, Stiassny's Insolvency firm Ferrier
Hodgson (now Korda Mentha) was granted a long term consulting contract by the Racing Board.
A year later, www.kiwisfirst.co.nz editor Vince Siemer filed an Official Information Act request with
Racing Board CEO Graeme Hansen, seeking information on this 'consulting' contract. This contract
was in addition to the $57,500 the government body paid Stiassny for the 9 meetings he attended as
Chairman and the 10 subcommittee meetings he sat in on.
Mr Hansen responded with a copy of the 'consulting report' from Stiassny's firm, missing page 13.
Hansen refused further inquiry as to whether this omission was intentional. He also refused to
divulge how much Stiassny's firm was paid for this report - a 23 page "outline" in landscape format.
The entire report looked like a homework assignment by a University student. Not surprising, as it
turned out. It was revealed that a low level staffer no longer with Stiassny's firm put it together.
Several pages had fewer than a few dozen words on the page.
The outline very basically laid out the racing facilities of the 'Northern Region' in New Zealand with its
'discussion' recommendation that the Avondale race course be phased out in favour of greater
development of the Pukekohe course.
Another year on, the Racing Board is in financial turmoil. Turnover at the yearling sales in January
was down 33% and betting revenue on thoroughbred racing in New Zealand is down 7.9%. The
Annual Report is out and it appears Stiassny's firm was paid $95,000 for the outline report. An
insider has advised that the inquiries as to how much Stiassny was being paid for consulting has
curtailed further consulting pay outs to his firm, at least until the heat cools.
The 2008 Annual Report reveals another disturbing hallmark of Stiassny's stewardship; furtive
accounting. Few remember it was only 3 years ago that Stiassny - as Chairman of local lines
company Vector Limited - was on the lecture circuit telling NZ businessmen that he had grown
Vector from "A $1 Billion company into a $5 Billion company in 3 years". Anyone reading the Vector
financial statement could see at the time that it was a fabrication. The contrived valuation was
achieved through an inflated value for recently acquired subsidiary NGC, a hugely amassed debt and
almost $1.8 Billion in 'goodwill' alone. It was only when the company was forced to sell a
primary infrastructure (Wellington to Auckland lines) last year that few people noticed. The sale of
what many considered Vector's prized asset was borne of the 'innovative' debt structure imposed on
the company by Stiassny.
In the case of the New Zealand Racing Board, the 2008 Annual Report now states of its financial
investments "The New Zealand Racing Board has some concentration of credit risk with New
Zealand Banking Institutions. To minimise this risk, the New Zealand Racing Board’s policy is to
hold investments with Financial institutions with an adequate Standard & Poors rating".
This is a notable regression from the 2007 Annual Report which stated - "The New Zealand Racing
Board’s policy is to hold investments with institutions that have a Standard & Poor’s short term credit
rating of not less than A1+. Long Term investments require a Standard & Poor’s long term credit
rating of not less than AA-."
A forensic accountant interviewed for this story openly wondered what it would take for the public to
wake up to Stiassny's lack of business acumen. "He is, by most accounts, a very good and
successful insolvency practitioner. But it is not only a different skillset required to run a productive
enterprise, it is a completely different mindset. A liquidator is focused on the piecemeal sale of the
business assets."
Judge Mark Cooper’s Racist Invective Obscures Michael
Stiassny’s Control of Auckland Court
21 January 2009
Under cover of the Christmas Holiday, Auckland High Court Judge Mark Cooper ruled www.
kiwisfirst.co.nz editor Vince Siemer had defamed Auckland insolvency accountant Michael
Stiassny with publications on this website. Siemer was ordered to pay $920,000 damages, plus
unspecified Court costs, to Mr Stiassny. Mr Siemer was debarred from defending himself at the
‘trial’ by order of Auckland High Court Judge Judith Potter for refusing to pay Stiassny $200,000
in pre-trial costs ahead of trial.
A jury trial had earlier been denied Mr Siemer by Rodney Hansen J on Mr Stiassny’s application
that the nature of the defamation alleged was too complicated for a New Zealand jury to
understand.
It is understood that Stiassny and an employee of Korda Mentha (formerly Ferrier Hodgson) Alan
Garrett, walked into an Auckland Courtroom sometime in October and told Judge Cooper the sad
story of Stiassny having to tell his children that he did not do any of the things which had been
evidentially detailed on this site. Testifying his side of this bizarre legal escapade lasting over 3 ½
years, Mr Stiassny told the Judge he had spent over a million dollars in legal costs pursuing Mr
Siemer and that everything Siemer published about him were [CENSORED BY ORDER OF THE
NEW ZEALAND SOLICITOR GENERAL]. The testimony was not challenged by the Judge. No
reporters or public were present at this cosy meeting. No record other than the testimony was
apparently taken.
The undefended trial was the first time in the long court battle that Michael Stiassny had
appeared in Court. His appearance came after the Judge provided assurances that he would not
be cross-examined on his testimony.
The “official” summary of the events and trial lies in the often acerbic words of Justice Cooper
contained in his judgment dated 23 December 2008 which demonstrates how serious the Judge
considered the defamation to be. In paragraph [49] of that judgment Cooper quoted what he later
referred to as “clear instances of vile racist abuse [by Mr Siemer]”. In an apparent quote of Mr
Siemer, Cooper J stated – “Mr Siemer had referred to Mr Stiassny as a man with “exceptional
sway within the small Jewish community” and had commented that “when the judiciary
determines that a ruthless and powerful man’s reputation is so priceless…the Gestapo cannot
be far behind…people like Adolph [sic] Hitler….”.
The big problem is that Mr Siemer made no such racist remarks. Justice Cooper simply took
words from unrelated articles, juxtaposed them, then attributed the resultant fictitious quote to
Mr Siemer. Those articles remain in their unaltered state on the “interviews” page of this
website.
In one article which tracks Michael Stiassny’s questionable relationship with Robert Fardell QC
prior to Mr Fardell’s suicide in December 2005, Mr Siemer actual wrote “Stiassny, the man
(Fardell) had inextricably linked himself with, a man with exceptional sway within the small
Jewish community and certain sectors of the business community, had spurned his pleas for
help.”
An unrelated interview posted on the site had Mr Siemer answering the question “Can you really
argue with Judge (France’s) decision that one cannot put a price on Stiassny’s reputation
whereas the only thing you have lost is your expenditures on the billboard and website?” To
which Mr Siemer answered:
“Are you kidding?! The hearing was the same week as Anzac Day. Those gallant men and
women who paid the ultimate price for freedom would roll over in their graves to learn that a High
Court Judge played truth police while quashing freedom of expression. When the Judiciary
determines that a ruthless and powerful man’s reputation is so priceless that any evidence and
experiences that he claims undermines it must be purged and banned, the Gestapo cannot be far
behind. I am not being over-dramatic. Erosion of civil liberties is notoriously unremarkable
as it is occurring. If history has taught us anything it is that people like Adolph Hitler, Idi Amin,
Saddam Hussein and Pol Pot succeeded in committing horrendous crimes only through purges
of public opinion that conflicted with the reputation they sought to promote.”
Judge Cooper’s “quote”, which he attempted to attribute to Mr Siemer, is compiled from the
words highlighted in the actual publications (above). Perhaps more than anything else, this
example demonstrates the dangerous threat to justice and the rule of law posed by the lack of
judicial accountability in New Zealand.
At least three of Stiassny’s former lawyers – Patricia Courtney J, Rhys Harrison J, and Paul
Heath J – are active judges on the Auckland High Court. All three Judges played critical roles in
the lead up to the defamation ruling of Cooper J.
Four witnesses provided evidence that Patricia Courtney [CENSORED BY ORDER OF A NEW
ZEALAND JUDGE] . This was prior to Ms Courtney's appointment to Auckland High Court judge.
Shortly after being appointed an Auckland High Court judge in 2005,Paul Heath J presided over a
secretly lodged appeal which resulted in an order to suppress the Auckland Coroner’s findings
into the suspicious death of Robert Fardell QC on 11 December 2005. Stiassny was the trustee
of the Fardell multi-million dollar family trust (Dellfar Holdings Ltd) at the time of Fardell’s fatal fall
from the 15 metre high Narrow Neck cliff. Mr Siemer’s million dollar professional negligence suit
was specifically cited in appeal documents as the reason suppression orders were being
sought. Despite this, Mr Siemer was never notified of the proceedings.
The Judge directed the Fardell estate plaintiff, Auckland Coroner and Attorney General defendant
each be obscurely named on Court documents as “A”. This concealed the Court appeal
proceedings from public and press. Neither the Attorney General nor the Coroner were
represented at the secret appeal proceeding. Heath J permanently sealed the Court file of the
entire proceedings after ordering the Coroner’s public findings suppressed and sealed. Heath's
Court order was not publicly released until six months later (June 2007), ensuring the statute of
limitations for any appeal to his suppression order had elapsed.
As recently as March 2008, Rhys Harrision J ordered a Court case dismissed, and the file sealed,
which evidentially laid out [CENSORED BY ORDER OF A NEW ZEALAND JUDGE] with the complicity
of some Judges.
Two other Judges from the parochial Auckland Court believed to have past associations with
Stiassny – namely Graham Lang J and Rodney Hansen J – actively engaged in assisting the
powerful and litigious insolvency practitioner from the Bench. Former insolvency lawyer Graham
Lang J exempted Mr Stiassny from discovery obligations. Rodney Hansen J ordered Mr Siemer
to pay Stiassny’s legal costs in a successful application by Siemer’s lawyer Brian Henry in
September 2006.
Months later, Rodney Hansen quietly and inexplicably reversed his findings on the merits of
Siemer’s defence to agree with Stiassny that Mr Siemer’s defence must be restricted to the
subject of the compromise agreement he had signed with Stiassny in August 2001. In that
agreement Siemer agreed not to speak about [CENSORED BY ORDER OF A NEW ZEALAND
JUDGE].
Hansen J was the original trial judge but was replaced by Mark Cooper J without notice or
explanation. At the time of the ‘trial’ before Cooper J, Hansen J’s ruling was the subject of an
active appeal application before the New Zealand Supreme Court (SC62/2008 Siemer v
Stiassny). This Supreme Court application was subsequently dismissed without hearing on 19
November 2008. In dismissing the application, Justices Blanchard, McGrath and Tipping for the
Supreme Court ruled that conflict of interest by Hammond J in dismissing the appeal to the Court
of Appeal “could never have been responsibly alleged”. Since this ruling, a Special Leave
application to the New Zealand Supreme Court has been filed, with documents appended which
prove the Supreme Court was materially misled by Hammond J on the issue of his conflict of
interest and, moreover, that Judge Hammond is a material witness to [CENSORED BY ORDER OF
A NEW ZEALAND JUDGE].
In April 2005, Siemer reported on this website – with evidential detail using Stiassny own
documents – accounting scams which he considered Mr Stiassny widely used in his accounting
practice. [CENSORED BY ORDER OF A NEW ZEALAND JUDGE].
This was the end of the matter until Siemer noticed in a New Zealand Herald Article in late 2004
that Michael Stiassny was charging roughly $100,000 a month in fees over seven months for
liquidating Access Brokerage Ltd – with no end in sight. At the time Siemer expressed
considerable sympathy for the vast numbers of honest Kiwis who had superannuation invested
in Access Brokerage but who were powerless to stop Stiassny’s fee gouging. Like Siemer’s
own company years earlier, the Access liquidation was unique by virtue of its substantial cash
assets which were not encumbered by debenture. New Zealand law gives virtually no rights to
shareholders or beneficiaries against receivers or liquidators. Perversely, insolvency
practitioners are granted liberal use of the shareholder assets to finance defence against any
legal challenges from aggrieved shareholders. [CENSORED BY ORDER OF A NEW ZEALAND
JUDGE].
Vector Limited in Struggle over Massive Debt Brought on by
Stiassny.
25 March 2008
Embattled Chairman Michael Stiassny looks for help from his mates in government to cover up
his mismanagement of electricity and gas provider Vector Limited. See www.vectorlimited.co.nz
THE NEW ZEALAND ATTORNEY GENERAL NAMED AS
DEFENDANT IN STIASSNY CORRUPTION ACTION
10 January 2008
In a move that has resulted in New Zealand Judges' demanding the Auckland High Court
Registrar find a way to reject a court action that exposes serious Court corruption so a judge will
not have to, High Court Registrar Tony Mortimer attempt to follow the order by replying a day after
filing "I have now had the chance to further peruse your 9 January statement of claim, and I find I
am unable to determine that the document meets the requirements of rule 108." Brilliant. The
Registrar has said that he is unable to find fault but still 'suspects' the filings may not meet rule
108. Rule 108 states the claim must provide sufficient information to be answerable. Read for
yourself why case CIV2008 404 0104 is writing a new chapter in exposing judicial corruption of
the 'old-boys' system. Videotape of Registrar Tony Mortimer acting unlawfully coming to
YOUTUBE soon.
READ COURT FILINGS
VECTOR AGM A LESSON IN CORPORATE TERRORISM
20 October 2007
Amid hired security forces that rivaled that of a traveling head of state, Vector Chairman Michael
Stiassny threatened looming electricity infrastructure cutbacks and looked to blame Vector’s
lackluster business performance and its huge and mounting debt on government regulators
during the company’s annual general meeting yesterday. About three hundred people attended
the gathering held at Ellerslie Event Centre. At least two shareholders were prevented from
attending by Russell McVeagh solicitor Michael Heron who said he had orders from the board of
directors to instruct security staff to prohibit these shareholders from entering.
In a scene reminiscent of Jonestown (the former Jim Jones sect compound in Guyana infamous
for murder and mass suicide) the Chairman commenced the meeting by pointing out all the exits
before launching into claims that the company was under siege from the Commerce
Commission. Security guards stood ominously at the doors as he spoke. Cameras were not
allowed in. He wasted no time telling shareholders that this regulatory environment singularly
threatened their investments. In a salvo fired at consumers he warned the company’s future
investment into electricity and gas supply infrastructure was also at risk. Both Stiassny and
Acting CEO Simon McKenzie stressed the uncertainty and unpredictability of the regulators as
the true source of Vector’s financial woes.
Vector’s financial troubles are no small problem, not simply for the investors but also the
regional consumers who have seen the company’s debt skyrocket over the last few years to a
current $3.127 billion – up $46 million from last year despite selling off nominal assets. In order
to maintain the dividend payment to shareholders this year, retained earnings went into negative
territory. The monopoly utility also has $1.6 billion in goodwill that it has been unable to
significantly write down due to its perilous financial position. This overall financial scenario is
now being used to pressure the regulators into letting Vector charge power consumers more
than the Commerce Commission has said they are entitled to do.
Two years ago Stiassny was proudly telling public meetings that he was responsible for a half
billion dollar unrealized capital gain on the acquisition of NGC by Vector. If true, Vector could sure
stand to capitalize on this gain now. However, as with much that comes from Stiassny, this was
part arrogant bluster and part accounting parlor tricks serving to pass as accepted fact.
Nevertheless, the real story is the substantial debt that the company took on board at the time of
this purchase and which it now is struggling to discharge. The company has recently looked
hard at selling off assets to get its debt ratios down to reasonable levels and its precarious BBB+
(with negative outlook) credit rating up.
Although the investors were generally unhappy, the Chairman and acting CEO were reasonably
successful in diverting attention away from Vector’s recent management chaos. Three directors
resigned en masse within the last year and both the Chief Executive Officer and Chief Financial
Officer abruptly resigned five months ago. Director Karen Sherry, a lawyer and political
appointee with little business experience had been put in charge of risk assessment for Vector
in the midst of this drama.
Vince Siemer was one shareholder unlawfully prevented access to the meeting. Stiassny filed a
$1.25 million defamation claim against Siemer two and a half years ago but has done virtually
nothing to advance the matter since. In July of this year – when Siemer was on a two week trip
overseas – Stiassny was able to get a High Court order from Justice Judith Potter that debarred
Siemer from defending his defamation claim. This issue is now before the Court of Appeal. For
two months the Court of Appeal has failed to schedule a hearing citing the large number of
appeals Siemer has filed as one reason for the delay. Potter was deeply involved with the
Electricity Commission before her appointment as judge and has openly defended Stiassny in
court. Three of Stiassny’s former lawyers now sit as High Court judges. The judge that granted
Stiassny his injunction against Siemer is a former chambers’ partner of Stiassny’s current
lawyer Julian Miles QC.
Siemer, who has a bachelors degree in industrial relations and an MBA from Washington
University in the United States and has run successful companies abroad, wanted to ask the
directors questions regarding the goodwill, debt covenants and foreign currency risks. In being
denied entry into the meeting, Siemer drew a parallel with attempts to silence critics of ENRON
ten years ago. He considers it is no accident that no one on the Board other than Chairman
Stiassny has comprehensive accounting or finance experience and has made a written request
of each director asking them whether they personally agree with the company’s current financial
statements. Siemer views the recent move to appoint Hugh Fletcher (husband of the Chief
Justice of the Supreme Court) a director of Vector is little more than a political pressure move.
Hugh Fletcher’s own business background, while extensive, is uninspiring. Excluding Stiassny,
the current directors of this $4 billion dollar essential service provider average less than a year
on the board.
FREE SPEECH CASE THROWN OUT BY NEW ZEALAND
SUPREME COURT
Wellington, New Zealand 21 August 2007
In a move that confirms New Zealand has taken its justice system to the dark ages with the
formation of a Supreme Court two years ago, Justices Tipping and McGrath - speaking for New
Zealand's Highest Court - refused to hear an appeal where High Court Judge Judy Potter ordered
the editor of www.stiassny.org sentenced to six weeks in the notorious Mr. Eden maximum
security prison for merely publishing this site. The official charge imposed by Judy Potter was
"conspiracy to defeat the cause of justice" which seemed Freudian given Ms. Potter's refusal to
allow accurate recording of the proceedings, her disallowing cross examination of witnesses
against the accused, conducting part of the proceedings outside the presence of the accused
and his lawyer, making multiple findings of 'beyond reasonable doubt' based on untested
hearsay evidence and refusing to recuse herself where both the accused and his lawyer had
formal complaints pending of judicial misconduct against this judge - on separate matters -
including ruling on behalf of her brother-in-law in a case without disclosing her relationship to her
brother-in law litigant.
The NZ press is largely forbidden from publishing stories of judicial misconduct and, where they
do, the suspect judges are granted name suppression. Tony Stickley with the New Zealand
Herald informed the editor of Kiwisfirst that even when the Herald is correct in its reporting, the
Court awards a hundred thousand dollars in costs against them that they cannot afford.
Fundamental law violations by judges have become commonplace since New Zealand abolished
the Privy Council in England as an impartial appeal Court in favour of the newly formed 'Supreme
Court' in 2004. At the time there was widespread concern among New Zealand's lawyers that
such a move would promulgate up the ladder the 'old-boy's network' favours that had made a
cesspool of established law in the lower courts. Key lawyers accurately pointed out the
tremendous number of NZ Court cases that had been overturned as proof that the Privy Council
was needed to instil discipline in a judiciary that had become corrupted by special interests. This
concern was validated by New Zealand's closest ally when, shortly after the Supreme Court was
formed in 2005, Australia refused to extradite two defrocked priests to stand trial in New
Zealand, saying flatly this refusal was because they were unlikely to get a fair trial here. Two
months ago the Privy Council issued its last New Zealand Case ruling, overturning the conviction
of David Bain for murder due to fundamental failures by the New Zealand Courts in following due
process procedures. When Kiwis generally are respected the world over for their ingenuity and
honestly, this embarrassment is a tremendous blow to national prestige.
Since the abolishment of the Privy Council as an independent judiciary, New Zealand has lost
considerable status among law-respecting democracies. Economically, many international
businesses (sensing the legal risks) have shunned having operations in New Zealand. A large
number of New Zealand companies have quietly moved their operations offshore. Most Kiwis
point to the new Chief Justice Sian Elias' husband Hugh Fletcher being one of New Zealand's
most connected businessmen as proof that an impartial Supreme Court is an impossibility in, at
least, commercial cases. Even this damning indictment neglects the greatest threat to natural
justice imposed by its formation. For example, it is doubtful that the two Justices rejecting
freedom of expression in this case would pass muster for appointments in any other country.
Euphemistically called 'constructionists' Justice Tipping and McGrath have both worked to
create their personal brand of English law in the South Pacific, only to take the Country on a wild
ride in the process. Three years ago, Justice Tipping unsuccessfully tried to create a new tort
(the Hosking case) that would make it illegal to take photographs of people in public. As a Court
of Appeal judge, McGrath gave vitriolic speeches about how lawyers needed immunity from
negligence lawsuits by their clients. Fortunately, his was an isolated voice, but the telling part is
that he was the member of that court to be appointed to the New Supreme Court.
In rejecting the appeal, the Supreme Court said the trial judge legally used her discretion. On the
underlying issue of Freedom of Expression and the Court of Appeal's refusal to consider this
legal guarantee despite certain legal precedent that they must, Justices Tipping and McGrath
cited their own discretion to have the Supreme Court not consider this thorny issue.
The editor of this website has vowed to fight on and has lodged a complaint on his imprisonment
with Amnesty International and the United Nations Council on Human Rights.##
14 April 2007
WHY IS THIS MAN'S NOSE GROWING?
In April 2005, Michael Stiassny was a desperate man. Sure, he
was pulling down $7 million dollars plus a year from his insolvency
practice and another $1 million dollars or so a year from his
various directorships, but the house of cards that provided this
substantial booty was about to collapse. [information blocked
by order of theNew Zealand Courts].
Moreover, this [blocked by order of the New Zealand Court] was
able to financially bilk companies - was coming back to haunt the
once venerated insolvency practitioner due to [CENSORED BY ORDER
OF A NEW ZEALAND JUDGE] in Auckland and a website being
launched.
With so much at stake, Stiassny had to act quickly. He hired top
lawyer Julian Miles QC, chairman of Shortland Chambers (where
many of the current judges on the Auckland Court hail from),
to obtain an injunction shutting down the website and billboards.
Paying Mr. Miles $900 per hour (not an exaggeration; actually $900.00/hr) was not
enough though. Stiassny was required to state in a sworn affidavit that the allegations
on the website against him were untrue, this in order to enable Mr. Miles to work his
magic with his fellow judges. Stiassny's already large nose grew a little longer.
For a time, this strategy worked. Mr. Miles was able to get then High Court justice Ellen
France to issue an injunction that decreed there was no reasonable defence of truth to
allegations against Staissny despite the incontrovertible [CENSORED BY ORDER OF A
NEW ZEALAND JUDGE], ordering that the billboards and website must be shut down to
protect Mr. Stiassny's reputation. For her role in what affects every New Zealander,
Justice France was properly rewarded. But to be fair to the judge, she also honestly
thought that would be the end of the matter and that her judicial transgressions were
justified because she was preventing what could very well result in a catastrophic blow to
the financial markets. Certainly, she rationalized, Mr. Stiassny's seemingly [blocked by
the New Zealand Court] did not extend to public utility Vector Limited, the monopoly
electric utility of which Stiassny was chairman and which also was at the time deeply
involved in a complex and expensive acquisition and public share float. Better, she
thought, that a private word be taken up with Stiassny to ensure this was not the case.
Hence, Stiassny had to lie again and, like Pinocchio, his nose grew a little longer.
No doubt this is where Judge France's inexperience (on the bench one year) and
immaturity showed. Before her judicial appointment Ellen France had never been
anything other than a political bureaucrat. She was too trusting - some would correctly
say intimidated - by the likes of Mr. Stiassny and Mr. Miles and she wanted to believe
that operating outside the law in this case was justified. But once having made her
decision, it was not a case of misinterpretation of law or facts that regularly can be
expected to resolve itself in the higher courts. What Ellen France did was a clear breach
of her judicial oath and her judicial colleagues knew full well that risk of her abuse of
power being exposed posed a huge dilemma for the Court as a whole. She needed to be
personally protected from what clearly was a lapse in personal character.
The next stage in the legal challenge was quite different. At the Court of Appeal, the
case fell into the lap of a close personal associate of Stiassny, Justice Robert Chambers.
Chambers, a much more intellectual judge, albeit corrupt, saw immediately that Justice
France's decision was untenable. He needed to re-write history in order to [CENSORED BY
ORDER OF A NEW ZEALAND JUDGE]. And what Chambers did was pure genius. He refused
to overturn France's decision and even refused to address the validity of the points of
appeal, choosing instead to say the matter was a contractual dispute that singularly
warranted dismissal of the appeal and maintaining of the injunction. But Chambers J
had a further problem. The course he embarked on contrasted with the Ellen France
judgment and was not a legal point cross-appealed. Consequently, Justice Chambers
audaciously wrote that by ruling this way he was merely agreeing with what Justice
France thought - despite the fact that Justice France's judgment said the opposite on this
point. And this is when all hell broke loose in the Court.
Now both Justice Chambers and Justice France had crossed the line. What happened
next is a testament to the reality that judges, with few exceptions, are lawyers with a
past: lawyers who are additionally not given to allowing the skeletons of their fellow
judges being exposed when it could very well lead to their own skeletons being exposed.
This is a particular risk and concern in the cloistered Court setting where it is common
knowledge among judges what the others had for lunch, let alone what bribe they took in
1988. It is against this backdrop that the President of the Court of Appeal, Willy Young,
a lawyer with his own sordid past, became intimately and irreversibly involved. see
related story It is not that Will Young is incapable of being a decent and honest judge so
much as the fact that his own history now prevents him from preaching morals to the
judges he now oversees. The reality is that they would simply laugh at his hypocrisy. A
court insider has revealed that it is his immoral vulnerability that was instrumental in
Willy Young's appointment as President of the Court in 2006. In the democracy of the
corporate world, leaders are often chosen for their inability to wield too much power. So
it was with Will Young.
There is no particular fondness between Will Young and Robert Chambers, but their
fates were by now inexplicably linked. In an appeal on 8 February 2007, Will Young
presided over another legal challenge that not only laid bare the deceptions of Robert
Chambers and the breaches by Ellen France but, perhaps more importantly, revealed
incontrovertible evidence that Mr. Stiassny lied under oath when he swore an affidavit
that, among other things, said he [CENSORED BY ORDER OF A NEW ZEALAND JUDGE] and the
attempted cover-up was working as planned. Another lie, and Stiassny's nose grew
longer still.
On 4 April 2007, President Will Young of the New Zealand Court of Appeal ruled that
despite all this evidence, despite the unchallenged evidence of 9 witnesses who attested
to judicial impropriety that included conducting court proceedings ex-parte and the
oppression of witness cross-examination, and despite irrefutable evidence that the
injunction was improperly obtained and issued, he saw no basis for the Court to take
action. In doing so, Justice Young may have protected Stiassny and his fellow judges but
it is too early to tell whether, and to what extent, his actions have harmed the Court's
reputation and New Zealand as a whole. In the meantime, Stiassny's nose keeps growing
and he gets still fatter financially gouging at the public trough and at the expense of so
many hard-working and honest Kiwis.# See Related stories
STIASSNY IN FIRING LINE 23/12/06
Michael Stiassny has hit a rough patch in 2006. He was
kicked off the Met Life board, forced to resign as chair of
Metro Water and witnessed the only 3 directors with business
skills abandon the Vector board because he refused to resign
from that board two weeks ago. At the same time, Vector management has
revolted at Stiassny's specious public claims and promises of strong financial
performance at Vector, coupled with his demand that Vector CEO Franklin and CFO
Peter Fredricson then find a way to produce the numbers he has publicly claimed. CEO
Mark Franklin in particular has had several confrontations with Stiassny over his
belligerent personal style and inverted business approach since being recruited from
Australia two years ago. In addition to almost doubling his own pay, Stiassny had to
seek approval of a pay package approaching a million dollars per year in order to placate
Franklin and thereby prevent an open and nasty revolt.
Then there was Stiassny's declared war on the Commerce Commission last winter over
the Commerce Commission's stated intention of taking over Vector (an electricity lines
company) for unfair charging practices - coupled with Stiassny's threats of power
blackouts if the Commerce Commission did not back down
- as well as an active Court action that seeks to hold him
personally responsible for losses suffered by the Trinity
Foundation Ltd. in relation to a failed tax scam (see related
story left column). In addition to all this, [CENSORED BY
ORDER OF A NEW ZEALAND JUDGE]
At Vector, John Goulter, Greg Muir and Tony Gibbs
resigned from the Vector Board on 13 December 2006, Vector CEO Mark Franklin & CFO Fredricson
citing the direction of the company and Stiassny's refusal to step down as their reasons
for leaving. Their abandonment leaves Stiassny's girlfriend Karen Sherry and Shale
Chambers, both with limited business backgrounds and virtually no board experience,
and the vacillating Robert Thompson to govern the $3.7 billion dollar company (or $5.7
billion company according to Stiassny). Of particular concern to Vector investors was
Staissny's replacing the now departed Goulter as chairman of the Risk and Assurance
Committee with Ms. Sherry, virtually the only person who is blind to the risks imposed
upon the organization by Stiassny.
One of many immediate challenges Vector faces is how to write off $1.7 billion in
'goodwill'. While most insiders recognize the current board is ill-equipped to deal with
the challenges ahead, the board and management at Vector are taking some comfort
that, as a monopoly provider of an essential public service, the Auckland and Wellington
public have no option but to financially support the company until such time government
or regulatory authorities follow through and step in to safeguard the company and
consumers. Board member Shale Chambers, appointed only last August, is taking
additional comfort in the fact that he was not directly involved in the financial mess that
currently plagues Vector and has been kept in the dark in relation to the side deals
Stiassny and Sherry have made.
Meanwhile, two former Auckland Energy Consumer Trustees have asked the Labour
government to investigate Mr. Stiassny's conduct in relation to Vector. As if this was
not enough trouble facing Stiassny, consumer advocate Penny Bright of the public
watchdog Water Pressure Group was last week successful in advancing two Parliamentary
select committee inquiries into Stiassny's conduct at Metro Water when Maori MP and
party leader Dr. Pita Sharples tabled the complaints before Parliament. They include
petitions asking for a parliamentary investigation into overcharging and collection
practices that unlawfully targeted certain Metro Water consumers for bankruptcy.
In July, then Metro Water Chairman Michael Stiassny admitted that water charges in
Auckland were going up 9.7% instead of 3% in order that Metro Water could fund other
non-water related city expenditures, such as the $84,000 global working holiday that
certain Auckland Councilors took a year ago. This admission followed a 'public' Council
meeting held in May where Stiassny demanded the meeting go into 'confidential' session
before he would discuss such financial arrangements that violate the public charter. Ms.
Bright was arrested when she refused to leave the public gallery on the order of meeting
Chair and Auckland Councillor Vern Walsh that the public leave in response to
Stiassny's demand.
Ms. Bright and the Water Pressure Group's case was bolstered last week when Auckland
District Court Judge Nicola Mathers ruled that Metro Water has a legal obligation to
follow its dispute process. It is uncertain whether Metro Water lawyers Chapman Tripp
will be retained now that Staissny has been forced out. Earlier in the year Stiassny
ordered Chapman Tripp to bankrupt Water Pressure Group member Moli Tevaga over a
disputed $2,800 water bill rather than follow proper administrative procedures. Mr.
Tevaga was adjudicated bankrupt in August. Metro Water spent $15,000 in legal costs. #
RECENT NEWS: 3 OCTOBER 2006 In a rare and exclusive interview,
Business Editor Tim Hunter with the Sunday Star-Times talks with
Vince Siemer in regard to Vector Chair Stiassny's declared war on the
Commerce Commission and how Mr. Hunter has been stonewalled on
requests of Vector to provide support for Stiassny's claims READ
MORE
Archive News: NZ HERALD Interview 28/8/06 - On page one of the business section, reporter
Anne Gibson interviewed Michael Stiassny and talked about how Stiassny has declared war
on the Commerce Commission, the potential for power black-outs if Stiassny does not get his
way, what a good Jew he is (no joke) and she says Stiassny's "anxieties are the country's
concerns". READ MORE
Archive NEWS: 9/8/06 - Due diligence determined NGC purchase by Vector would
potentially create $7.9M and not the $500M that Vector Chair Stiassny claimed to public.
READ MORE
Archive NEWS: 6/8/06 - METRO-WATER raises water charges 9.6% to meet Council demand
for $18million profit READ MORE
Archive News: 22/6/06
Michael Stiassny took another step to fulfilling his promise to target his critics for bank-
ruptcy using public funds from Metro Water. Council provided approval for Stiassny's legal
targeting while Mayor Dick Hubbard ate cocktail sandwiches in the next room.
In a related story, Auckland City Councillor Bruce Hucker betrayed Auckland water
consumers by working in confidential sessions with Stiassny to raise water rates to Auckland
residents yet again. The proposed rate rises are designed to enable Metro Water funding of
other city expenditures such as city councillor trips abroad - expenses and trips that have
nothing to do with water - to the tune of $10 million annually. As many of the councillors
relied upon the apathy of the voters and chose not to fight it (in politics, counting favours is
the rule of the day), Councillor Neil Abel stood by his commitment to honour his oath of
office by objecting to these secret backroom deals that plague this administration and deceive
the public.
*************************************************************
Auckland City Council controls Metro Water Limited
SUBMISSION TO THE FINANCE and CORPORATE BUSINESS COMMITTEE
AUCKLAND CITY COUNCIL, Mr. Vern Walsh, Chairperson
Respectfully submitted by Vince Siemer, MBA 5 December 2005
Few things in life are as precious as a safe, reliable and affordable water supply. Next to air, water
is the most essential human need.
Michael Stiassny is the current Chairman of Metrowater. My recent research into this man’s
business background has uncovered behaviour so alarming that I am compelled to bring this
information to the Finance and Corporate Business Committee’s attention today. Mr. Stiassny’s
conduct as I have witnessed it is so egregious that I can state forthrightly –
In my informed and considered opinion Michael Stiassny is not fit to be chairman
of any public company, let alone a company that provides such an essential
human resource as water.
In support of my claim to the Committee today that Mr. Stiassny is not only unfit to remain as
Chairman of Metrowater, but that he may pose a threat to the safe, reliable and affordable supply
of water to the public given his personally callous nature and reckless management style, I will
draw a parallel to Mr. Stiassny’s stewardship of another monopoly – Vector Energy.
Stiassny has publicly represented that he has grown Vector Energy from a one billion dollar
company into five billion dollars within three years (Exhibit A). What he fails repeatedly to
mention is that Vector, under his stewardship, has amassed a horrendous debt of $3.1 Billion (from
$0.8 Billion just a few years ago).
RECKLESS FISCAL MANAGEMENT
Anyone can build a five Billion dollar house of cards if they are able to borrow enough money and
place an intangible value on the result. Stiassny is preaching how he built a five billion dollar
company but I submit to you that this is misleading and it minimally fails to acknowledge the
tremendous debt that the consumer ratepayers – not Stiassny – are ultimately responsible for.
This is particularly ominous in the case of Vector for several reasons:
1) Interest rates have risen recently, and are projected to go higher still, meaning the debt that
Stiassny created is increasingly encumbering the company. This increased cost must invariably be
borne by the helpless consumers or taxpayers.
2) In July, Standard and Poors put Vector on a negative credit watch, stating “The potential
negative outlook reflects the likely deterioration in financial metrics over the short to medium
term” (Exhibit B).
3) This negative credit watch was despite the company’s low-risk electricity network business,
the scale and diversity of its operations and its robust service area.
4) Vector announced a 30% decline in profit immediately after the public share offering, the
IPO date itself having been inexplicably moved up a week. Vector blamed the profit decline on
increased electricity transmission costs of 15% and increased electricity maintenance costs of 35%
over last year, and admitted this profit decline occurred despite higher selling prices being paid by
the consumers (Exhibit C).
So what would you do if you were Chairman of this teetering mess? We know what Stiassny did –
he threw a party! Despite credit rating pressures, huge debt becoming more expensive to manage
due to rising interest rates and significantly declining profits, Stiassny elected to increase dividends
to trust beneficiaries!
I submit to you today that this is not a rational action for a responsible manager, but it may help
explain how Mr. Stiassny’s official compensation has almost doubled in his short tenure at Vector.
Can the Auckland City Council afford to leave such a man in control of a valuable and necessary
resource as water?
Vector would be relatively fortunate if Stiassny’s poor fiscal management was its biggest problem.
At a recent Institute of Directors presentation, Stiassny claimed to have made Vector a Half Billion
dollar profit on the recent purchase of NGC alone! This pegging of value was apparently
determined by extrapolation of the sum value of the 24.9% initial public share offering at the peak
of its share-trading price after the recent float. To be sure, Mr. Stiassny’s short-term capital gain
claim had nothing to do with intrinsic value as determined by factors such as tangible asset value or
even anticipated return on investment. Mr. Stiassny’s half billion dollar short-term capital gain
claim was as bold as any Enron accountant – and equally alarming! And Stiassny is a Chartered
Accountant!
LEGAL INTIMIDATION AND BULLYING
And it gets worse. It is common knowledge that Stiassny initiated defamation proceedings against
one former trustee of the Auckland Energy Consumer Trust and took legal action against another
to prevent that trustee from voting against his retention of the Vector chairmanship. Consequently,
Mr. Stiassny was re-elected by only two of the five AECT trustees. Given Mr. Stiassny’s propensity
to use the legal bludgeon to beat his critics into submission, it is quite possible that at least one of
the two trustees who did vote for Stiassny might have done so for reasons having nothing to do with
his abilities.
Please make no mistake. Even if Stiassny has not threatened you with legal action, his legal
bullying tactics are tainting Metrowater (and Auckland City Council) directly. At the Institute of
Directors meeting noted above, Mr. Stiassny began his presentation by gloating he was in the
process of bankrupting the Water Pressure Group members protesting peacefully outside. Not only
was there no cause for this outburst, it made many people in the room understandably
uncomfortable. This behaviour was duly reported to the Energy Minister in a letter dated 25
October 2005 (Exhibit D). While Stiassny may be free to spend his own money in suing people who
criticize him, it will prove scandalous in my opinion if the Auckland City Council has authorized
Mr. Stiassny to use, in effect, water receipts (Metrowater funds) to legally bankrupt people he
disagrees with, and without legitimate cause.
I have been fortunate to travel many places in the world. It has always impressed me in my travels
that Kiwis as a group are the most resourceful and adaptable people on the planet and are
particularly astute at cutting through all the propaganda in accurately assessing a situation when it
comes to hand, and then taking the appropriate action. It pains me to see so many of these decent,
conscientious people bullied and taken advantage of by Mr. Stiassny while the elected
representatives with the power to cut off his legal war-chest wring their hands. Change is needed.
EXHIBIT A
INSTITUTE OF
DIRECTORS
in New Zealand Inc
Breakfast with Michael Stiassny
Topic: From a one billion dollar
to a five billion dollar business in three years - the evolution of Vector.
Michael Stiassny, BCom, LLB, CA, is a chartered accountant and senior partner of Ferrier
Hodgson & Co in Auckland.
He has significant experience in insolvency, investigating accountant work, company
restructuring and due diligence.
He is currently chariman of Vector, NGC Holdings Ltd and Metrowater Limited, as well as a
director of a number of public and private companies, including Metlifecare and The
Horticulture & Food Research Institute of New Zealand Limited. He is also a member of the
Auckland Branch Committee of the Institute of Directors.
When: Wednesday October 19th. 7.15am for 7.30am
Where: The Northern Club, Princes Street, City
Cost: Members $35 Guests (with IoD Member) $40
EXHIBIT B
VECTOR AND NGC PUT ON NEGATIVE RATINGS WATCH
By NZPA
Tuesday 28th June 2005
Standard & Poor's said today it was putting Auckland energy company Vector and NGC Holdings on
creditwatch with negative implications following Vector's announcement of a full NGC takeover bid yesterday.
Vector yesterday made a $3.40 per shares scrip and cash offer for the remaining 32.8% of NGC it does not
already own ahead of the float of a quarter of its shares that will raise $593 million.
NGC shareholders will be offered 78c cash and the rest in new Vector shares.
S&P said if the IPO and acquisition proceeded under the terms and conditions expected, then the ratings on
Vector and NGC were likely to be affirmed at BBB-plus with a negative outlook.
"The potential negative outlook reflects the likely deterioration in financial metrics over the short to medium
term." S&P said.
A major part of the decision to affirm the rating will be an assumption that Vector repays its equity bridge, either
from its IPO proceeds or other means, before the end of October 2005, the international rating agency said.
S&P said Vector's rating reflected the company's low-risk electricity network business, the scale and diversity of
its operations, its robust service area, and current regulatory price-path certainty.
"In addition, Vector is expected to benefit from the broadening of its business profile that results from assuming
full control over NGC's gas businesses, including its transmission and distribution business.
"These strengths are offset Vector's moderate financial profile, uncertainty regarding the level of Vector's final
shareholding in NGC, and consequently the extent of the integration that will ultimately occur and the
associated integration risks."
NGC's rating reflected its strong market position in gas transmission and distribution, its diversified revenue
base, and its moderate financial profile as well as Vector's creditworthiness. "These strengths are mitigated by
New Zealand's depleting long-term gas reserves and any implications arising from the current regulatory review
of gas transportation," S&P said.
Vector expects to be listed on the exchange in the spring with a capitalisation of up to $2.38 billion.
NGC shares jumped 22c to $3.782 yesterday and rose another 3c to $3.75 today - well above the implied takeover
price.
Last year, valuers Grant Samuel said the underlying value of NGC shares was in the $2.50 to $2.76 range.
EXHIBIT C
EXHIBIT D
25 October 2005
The Honourable Mr. David Parker
Minister of Energy
Parliament Building
WELLINGTON
Dear Mr. Parker
On 19 October 2005, Michael Stiassny gave a presentation at an Institute of Directors meeting at the Northern
Club in Auckland titled
“How to turn a one Billion dollar business into a five Billion dollar business in three years – the evolution of
Vector”.
As an energy consumer and ratepayer, I was extremely troubled by several aspects of Mr. Stiassny’s presentation.
These were:
1) Chairman Stiassny claimed to have increased the value of Vector a HALF BILLION DOLLARS solely
through his orchestration of the recent NGC buyout by Vector.
2) Under his tutelage Vector shareholders have enjoyed increased dividends.
3) While accepting regulation of monopoly enterprises is here to stay, Stiassny suggested the shareholders
and particularly those in attendance could appeal, as voters, to their politicians for less intrusive regulations –
regulations that tend to stymie growth.
The intrepid manner in which Mr. Stiassny bragged to the directors in attendance of adding a Half-Billion
dollars to the value of Vector through the NGC purchase alone was as frightening as it was unsound.
Minimally Mr. Stiassny confused the investor “honeymoon” after the recent float, combined with the market
hype that accompanied this launch, with intrinsic value. In point of fact, Vector has recently struggled, with a
30% annual profit decline over the last year, and NGC had been independently valued at substantially less
than Stiassny’s claim – yet neither garnered a mention by him. Additionally, Standard and Poor’s in July put
Vector on a negative ratings watch, saying “the potential negative outlook is a result of an expected decline in
financial metrics over the short to medium term”.
Perhaps most alarming is the fact that all these dour developments have occurred within Vector despite a
buoyant economy, increased selling prices and infrastructure changes at Vector.
That Mr. Stiassny raised dividends - and brags about this move - at a time of substantially declining profits, is
reminiscent of Nero fiddling as Rome burned. Whether any argument can be made for increasing dividends at
a time of drastically declining profits, it is not difficult to deduce the motivation for such a payout in these
circumstances.
Vector blamed the recent poor financial performance on substantially increased transmission and maintenance
costs under Stiassny’s stewardship. Not only does this speak poorly of Mr. Stiassny’s fiscal management – or
lack thereof – but it has profound and far-reaching implications to the consumers in particular and the
economy in general. This is because, unlike other businesses and industries where the consumer has a choice
and can avoid an inefficient and poorly run business that does not provide value for the money, Vector provides
an essential service in a monopoly environment. While the consumer and ratepayers are not compelled to foot
the financial bill for inefficiencies and poor performance in typical businesses (they simply choose another
supplier of the good or service) this cannot be said about Vector. In fact, any poor management performance by
Mr. Stiassny must invariably be financially underwritten by the unsuspecting and captive consumer and
ratepayer beneficiaries.
As a monopoly enterprise, this is particularly true if Mr. Stiassny is able to increase prices to offset poor
management of such a vital industry. In this scenario, the economy at large is directly and negatively impacted
through inordinate cost pressures on the productive sector and pressures upon inflation in general. Hence, Mr.
Stiassny’s mantra that regulation might be softened through the collective voice of the voters was most
disturbing.
I was deeply troubled by Mr. Stiassny’s presentation and posed the question to him at the conclusion of his talk
– a question made all the more relevant by my observation that such contrived and inaccurate financial
outlooks are typical of businesses under Mr. Stiassny’s stewardship that I have examined – to “name two
companies where your stewardship resulted in a tangible benefit to shareholders?”. In response, Mr. Stiassny
claimed that Vector was one such company – evidenced, he said, by the increased share value after the IPO
launch. I responded that this was a result of market hype – as he himself had conceded – and had nothing to
do with fundamentals such as return on investment. At this, Mr. Stiassny went silent and the moderator called
an end to the questions and the presentation. Mr. Stiassny was unable or unwilling to name one other
company.
As an interesting anecdote, Mr. Stiassny devoted the first five minutes of his presentation attempting to explain
away the half dozen protesters carrying placards outside the meeting, with messages such as ‘Stiassny the
Corporate Thug’ and ‘Dump Stiassny’, as people who were not paying their water bills – “not because they
couldn’t afford to but because they didn’t want to”. He went on to say slyly that this is why we have people
around “called lawyers” to deal with these people and that he was in the process of bankrupting these
protesters! His vitriolic rant at the protesters was not only an unwelcome concession to the effectiveness of their
peaceful demonstration but made many people in the room quite uncomfortable.
Few omens present themselves with such clarity. In my honest, informed and considered opinion Mr. Stiassny’s
presentation to the Institute of Directors breakfast meeting on 19 October 2005 portends an ominous threat to
the energy sector, as well as the economy in general. As such, it would be prudent for you to obtain a copy of
Mr. Stiassny’s presentation so that you might judge this for yourself. With all due respect, like the canary in the
coalmine, we can ill-afford to ignore the warnings.
One final note: Do not expect the Auckland Energy Consumer Trustees to provide a safeguard against Mr.
Stiassny. Tellingly, Mr. Stiassny was re-elected Chairman of Vector despite the fact that only two of the five
trustees voted for him. Mr. Stiassny had taken legal action against one of the trustees at the time of this vote and
had previously engaged lawyers to threaten suit against another trustee for defamation after she spoke out
against him. In this environment, it is also not difficult to see how two of the five might vote for him. (In the
interests of full disclosure, I will tell you that Mr. Sitassny has also filed a million dollar defamation lawsuit
against my company and me.) Moreover, it is my understanding today that Mr. Stiassny has all of the existing
trustees currently tied up by a confidentiality agreement that provides him legal recourse against them if they
speak out against him. If this is indeed the case, it is unreasonable to expect any of them to blow the whistle
until after this ship is well and truly sunk.
Sincerely,
Vince Siemer, MBA
27 Clansman Terrace
Gulf Harbour
Mr. Mark Weldon
Cc: The Hon. Harry Duynhoven New Zealand Share Exchange
Associate Minister, Energy PO Box 2959
Parliament WELLINGTON
WELLINGTON
AECT Trustees (Shale Chambers, M.
Mr. Bruce Sheppard Buczkowski, John Collinge, W. Kyd, K.
NZ Shareholders Association Sherry)
P.O. Box 6310 Faxed to 09 978 7516
Wellesley Station
AUCKLAND The Hon. Dr. Michael Cullen
Deputy Prime Minister
Mr. Tim Hunter Parliament
Editor, Sunday Star-Times WELLINGTON
P.O. Box 1409
AUCKLAND
Mr. Michael Stiassny
Vector Energy
Faxed: 09 978 7799
SKYROCKETING POWER BILLS
17 August 2009
Power rates have increased an astronomical 80% since Michael
Stiassny took over as Chairman of Vector Energy seven years ago.
During this short time, Stiassny's own compensation doubled and
it is reported he additionally received loan kickbacks on high risk
bridge financial products he took advantage of in his early days to
bring huge amounts of debt upon the company. This occurred during the disastrous growth and
acquisition phrase promoted by Stiassny with the help of his girlfriend Karen Sherry, an Auckland
Energy Consumer Trustee and current board member of Vector. This, in turn, forced Vector to sell off
its most prized asset (the Auckland to Wellington lines) to Chinese interests last year simply to keep
from having their credit rating downgraded. Such a credit downgrading would have likely resulted in
much of Vector's debt being called due, as well as certain interest rate increases on its massive
debt.
As a monopoly provider of power to Auckland and Wellington, the huge costs of these blunders by
the Board of Vector Limited had to be paid for by the unwitting consumer. It is safe to say that
electricity rates have increased at twice the rate they would have if Stiassny had not rose to a position
of power and pushed such a misguided strategy of acquisition and amassing huge debt on the
company.
Ms Sherry has the personally distinction of being sacked from the energy board after the massive
power outages in Auckland in 1999 were determined to be caused by neglect by the leadership.
The New Zealand government last week revealed the result of their own investigation that New
Zealanders are paying far more for power than they ought to be. The government did not reveal that
this was largely due to the gross mismanagement of Vector by Mr Stiassny. Mr Stiassny put this
once financially sound government owned enterprise into such financial straits that, even with the
sell off of his most valuable asset, the company's financial position is still in poorer condition than
when Stiassny took over the Chairmanship with the help of a few banker friends who like his
propensity to borrow money.
In 2005, Michael Stiassny was giving powerpoint presentations around the Country which falsely
showed he had increased the value of Vector from a $1 billion company to a $5 billion company in
three years. The deception was on the scale used by Enron executives leading up to its infamous
collapse.
In 2006, Mr Stiassny went on a public relations blitz viciously attacking Commerce Commissioner
Paula Rebstock for not allowing monopoly electricity provider Vector to raise its rates to its captive
consumers in Auckland and Wellington as much as it said it needed to survive. In a defeat of
consumer protections, Vector prevailed when it became obvious that Stiassny had created a
financial mess of the company that could not be solved without a public bailout.
As a result of its investigation and findings, the government has promised to implement steps to
lower power bills for consumers and resolve the persistent problem of power black-outs and brown-
outs. We will see.
NZ RACING BOARD LATEST CASUALTY OF STIASSNY'S
TOUCH
12 February 2009
Michael Stiassny was appointed Chairman of the New Zealand Racing Board in January 2007 by
then Government Racing Minister Winston Peters. Within weeks, Stiassny's Insolvency firm Ferrier
Hodgson (now Korda Mentha) was granted a long term consulting contract by the Racing Board.
A year later, www.kiwisfirst.co.nz editor Vince Siemer filed an Official Information Act request with
Racing Board CEO Graeme Hansen, seeking information on this 'consulting' contract. This contract
was in addition to the $57,500 the government body paid Stiassny for the 9 meetings he attended as
Chairman and the 10 subcommittee meetings he sat in on.
Mr Hansen responded with a copy of the 'consulting report' from Stiassny's firm, missing page 13.
Hansen refused further inquiry as to whether this omission was intentional. He also refused to
divulge how much Stiassny's firm was paid for this report - a 23 page "outline" in landscape format.
The entire report looked like a homework assignment by a University student. Not surprising, as it
turned out. It was revealed that a low level staffer no longer with Stiassny's firm put it together.
Several pages had fewer than a few dozen words on the page.
The outline very basically laid out the racing facilities of the 'Northern Region' in New Zealand with its
'discussion' recommendation that the Avondale race course be phased out in favour of greater
development of the Pukekohe course.
Another year on, the Racing Board is in financial turmoil. Turnover at the yearling sales in January
was down 33% and betting revenue on thoroughbred racing in New Zealand is down 7.9%. The
Annual Report is out and it appears Stiassny's firm was paid $95,000 for the outline report. An
insider has advised that the inquiries as to how much Stiassny was being paid for consulting has
curtailed further consulting pay outs to his firm, at least until the heat cools.
The 2008 Annual Report reveals another disturbing hallmark of Stiassny's stewardship; furtive
accounting. Few remember it was only 3 years ago that Stiassny - as Chairman of local lines
company Vector Limited - was on the lecture circuit telling NZ businessmen that he had grown
Vector from "A $1 Billion company into a $5 Billion company in 3 years". Anyone reading the Vector
financial statement could see at the time that it was a fabrication. The contrived valuation was
achieved through an inflated value for recently acquired subsidiary NGC, a hugely amassed debt and
almost $1.8 Billion in 'goodwill' alone. It was only when the company was forced to sell a
primary infrastructure (Wellington to Auckland lines) last year that few people noticed. The sale of
what many considered Vector's prized asset was borne of the 'innovative' debt structure imposed on
the company by Stiassny.
In the case of the New Zealand Racing Board, the 2008 Annual Report now states of its financial
investments "The New Zealand Racing Board has some concentration of credit risk with New
Zealand Banking Institutions. To minimise this risk, the New Zealand Racing Board’s policy is to
hold investments with Financial institutions with an adequate Standard & Poors rating".
This is a notable regression from the 2007 Annual Report which stated - "The New Zealand Racing
Board’s policy is to hold investments with institutions that have a Standard & Poor’s short term credit
rating of not less than A1+. Long Term investments require a Standard & Poor’s long term credit
rating of not less than AA-."
A forensic accountant interviewed for this story openly wondered what it would take for the public to
wake up to Stiassny's lack of business acumen. "He is, by most accounts, a very good and
successful insolvency practitioner. But it is not only a different skillset required to run a productive
enterprise, it is a completely different mindset. A liquidator is focused on the piecemeal sale of the
business assets."
Judge Mark Cooper’s Racist Invective Obscures Michael
Stiassny’s Control of Auckland Court
21 January 2009
Under cover of the Christmas Holiday, Auckland High Court Judge Mark Cooper ruled www.
kiwisfirst.co.nz editor Vince Siemer had defamed Auckland insolvency accountant Michael
Stiassny with publications on this website. Siemer was ordered to pay $920,000 damages, plus
unspecified Court costs, to Mr Stiassny. Mr Siemer was debarred from defending himself at the
‘trial’ by order of Auckland High Court Judge Judith Potter for refusing to pay Stiassny $200,000
in pre-trial costs ahead of trial.
A jury trial had earlier been denied Mr Siemer by Rodney Hansen J on Mr Stiassny’s application
that the nature of the defamation alleged was too complicated for a New Zealand jury to
understand.
It is understood that Stiassny and an employee of Korda Mentha (formerly Ferrier Hodgson) Alan
Garrett, walked into an Auckland Courtroom sometime in October and told Judge Cooper the sad
story of Stiassny having to tell his children that he did not do any of the things which had been
evidentially detailed on this site. Testifying his side of this bizarre legal escapade lasting over 3 ½
years, Mr Stiassny told the Judge he had spent over a million dollars in legal costs pursuing Mr
Siemer and that everything Siemer published about him were [CENSORED BY ORDER OF THE
NEW ZEALAND SOLICITOR GENERAL]. The testimony was not challenged by the Judge. No
reporters or public were present at this cosy meeting. No record other than the testimony was
apparently taken.
The undefended trial was the first time in the long court battle that Michael Stiassny had
appeared in Court. His appearance came after the Judge provided assurances that he would not
be cross-examined on his testimony.
The “official” summary of the events and trial lies in the often acerbic words of Justice Cooper
contained in his judgment dated 23 December 2008 which demonstrates how serious the Judge
considered the defamation to be. In paragraph [49] of that judgment Cooper quoted what he later
referred to as “clear instances of vile racist abuse [by Mr Siemer]”. In an apparent quote of Mr
Siemer, Cooper J stated – “Mr Siemer had referred to Mr Stiassny as a man with “exceptional
sway within the small Jewish community” and had commented that “when the judiciary
determines that a ruthless and powerful man’s reputation is so priceless…the Gestapo cannot
be far behind…people like Adolph [sic] Hitler….”.
The big problem is that Mr Siemer made no such racist remarks. Justice Cooper simply took
words from unrelated articles, juxtaposed them, then attributed the resultant fictitious quote to
Mr Siemer. Those articles remain in their unaltered state on the “interviews” page of this
website.
In one article which tracks Michael Stiassny’s questionable relationship with Robert Fardell QC
prior to Mr Fardell’s suicide in December 2005, Mr Siemer actual wrote “Stiassny, the man
(Fardell) had inextricably linked himself with, a man with exceptional sway within the small
Jewish community and certain sectors of the business community, had spurned his pleas for
help.”
An unrelated interview posted on the site had Mr Siemer answering the question “Can you really
argue with Judge (France’s) decision that one cannot put a price on Stiassny’s reputation
whereas the only thing you have lost is your expenditures on the billboard and website?” To
which Mr Siemer answered:
“Are you kidding?! The hearing was the same week as Anzac Day. Those gallant men and
women who paid the ultimate price for freedom would roll over in their graves to learn that a High
Court Judge played truth police while quashing freedom of expression. When the Judiciary
determines that a ruthless and powerful man’s reputation is so priceless that any evidence and
experiences that he claims undermines it must be purged and banned, the Gestapo cannot be far
behind. I am not being over-dramatic. Erosion of civil liberties is notoriously unremarkable
as it is occurring. If history has taught us anything it is that people like Adolph Hitler, Idi Amin,
Saddam Hussein and Pol Pot succeeded in committing horrendous crimes only through purges
of public opinion that conflicted with the reputation they sought to promote.”
Judge Cooper’s “quote”, which he attempted to attribute to Mr Siemer, is compiled from the
words highlighted in the actual publications (above). Perhaps more than anything else, this
example demonstrates the dangerous threat to justice and the rule of law posed by the lack of
judicial accountability in New Zealand.
At least three of Stiassny’s former lawyers – Patricia Courtney J, Rhys Harrison J, and Paul
Heath J – are active judges on the Auckland High Court. All three Judges played critical roles in
the lead up to the defamation ruling of Cooper J.
Four witnesses provided evidence that Patricia Courtney [CENSORED BY ORDER OF A NEW
ZEALAND JUDGE] . This was prior to Ms Courtney's appointment to Auckland High Court judge.
Shortly after being appointed an Auckland High Court judge in 2005,Paul Heath J presided over a
secretly lodged appeal which resulted in an order to suppress the Auckland Coroner’s findings
into the suspicious death of Robert Fardell QC on 11 December 2005. Stiassny was the trustee
of the Fardell multi-million dollar family trust (Dellfar Holdings Ltd) at the time of Fardell’s fatal fall
from the 15 metre high Narrow Neck cliff. Mr Siemer’s million dollar professional negligence suit
was specifically cited in appeal documents as the reason suppression orders were being
sought. Despite this, Mr Siemer was never notified of the proceedings.
The Judge directed the Fardell estate plaintiff, Auckland Coroner and Attorney General defendant
each be obscurely named on Court documents as “A”. This concealed the Court appeal
proceedings from public and press. Neither the Attorney General nor the Coroner were
represented at the secret appeal proceeding. Heath J permanently sealed the Court file of the
entire proceedings after ordering the Coroner’s public findings suppressed and sealed. Heath's
Court order was not publicly released until six months later (June 2007), ensuring the statute of
limitations for any appeal to his suppression order had elapsed.
As recently as March 2008, Rhys Harrision J ordered a Court case dismissed, and the file sealed,
which evidentially laid out [CENSORED BY ORDER OF A NEW ZEALAND JUDGE] with the complicity
of some Judges.
Two other Judges from the parochial Auckland Court believed to have past associations with
Stiassny – namely Graham Lang J and Rodney Hansen J – actively engaged in assisting the
powerful and litigious insolvency practitioner from the Bench. Former insolvency lawyer Graham
Lang J exempted Mr Stiassny from discovery obligations. Rodney Hansen J ordered Mr Siemer
to pay Stiassny’s legal costs in a successful application by Siemer’s lawyer Brian Henry in
September 2006.
Months later, Rodney Hansen quietly and inexplicably reversed his findings on the merits of
Siemer’s defence to agree with Stiassny that Mr Siemer’s defence must be restricted to the
subject of the compromise agreement he had signed with Stiassny in August 2001. In that
agreement Siemer agreed not to speak about [CENSORED BY ORDER OF A NEW ZEALAND
JUDGE].
Hansen J was the original trial judge but was replaced by Mark Cooper J without notice or
explanation. At the time of the ‘trial’ before Cooper J, Hansen J’s ruling was the subject of an
active appeal application before the New Zealand Supreme Court (SC62/2008 Siemer v
Stiassny). This Supreme Court application was subsequently dismissed without hearing on 19
November 2008. In dismissing the application, Justices Blanchard, McGrath and Tipping for the
Supreme Court ruled that conflict of interest by Hammond J in dismissing the appeal to the Court
of Appeal “could never have been responsibly alleged”. Since this ruling, a Special Leave
application to the New Zealand Supreme Court has been filed, with documents appended which
prove the Supreme Court was materially misled by Hammond J on the issue of his conflict of
interest and, moreover, that Judge Hammond is a material witness to [CENSORED BY ORDER OF
A NEW ZEALAND JUDGE].
In April 2005, Siemer reported on this website – with evidential detail using Stiassny own
documents – accounting scams which he considered Mr Stiassny widely used in his accounting
practice. [CENSORED BY ORDER OF A NEW ZEALAND JUDGE].
This was the end of the matter until Siemer noticed in a New Zealand Herald Article in late 2004
that Michael Stiassny was charging roughly $100,000 a month in fees over seven months for
liquidating Access Brokerage Ltd – with no end in sight. At the time Siemer expressed
considerable sympathy for the vast numbers of honest Kiwis who had superannuation invested
in Access Brokerage but who were powerless to stop Stiassny’s fee gouging. Like Siemer’s
own company years earlier, the Access liquidation was unique by virtue of its substantial cash
assets which were not encumbered by debenture. New Zealand law gives virtually no rights to
shareholders or beneficiaries against receivers or liquidators. Perversely, insolvency
practitioners are granted liberal use of the shareholder assets to finance defence against any
legal challenges from aggrieved shareholders. [CENSORED BY ORDER OF A NEW ZEALAND
JUDGE].
Vector Limited in Struggle over Massive Debt Brought on by
Stiassny.
25 March 2008
Embattled Chairman Michael Stiassny looks for help from his mates in government to cover up
his mismanagement of electricity and gas provider Vector Limited. See www.vectorlimited.co.nz
THE NEW ZEALAND ATTORNEY GENERAL NAMED AS
DEFENDANT IN STIASSNY CORRUPTION ACTION
10 January 2008
In a move that has resulted in New Zealand Judges' demanding the Auckland High Court
Registrar find a way to reject a court action that exposes serious Court corruption so a judge will
not have to, High Court Registrar Tony Mortimer attempt to follow the order by replying a day after
filing "I have now had the chance to further peruse your 9 January statement of claim, and I find I
am unable to determine that the document meets the requirements of rule 108." Brilliant. The
Registrar has said that he is unable to find fault but still 'suspects' the filings may not meet rule
108. Rule 108 states the claim must provide sufficient information to be answerable. Read for
yourself why case CIV2008 404 0104 is writing a new chapter in exposing judicial corruption of
the 'old-boys' system. Videotape of Registrar Tony Mortimer acting unlawfully coming to
YOUTUBE soon.
READ COURT FILINGS
VECTOR AGM A LESSON IN CORPORATE TERRORISM
20 October 2007
Amid hired security forces that rivaled that of a traveling head of state, Vector Chairman Michael
Stiassny threatened looming electricity infrastructure cutbacks and looked to blame Vector’s
lackluster business performance and its huge and mounting debt on government regulators
during the company’s annual general meeting yesterday. About three hundred people attended
the gathering held at Ellerslie Event Centre. At least two shareholders were prevented from
attending by Russell McVeagh solicitor Michael Heron who said he had orders from the board of
directors to instruct security staff to prohibit these shareholders from entering.
In a scene reminiscent of Jonestown (the former Jim Jones sect compound in Guyana infamous
for murder and mass suicide) the Chairman commenced the meeting by pointing out all the exits
before launching into claims that the company was under siege from the Commerce
Commission. Security guards stood ominously at the doors as he spoke. Cameras were not
allowed in. He wasted no time telling shareholders that this regulatory environment singularly
threatened their investments. In a salvo fired at consumers he warned the company’s future
investment into electricity and gas supply infrastructure was also at risk. Both Stiassny and
Acting CEO Simon McKenzie stressed the uncertainty and unpredictability of the regulators as
the true source of Vector’s financial woes.
Vector’s financial troubles are no small problem, not simply for the investors but also the
regional consumers who have seen the company’s debt skyrocket over the last few years to a
current $3.127 billion – up $46 million from last year despite selling off nominal assets. In order
to maintain the dividend payment to shareholders this year, retained earnings went into negative
territory. The monopoly utility also has $1.6 billion in goodwill that it has been unable to
significantly write down due to its perilous financial position. This overall financial scenario is
now being used to pressure the regulators into letting Vector charge power consumers more
than the Commerce Commission has said they are entitled to do.
Two years ago Stiassny was proudly telling public meetings that he was responsible for a half
billion dollar unrealized capital gain on the acquisition of NGC by Vector. If true, Vector could sure
stand to capitalize on this gain now. However, as with much that comes from Stiassny, this was
part arrogant bluster and part accounting parlor tricks serving to pass as accepted fact.
Nevertheless, the real story is the substantial debt that the company took on board at the time of
this purchase and which it now is struggling to discharge. The company has recently looked
hard at selling off assets to get its debt ratios down to reasonable levels and its precarious BBB+
(with negative outlook) credit rating up.
Although the investors were generally unhappy, the Chairman and acting CEO were reasonably
successful in diverting attention away from Vector’s recent management chaos. Three directors
resigned en masse within the last year and both the Chief Executive Officer and Chief Financial
Officer abruptly resigned five months ago. Director Karen Sherry, a lawyer and political
appointee with little business experience had been put in charge of risk assessment for Vector
in the midst of this drama.
Vince Siemer was one shareholder unlawfully prevented access to the meeting. Stiassny filed a
$1.25 million defamation claim against Siemer two and a half years ago but has done virtually
nothing to advance the matter since. In July of this year – when Siemer was on a two week trip
overseas – Stiassny was able to get a High Court order from Justice Judith Potter that debarred
Siemer from defending his defamation claim. This issue is now before the Court of Appeal. For
two months the Court of Appeal has failed to schedule a hearing citing the large number of
appeals Siemer has filed as one reason for the delay. Potter was deeply involved with the
Electricity Commission before her appointment as judge and has openly defended Stiassny in
court. Three of Stiassny’s former lawyers now sit as High Court judges. The judge that granted
Stiassny his injunction against Siemer is a former chambers’ partner of Stiassny’s current
lawyer Julian Miles QC.
Siemer, who has a bachelors degree in industrial relations and an MBA from Washington
University in the United States and has run successful companies abroad, wanted to ask the
directors questions regarding the goodwill, debt covenants and foreign currency risks. In being
denied entry into the meeting, Siemer drew a parallel with attempts to silence critics of ENRON
ten years ago. He considers it is no accident that no one on the Board other than Chairman
Stiassny has comprehensive accounting or finance experience and has made a written request
of each director asking them whether they personally agree with the company’s current financial
statements. Siemer views the recent move to appoint Hugh Fletcher (husband of the Chief
Justice of the Supreme Court) a director of Vector is little more than a political pressure move.
Hugh Fletcher’s own business background, while extensive, is uninspiring. Excluding Stiassny,
the current directors of this $4 billion dollar essential service provider average less than a year
on the board.
FREE SPEECH CASE THROWN OUT BY NEW ZEALAND
SUPREME COURT
Wellington, New Zealand 21 August 2007
In a move that confirms New Zealand has taken its justice system to the dark ages with the
formation of a Supreme Court two years ago, Justices Tipping and McGrath - speaking for New
Zealand's Highest Court - refused to hear an appeal where High Court Judge Judy Potter ordered
the editor of www.stiassny.org sentenced to six weeks in the notorious Mr. Eden maximum
security prison for merely publishing this site. The official charge imposed by Judy Potter was
"conspiracy to defeat the cause of justice" which seemed Freudian given Ms. Potter's refusal to
allow accurate recording of the proceedings, her disallowing cross examination of witnesses
against the accused, conducting part of the proceedings outside the presence of the accused
and his lawyer, making multiple findings of 'beyond reasonable doubt' based on untested
hearsay evidence and refusing to recuse herself where both the accused and his lawyer had
formal complaints pending of judicial misconduct against this judge - on separate matters -
including ruling on behalf of her brother-in-law in a case without disclosing her relationship to her
brother-in law litigant.
The NZ press is largely forbidden from publishing stories of judicial misconduct and, where they
do, the suspect judges are granted name suppression. Tony Stickley with the New Zealand
Herald informed the editor of Kiwisfirst that even when the Herald is correct in its reporting, the
Court awards a hundred thousand dollars in costs against them that they cannot afford.
Fundamental law violations by judges have become commonplace since New Zealand abolished
the Privy Council in England as an impartial appeal Court in favour of the newly formed 'Supreme
Court' in 2004. At the time there was widespread concern among New Zealand's lawyers that
such a move would promulgate up the ladder the 'old-boy's network' favours that had made a
cesspool of established law in the lower courts. Key lawyers accurately pointed out the
tremendous number of NZ Court cases that had been overturned as proof that the Privy Council
was needed to instil discipline in a judiciary that had become corrupted by special interests. This
concern was validated by New Zealand's closest ally when, shortly after the Supreme Court was
formed in 2005, Australia refused to extradite two defrocked priests to stand trial in New
Zealand, saying flatly this refusal was because they were unlikely to get a fair trial here. Two
months ago the Privy Council issued its last New Zealand Case ruling, overturning the conviction
of David Bain for murder due to fundamental failures by the New Zealand Courts in following due
process procedures. When Kiwis generally are respected the world over for their ingenuity and
honestly, this embarrassment is a tremendous blow to national prestige.
Since the abolishment of the Privy Council as an independent judiciary, New Zealand has lost
considerable status among law-respecting democracies. Economically, many international
businesses (sensing the legal risks) have shunned having operations in New Zealand. A large
number of New Zealand companies have quietly moved their operations offshore. Most Kiwis
point to the new Chief Justice Sian Elias' husband Hugh Fletcher being one of New Zealand's
most connected businessmen as proof that an impartial Supreme Court is an impossibility in, at
least, commercial cases. Even this damning indictment neglects the greatest threat to natural
justice imposed by its formation. For example, it is doubtful that the two Justices rejecting
freedom of expression in this case would pass muster for appointments in any other country.
Euphemistically called 'constructionists' Justice Tipping and McGrath have both worked to
create their personal brand of English law in the South Pacific, only to take the Country on a wild
ride in the process. Three years ago, Justice Tipping unsuccessfully tried to create a new tort
(the Hosking case) that would make it illegal to take photographs of people in public. As a Court
of Appeal judge, McGrath gave vitriolic speeches about how lawyers needed immunity from
negligence lawsuits by their clients. Fortunately, his was an isolated voice, but the telling part is
that he was the member of that court to be appointed to the New Supreme Court.
In rejecting the appeal, the Supreme Court said the trial judge legally used her discretion. On the
underlying issue of Freedom of Expression and the Court of Appeal's refusal to consider this
legal guarantee despite certain legal precedent that they must, Justices Tipping and McGrath
cited their own discretion to have the Supreme Court not consider this thorny issue.
The editor of this website has vowed to fight on and has lodged a complaint on his imprisonment
with Amnesty International and the United Nations Council on Human Rights.##
14 April 2007
WHY IS THIS MAN'S NOSE GROWING?
In April 2005, Michael Stiassny was a desperate man. Sure, he
was pulling down $7 million dollars plus a year from his insolvency
practice and another $1 million dollars or so a year from his
various directorships, but the house of cards that provided this
substantial booty was about to collapse. [information blocked
by order of theNew Zealand Courts].
Moreover, this [blocked by order of the New Zealand Court] was
able to financially bilk companies - was coming back to haunt the
once venerated insolvency practitioner due to [CENSORED BY ORDER
OF A NEW ZEALAND JUDGE] in Auckland and a website being
launched.
With so much at stake, Stiassny had to act quickly. He hired top
lawyer Julian Miles QC, chairman of Shortland Chambers (where
many of the current judges on the Auckland Court hail from),
to obtain an injunction shutting down the website and billboards.
Paying Mr. Miles $900 per hour (not an exaggeration; actually $900.00/hr) was not
enough though. Stiassny was required to state in a sworn affidavit that the allegations
on the website against him were untrue, this in order to enable Mr. Miles to work his
magic with his fellow judges. Stiassny's already large nose grew a little longer.
For a time, this strategy worked. Mr. Miles was able to get then High Court justice Ellen
France to issue an injunction that decreed there was no reasonable defence of truth to
allegations against Staissny despite the incontrovertible [CENSORED BY ORDER OF A
NEW ZEALAND JUDGE], ordering that the billboards and website must be shut down to
protect Mr. Stiassny's reputation. For her role in what affects every New Zealander,
Justice France was properly rewarded. But to be fair to the judge, she also honestly
thought that would be the end of the matter and that her judicial transgressions were
justified because she was preventing what could very well result in a catastrophic blow to
the financial markets. Certainly, she rationalized, Mr. Stiassny's seemingly [blocked by
the New Zealand Court] did not extend to public utility Vector Limited, the monopoly
electric utility of which Stiassny was chairman and which also was at the time deeply
involved in a complex and expensive acquisition and public share float. Better, she
thought, that a private word be taken up with Stiassny to ensure this was not the case.
Hence, Stiassny had to lie again and, like Pinocchio, his nose grew a little longer.
No doubt this is where Judge France's inexperience (on the bench one year) and
immaturity showed. Before her judicial appointment Ellen France had never been
anything other than a political bureaucrat. She was too trusting - some would correctly
say intimidated - by the likes of Mr. Stiassny and Mr. Miles and she wanted to believe
that operating outside the law in this case was justified. But once having made her
decision, it was not a case of misinterpretation of law or facts that regularly can be
expected to resolve itself in the higher courts. What Ellen France did was a clear breach
of her judicial oath and her judicial colleagues knew full well that risk of her abuse of
power being exposed posed a huge dilemma for the Court as a whole. She needed to be
personally protected from what clearly was a lapse in personal character.
The next stage in the legal challenge was quite different. At the Court of Appeal, the
case fell into the lap of a close personal associate of Stiassny, Justice Robert Chambers.
Chambers, a much more intellectual judge, albeit corrupt, saw immediately that Justice
France's decision was untenable. He needed to re-write history in order to [CENSORED BY
ORDER OF A NEW ZEALAND JUDGE]. And what Chambers did was pure genius. He refused
to overturn France's decision and even refused to address the validity of the points of
appeal, choosing instead to say the matter was a contractual dispute that singularly
warranted dismissal of the appeal and maintaining of the injunction. But Chambers J
had a further problem. The course he embarked on contrasted with the Ellen France
judgment and was not a legal point cross-appealed. Consequently, Justice Chambers
audaciously wrote that by ruling this way he was merely agreeing with what Justice
France thought - despite the fact that Justice France's judgment said the opposite on this
point. And this is when all hell broke loose in the Court.
Now both Justice Chambers and Justice France had crossed the line. What happened
next is a testament to the reality that judges, with few exceptions, are lawyers with a
past: lawyers who are additionally not given to allowing the skeletons of their fellow
judges being exposed when it could very well lead to their own skeletons being exposed.
This is a particular risk and concern in the cloistered Court setting where it is common
knowledge among judges what the others had for lunch, let alone what bribe they took in
1988. It is against this backdrop that the President of the Court of Appeal, Willy Young,
a lawyer with his own sordid past, became intimately and irreversibly involved. see
related story It is not that Will Young is incapable of being a decent and honest judge so
much as the fact that his own history now prevents him from preaching morals to the
judges he now oversees. The reality is that they would simply laugh at his hypocrisy. A
court insider has revealed that it is his immoral vulnerability that was instrumental in
Willy Young's appointment as President of the Court in 2006. In the democracy of the
corporate world, leaders are often chosen for their inability to wield too much power. So
it was with Will Young.
There is no particular fondness between Will Young and Robert Chambers, but their
fates were by now inexplicably linked. In an appeal on 8 February 2007, Will Young
presided over another legal challenge that not only laid bare the deceptions of Robert
Chambers and the breaches by Ellen France but, perhaps more importantly, revealed
incontrovertible evidence that Mr. Stiassny lied under oath when he swore an affidavit
that, among other things, said he [CENSORED BY ORDER OF A NEW ZEALAND JUDGE] and the
attempted cover-up was working as planned. Another lie, and Stiassny's nose grew
longer still.
On 4 April 2007, President Will Young of the New Zealand Court of Appeal ruled that
despite all this evidence, despite the unchallenged evidence of 9 witnesses who attested
to judicial impropriety that included conducting court proceedings ex-parte and the
oppression of witness cross-examination, and despite irrefutable evidence that the
injunction was improperly obtained and issued, he saw no basis for the Court to take
action. In doing so, Justice Young may have protected Stiassny and his fellow judges but
it is too early to tell whether, and to what extent, his actions have harmed the Court's
reputation and New Zealand as a whole. In the meantime, Stiassny's nose keeps growing
and he gets still fatter financially gouging at the public trough and at the expense of so
many hard-working and honest Kiwis.# See Related stories
STIASSNY IN FIRING LINE 23/12/06
Michael Stiassny has hit a rough patch in 2006. He was
kicked off the Met Life board, forced to resign as chair of
Metro Water and witnessed the only 3 directors with business
skills abandon the Vector board because he refused to resign
from that board two weeks ago. At the same time, Vector management has
revolted at Stiassny's specious public claims and promises of strong financial
performance at Vector, coupled with his demand that Vector CEO Franklin and CFO
Peter Fredricson then find a way to produce the numbers he has publicly claimed. CEO
Mark Franklin in particular has had several confrontations with Stiassny over his
belligerent personal style and inverted business approach since being recruited from
Australia two years ago. In addition to almost doubling his own pay, Stiassny had to
seek approval of a pay package approaching a million dollars per year in order to placate
Franklin and thereby prevent an open and nasty revolt.
Then there was Stiassny's declared war on the Commerce Commission last winter over
the Commerce Commission's stated intention of taking over Vector (an electricity lines
company) for unfair charging practices - coupled with Stiassny's threats of power
blackouts if the Commerce Commission did not back down
- as well as an active Court action that seeks to hold him
personally responsible for losses suffered by the Trinity
Foundation Ltd. in relation to a failed tax scam (see related
story left column). In addition to all this, [CENSORED BY
ORDER OF A NEW ZEALAND JUDGE]
At Vector, John Goulter, Greg Muir and Tony Gibbs
resigned from the Vector Board on 13 December 2006, Vector CEO Mark Franklin & CFO Fredricson
citing the direction of the company and Stiassny's refusal to step down as their reasons
for leaving. Their abandonment leaves Stiassny's girlfriend Karen Sherry and Shale
Chambers, both with limited business backgrounds and virtually no board experience,
and the vacillating Robert Thompson to govern the $3.7 billion dollar company (or $5.7
billion company according to Stiassny). Of particular concern to Vector investors was
Staissny's replacing the now departed Goulter as chairman of the Risk and Assurance
Committee with Ms. Sherry, virtually the only person who is blind to the risks imposed
upon the organization by Stiassny.
One of many immediate challenges Vector faces is how to write off $1.7 billion in
'goodwill'. While most insiders recognize the current board is ill-equipped to deal with
the challenges ahead, the board and management at Vector are taking some comfort
that, as a monopoly provider of an essential public service, the Auckland and Wellington
public have no option but to financially support the company until such time government
or regulatory authorities follow through and step in to safeguard the company and
consumers. Board member Shale Chambers, appointed only last August, is taking
additional comfort in the fact that he was not directly involved in the financial mess that
currently plagues Vector and has been kept in the dark in relation to the side deals
Stiassny and Sherry have made.
Meanwhile, two former Auckland Energy Consumer Trustees have asked the Labour
government to investigate Mr. Stiassny's conduct in relation to Vector. As if this was
not enough trouble facing Stiassny, consumer advocate Penny Bright of the public
watchdog Water Pressure Group was last week successful in advancing two Parliamentary
select committee inquiries into Stiassny's conduct at Metro Water when Maori MP and
party leader Dr. Pita Sharples tabled the complaints before Parliament. They include
petitions asking for a parliamentary investigation into overcharging and collection
practices that unlawfully targeted certain Metro Water consumers for bankruptcy.
In July, then Metro Water Chairman Michael Stiassny admitted that water charges in
Auckland were going up 9.7% instead of 3% in order that Metro Water could fund other
non-water related city expenditures, such as the $84,000 global working holiday that
certain Auckland Councilors took a year ago. This admission followed a 'public' Council
meeting held in May where Stiassny demanded the meeting go into 'confidential' session
before he would discuss such financial arrangements that violate the public charter. Ms.
Bright was arrested when she refused to leave the public gallery on the order of meeting
Chair and Auckland Councillor Vern Walsh that the public leave in response to
Stiassny's demand.
Ms. Bright and the Water Pressure Group's case was bolstered last week when Auckland
District Court Judge Nicola Mathers ruled that Metro Water has a legal obligation to
follow its dispute process. It is uncertain whether Metro Water lawyers Chapman Tripp
will be retained now that Staissny has been forced out. Earlier in the year Stiassny
ordered Chapman Tripp to bankrupt Water Pressure Group member Moli Tevaga over a
disputed $2,800 water bill rather than follow proper administrative procedures. Mr.
Tevaga was adjudicated bankrupt in August. Metro Water spent $15,000 in legal costs. #
RECENT NEWS: 3 OCTOBER 2006 In a rare and exclusive interview,
Business Editor Tim Hunter with the Sunday Star-Times talks with
Vince Siemer in regard to Vector Chair Stiassny's declared war on the
Commerce Commission and how Mr. Hunter has been stonewalled on
requests of Vector to provide support for Stiassny's claims READ
MORE
Archive News: NZ HERALD Interview 28/8/06 - On page one of the business section, reporter
Anne Gibson interviewed Michael Stiassny and talked about how Stiassny has declared war
on the Commerce Commission, the potential for power black-outs if Stiassny does not get his
way, what a good Jew he is (no joke) and she says Stiassny's "anxieties are the country's
concerns". READ MORE
Archive NEWS: 9/8/06 - Due diligence determined NGC purchase by Vector would
potentially create $7.9M and not the $500M that Vector Chair Stiassny claimed to public.
READ MORE
Archive NEWS: 6/8/06 - METRO-WATER raises water charges 9.6% to meet Council demand
for $18million profit READ MORE
Archive News: 22/6/06
Michael Stiassny took another step to fulfilling his promise to target his critics for bank-
ruptcy using public funds from Metro Water. Council provided approval for Stiassny's legal
targeting while Mayor Dick Hubbard ate cocktail sandwiches in the next room.
In a related story, Auckland City Councillor Bruce Hucker betrayed Auckland water
consumers by working in confidential sessions with Stiassny to raise water rates to Auckland
residents yet again. The proposed rate rises are designed to enable Metro Water funding of
other city expenditures such as city councillor trips abroad - expenses and trips that have
nothing to do with water - to the tune of $10 million annually. As many of the councillors
relied upon the apathy of the voters and chose not to fight it (in politics, counting favours is
the rule of the day), Councillor Neil Abel stood by his commitment to honour his oath of
office by objecting to these secret backroom deals that plague this administration and deceive
the public.
*************************************************************
Auckland City Council controls Metro Water Limited
SUBMISSION TO THE FINANCE and CORPORATE BUSINESS COMMITTEE
AUCKLAND CITY COUNCIL, Mr. Vern Walsh, Chairperson
Respectfully submitted by Vince Siemer, MBA 5 December 2005
Few things in life are as precious as a safe, reliable and affordable water supply. Next to air, water
is the most essential human need.
Michael Stiassny is the current Chairman of Metrowater. My recent research into this man’s
business background has uncovered behaviour so alarming that I am compelled to bring this
information to the Finance and Corporate Business Committee’s attention today. Mr. Stiassny’s
conduct as I have witnessed it is so egregious that I can state forthrightly –
In my informed and considered opinion Michael Stiassny is not fit to be chairman
of any public company, let alone a company that provides such an essential
human resource as water.
In support of my claim to the Committee today that Mr. Stiassny is not only unfit to remain as
Chairman of Metrowater, but that he may pose a threat to the safe, reliable and affordable supply
of water to the public given his personally callous nature and reckless management style, I will
draw a parallel to Mr. Stiassny’s stewardship of another monopoly – Vector Energy.
Stiassny has publicly represented that he has grown Vector Energy from a one billion dollar
company into five billion dollars within three years (Exhibit A). What he fails repeatedly to
mention is that Vector, under his stewardship, has amassed a horrendous debt of $3.1 Billion (from
$0.8 Billion just a few years ago).
RECKLESS FISCAL MANAGEMENT
Anyone can build a five Billion dollar house of cards if they are able to borrow enough money and
place an intangible value on the result. Stiassny is preaching how he built a five billion dollar
company but I submit to you that this is misleading and it minimally fails to acknowledge the
tremendous debt that the consumer ratepayers – not Stiassny – are ultimately responsible for.
This is particularly ominous in the case of Vector for several reasons:
1) Interest rates have risen recently, and are projected to go higher still, meaning the debt that
Stiassny created is increasingly encumbering the company. This increased cost must invariably be
borne by the helpless consumers or taxpayers.
2) In July, Standard and Poors put Vector on a negative credit watch, stating “The potential
negative outlook reflects the likely deterioration in financial metrics over the short to medium
term” (Exhibit B).
3) This negative credit watch was despite the company’s low-risk electricity network business,
the scale and diversity of its operations and its robust service area.
4) Vector announced a 30% decline in profit immediately after the public share offering, the
IPO date itself having been inexplicably moved up a week. Vector blamed the profit decline on
increased electricity transmission costs of 15% and increased electricity maintenance costs of 35%
over last year, and admitted this profit decline occurred despite higher selling prices being paid by
the consumers (Exhibit C).
So what would you do if you were Chairman of this teetering mess? We know what Stiassny did –
he threw a party! Despite credit rating pressures, huge debt becoming more expensive to manage
due to rising interest rates and significantly declining profits, Stiassny elected to increase dividends
to trust beneficiaries!
I submit to you today that this is not a rational action for a responsible manager, but it may help
explain how Mr. Stiassny’s official compensation has almost doubled in his short tenure at Vector.
Can the Auckland City Council afford to leave such a man in control of a valuable and necessary
resource as water?
Vector would be relatively fortunate if Stiassny’s poor fiscal management was its biggest problem.
At a recent Institute of Directors presentation, Stiassny claimed to have made Vector a Half Billion
dollar profit on the recent purchase of NGC alone! This pegging of value was apparently
determined by extrapolation of the sum value of the 24.9% initial public share offering at the peak
of its share-trading price after the recent float. To be sure, Mr. Stiassny’s short-term capital gain
claim had nothing to do with intrinsic value as determined by factors such as tangible asset value or
even anticipated return on investment. Mr. Stiassny’s half billion dollar short-term capital gain
claim was as bold as any Enron accountant – and equally alarming! And Stiassny is a Chartered
Accountant!
LEGAL INTIMIDATION AND BULLYING
And it gets worse. It is common knowledge that Stiassny initiated defamation proceedings against
one former trustee of the Auckland Energy Consumer Trust and took legal action against another
to prevent that trustee from voting against his retention of the Vector chairmanship. Consequently,
Mr. Stiassny was re-elected by only two of the five AECT trustees. Given Mr. Stiassny’s propensity
to use the legal bludgeon to beat his critics into submission, it is quite possible that at least one of
the two trustees who did vote for Stiassny might have done so for reasons having nothing to do with
his abilities.
Please make no mistake. Even if Stiassny has not threatened you with legal action, his legal
bullying tactics are tainting Metrowater (and Auckland City Council) directly. At the Institute of
Directors meeting noted above, Mr. Stiassny began his presentation by gloating he was in the
process of bankrupting the Water Pressure Group members protesting peacefully outside. Not only
was there no cause for this outburst, it made many people in the room understandably
uncomfortable. This behaviour was duly reported to the Energy Minister in a letter dated 25
October 2005 (Exhibit D). While Stiassny may be free to spend his own money in suing people who
criticize him, it will prove scandalous in my opinion if the Auckland City Council has authorized
Mr. Stiassny to use, in effect, water receipts (Metrowater funds) to legally bankrupt people he
disagrees with, and without legitimate cause.
I have been fortunate to travel many places in the world. It has always impressed me in my travels
that Kiwis as a group are the most resourceful and adaptable people on the planet and are
particularly astute at cutting through all the propaganda in accurately assessing a situation when it
comes to hand, and then taking the appropriate action. It pains me to see so many of these decent,
conscientious people bullied and taken advantage of by Mr. Stiassny while the elected
representatives with the power to cut off his legal war-chest wring their hands. Change is needed.
EXHIBIT A
INSTITUTE OF
DIRECTORS
in New Zealand Inc
Breakfast with Michael Stiassny
Topic: From a one billion dollar
to a five billion dollar business in three years - the evolution of Vector.
Michael Stiassny, BCom, LLB, CA, is a chartered accountant and senior partner of Ferrier
Hodgson & Co in Auckland.
He has significant experience in insolvency, investigating accountant work, company
restructuring and due diligence.
He is currently chariman of Vector, NGC Holdings Ltd and Metrowater Limited, as well as a
director of a number of public and private companies, including Metlifecare and The
Horticulture & Food Research Institute of New Zealand Limited. He is also a member of the
Auckland Branch Committee of the Institute of Directors.
When: Wednesday October 19th. 7.15am for 7.30am
Where: The Northern Club, Princes Street, City
Cost: Members $35 Guests (with IoD Member) $40
EXHIBIT B
VECTOR AND NGC PUT ON NEGATIVE RATINGS WATCH
By NZPA
Tuesday 28th June 2005
Standard & Poor's said today it was putting Auckland energy company Vector and NGC Holdings on
creditwatch with negative implications following Vector's announcement of a full NGC takeover bid yesterday.
Vector yesterday made a $3.40 per shares scrip and cash offer for the remaining 32.8% of NGC it does not
already own ahead of the float of a quarter of its shares that will raise $593 million.
NGC shareholders will be offered 78c cash and the rest in new Vector shares.
S&P said if the IPO and acquisition proceeded under the terms and conditions expected, then the ratings on
Vector and NGC were likely to be affirmed at BBB-plus with a negative outlook.
"The potential negative outlook reflects the likely deterioration in financial metrics over the short to medium
term." S&P said.
A major part of the decision to affirm the rating will be an assumption that Vector repays its equity bridge, either
from its IPO proceeds or other means, before the end of October 2005, the international rating agency said.
S&P said Vector's rating reflected the company's low-risk electricity network business, the scale and diversity of
its operations, its robust service area, and current regulatory price-path certainty.
"In addition, Vector is expected to benefit from the broadening of its business profile that results from assuming
full control over NGC's gas businesses, including its transmission and distribution business.
"These strengths are offset Vector's moderate financial profile, uncertainty regarding the level of Vector's final
shareholding in NGC, and consequently the extent of the integration that will ultimately occur and the
associated integration risks."
NGC's rating reflected its strong market position in gas transmission and distribution, its diversified revenue
base, and its moderate financial profile as well as Vector's creditworthiness. "These strengths are mitigated by
New Zealand's depleting long-term gas reserves and any implications arising from the current regulatory review
of gas transportation," S&P said.
Vector expects to be listed on the exchange in the spring with a capitalisation of up to $2.38 billion.
NGC shares jumped 22c to $3.782 yesterday and rose another 3c to $3.75 today - well above the implied takeover
price.
Last year, valuers Grant Samuel said the underlying value of NGC shares was in the $2.50 to $2.76 range.
EXHIBIT C
EXHIBIT D
25 October 2005
The Honourable Mr. David Parker
Minister of Energy
Parliament Building
WELLINGTON
Dear Mr. Parker
On 19 October 2005, Michael Stiassny gave a presentation at an Institute of Directors meeting at the Northern
Club in Auckland titled
“How to turn a one Billion dollar business into a five Billion dollar business in three years – the evolution of
Vector”.
As an energy consumer and ratepayer, I was extremely troubled by several aspects of Mr. Stiassny’s presentation.
These were:
1) Chairman Stiassny claimed to have increased the value of Vector a HALF BILLION DOLLARS solely
through his orchestration of the recent NGC buyout by Vector.
2) Under his tutelage Vector shareholders have enjoyed increased dividends.
3) While accepting regulation of monopoly enterprises is here to stay, Stiassny suggested the shareholders
and particularly those in attendance could appeal, as voters, to their politicians for less intrusive regulations –
regulations that tend to stymie growth.
The intrepid manner in which Mr. Stiassny bragged to the directors in attendance of adding a Half-Billion
dollars to the value of Vector through the NGC purchase alone was as frightening as it was unsound.
Minimally Mr. Stiassny confused the investor “honeymoon” after the recent float, combined with the market
hype that accompanied this launch, with intrinsic value. In point of fact, Vector has recently struggled, with a
30% annual profit decline over the last year, and NGC had been independently valued at substantially less
than Stiassny’s claim – yet neither garnered a mention by him. Additionally, Standard and Poor’s in July put
Vector on a negative ratings watch, saying “the potential negative outlook is a result of an expected decline in
financial metrics over the short to medium term”.
Perhaps most alarming is the fact that all these dour developments have occurred within Vector despite a
buoyant economy, increased selling prices and infrastructure changes at Vector.
That Mr. Stiassny raised dividends - and brags about this move - at a time of substantially declining profits, is
reminiscent of Nero fiddling as Rome burned. Whether any argument can be made for increasing dividends at
a time of drastically declining profits, it is not difficult to deduce the motivation for such a payout in these
circumstances.
Vector blamed the recent poor financial performance on substantially increased transmission and maintenance
costs under Stiassny’s stewardship. Not only does this speak poorly of Mr. Stiassny’s fiscal management – or
lack thereof – but it has profound and far-reaching implications to the consumers in particular and the
economy in general. This is because, unlike other businesses and industries where the consumer has a choice
and can avoid an inefficient and poorly run business that does not provide value for the money, Vector provides
an essential service in a monopoly environment. While the consumer and ratepayers are not compelled to foot
the financial bill for inefficiencies and poor performance in typical businesses (they simply choose another
supplier of the good or service) this cannot be said about Vector. In fact, any poor management performance by
Mr. Stiassny must invariably be financially underwritten by the unsuspecting and captive consumer and
ratepayer beneficiaries.
As a monopoly enterprise, this is particularly true if Mr. Stiassny is able to increase prices to offset poor
management of such a vital industry. In this scenario, the economy at large is directly and negatively impacted
through inordinate cost pressures on the productive sector and pressures upon inflation in general. Hence, Mr.
Stiassny’s mantra that regulation might be softened through the collective voice of the voters was most
disturbing.
I was deeply troubled by Mr. Stiassny’s presentation and posed the question to him at the conclusion of his talk
– a question made all the more relevant by my observation that such contrived and inaccurate financial
outlooks are typical of businesses under Mr. Stiassny’s stewardship that I have examined – to “name two
companies where your stewardship resulted in a tangible benefit to shareholders?”. In response, Mr. Stiassny
claimed that Vector was one such company – evidenced, he said, by the increased share value after the IPO
launch. I responded that this was a result of market hype – as he himself had conceded – and had nothing to
do with fundamentals such as return on investment. At this, Mr. Stiassny went silent and the moderator called
an end to the questions and the presentation. Mr. Stiassny was unable or unwilling to name one other
company.
As an interesting anecdote, Mr. Stiassny devoted the first five minutes of his presentation attempting to explain
away the half dozen protesters carrying placards outside the meeting, with messages such as ‘Stiassny the
Corporate Thug’ and ‘Dump Stiassny’, as people who were not paying their water bills – “not because they
couldn’t afford to but because they didn’t want to”. He went on to say slyly that this is why we have people
around “called lawyers” to deal with these people and that he was in the process of bankrupting these
protesters! His vitriolic rant at the protesters was not only an unwelcome concession to the effectiveness of their
peaceful demonstration but made many people in the room quite uncomfortable.
Few omens present themselves with such clarity. In my honest, informed and considered opinion Mr. Stiassny’s
presentation to the Institute of Directors breakfast meeting on 19 October 2005 portends an ominous threat to
the energy sector, as well as the economy in general. As such, it would be prudent for you to obtain a copy of
Mr. Stiassny’s presentation so that you might judge this for yourself. With all due respect, like the canary in the
coalmine, we can ill-afford to ignore the warnings.
One final note: Do not expect the Auckland Energy Consumer Trustees to provide a safeguard against Mr.
Stiassny. Tellingly, Mr. Stiassny was re-elected Chairman of Vector despite the fact that only two of the five
trustees voted for him. Mr. Stiassny had taken legal action against one of the trustees at the time of this vote and
had previously engaged lawyers to threaten suit against another trustee for defamation after she spoke out
against him. In this environment, it is also not difficult to see how two of the five might vote for him. (In the
interests of full disclosure, I will tell you that Mr. Sitassny has also filed a million dollar defamation lawsuit
against my company and me.) Moreover, it is my understanding today that Mr. Stiassny has all of the existing
trustees currently tied up by a confidentiality agreement that provides him legal recourse against them if they
speak out against him. If this is indeed the case, it is unreasonable to expect any of them to blow the whistle
until after this ship is well and truly sunk.
Sincerely,
Vince Siemer, MBA
27 Clansman Terrace
Gulf Harbour
Mr. Mark Weldon
Cc: The Hon. Harry Duynhoven New Zealand Share Exchange
Associate Minister, Energy PO Box 2959
Parliament WELLINGTON
WELLINGTON
AECT Trustees (Shale Chambers, M.
Mr. Bruce Sheppard Buczkowski, John Collinge, W. Kyd, K.
NZ Shareholders Association Sherry)
P.O. Box 6310 Faxed to 09 978 7516
Wellesley Station
AUCKLAND The Hon. Dr. Michael Cullen
Deputy Prime Minister
Mr. Tim Hunter Parliament
Editor, Sunday Star-Times WELLINGTON
P.O. Box 1409
AUCKLAND
Mr. Michael Stiassny
Vector Energy
Faxed: 09 978 7799
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