Promotion of Accounting Reform as the most effective Pathway to a Fairer Safer and more Prosperous Society. Comment and Support from all quarters is Sought to straighten out NZ's problem 

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Sept 2003 Edition----for Previous Editions click here

In this edition we follow up on issues mentioned last month and elaborate on the latest Telecom and Trans Rail news.

Telecom New Zealand, the country’s largest public company has announced an intention to appoint Mr L C “Provisioning” Pyne as a director. This is the man who signed the 1990 Bank of New Zealand annual accounts as Managing Director.

This is what Mr Pyne had to tell the Securities Commission in 1993 about using a fake insurance policy to increase the reported profit of the bank by some $55m.

“...my understanding of the policy was that it was there as a contingency for an additional component of provisioning that one could use. Certainly I had not, no one had voiced to me for it to be anything different than that and why we had not required it in 1989 [was] because of the provisioning we had done. In 1990 we thought it was appropriate to use it. ...it is inextricably linked with provisioning. It is no more, no less than provisioning.”

Mr Pyne was appointed BNZ managing director on 1 May 1989. The appointment was in reaction to losses incurred in the year to 31 March 1989 requiring a government bail-out. The Bank reported a loss for that year of $940m. The obvious reason why they didn’t use the “insurance” was that $200m at most was “claimable” so it would only reduce the loss to $700m which would make little or no difference to how the loss was perceived by the public. Provisioning was woefully short in the 1989 year and if there was genuine insurance which could be claimed to make good the losses surly it was the thing to do.

As explained last month Telecom seems also to be in the fake profit business so Mr Pyne’s expertise will no doubt be most useful. He is not an accountant but bad accounting is keeping him in business.

A feature Telecom and the Bank of New Zealand have in common is that they are both former major government businesses.

Reflecting on the BNZ saga Mr Pyne has claimed that he never came across any examples of dishonesty or corruption. “incompetence, perhaps to the point of stupidity, yes” but not corruption.

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