On this page we consider the reaction of the NZ Society of Accountants and its successor the Institute of Chartered Accountants of NZ to the 1990 Annual Accounts of the Bank of New Zealand. But please be sure to visit our Home Page to get an up to date impression of Accounting in New Zealand.

We start with official public communications which the Institute/Society has made on the matter: - absolute zero as far as is known.

The Securities Commission report into the BNZ "arrangements" was released in may 1993. At the left we have the NZSA Investigations committee annual report for the year to June 1993. Notice that 52 of the 129 complaints received were still under review at year end, which is somewhat understandable since the Securities Commission was released in May 1993 and would have generated about that many complaints. Normally such matters outstanding at year end would be sorted out prior to the report going to print however.

The Investigations report to June 1994 states that 115 complaints were received for the year and gives an outline of what happened to them. There is no mention of any which were still under investigation at this year end, and no mention of what happened to the 52 brought forward from 1993.

The membership of the Investigations Committee remained constant over that time being Michael Fenton (chair), Joyce Brooks, Tim Fairhall, John Falloon, Graeme Meyers, Marsden Robinson, and Dick Sumpter. It is known that they received complaints arising from the above Securities Commission report and started processing them as being valid, advising complainants that they would be given copies of the responses of the accused for comment, and then at some stage closed up shop and decided not to deliver on this undertaking. They advised that the people complained of had acted within their competence.

The reports on this committee's operations in subsequent years remain most rudimentary.

The composition of the Investigations Committee (now known as the Professional Conduct committee of the Institute) subsequent to 1993 shows plenty of evidence of a cover up and protection philosophy. Micheal Fenton remains on the committee in 2000 despite having retired as an accountant several years ago. Jim Hoare, a long time employee or associate of the Fay Richwhite and 'co-incidentally" of the executive of the Institute of Chartered Accountants (he was president in the mid 1990s) has not drifted off having done his stint. He is back on the Profession Conduct committee. FR partners seems to be a big organisation but it does not have a website.

The sequence of Society or Institute Presidents since 1993 shows many signs of a cover-up. It should be remembered that Presidents are usually on the executive board for several years until they finish as president. The one holding office in 1994 was subsequently gaoled for fraud committed about this time. It is not proposed to dwell on this since he has got his just desserts (and perhaps more since the Court dealt with him having due regard for his professional person status and subsequently the Institute decided that it too must dish out some punishment) and his offending does not appear to have any association with the BNZ accounts or related matters. But probably his tendencies to stray were noted, making him an excellent candidate for a cover-up president.

There followed Jim Hoare, who at the time he was president was working for Fay Richwhite, apparantly as an accountant or tax adviser to Fay Richwhite clients. He said that he never got involved with suggesting controversial tax ploys however. Whether he referred any clients wanting such "extras" upstairs is unknown. It would seem that Fay Richwhite would not be holding a Certificate of Public Practice from the Society (NZ Society of Accountants) and one wonders whether it would be proper for a society member (let alone president) to assist his employers to run such a practice without a certificate. Probably nobody dared ask.

The 1997 calendar year had Warren Allen as president of the Institute. It seems that Mr Allen was a partner of Ernst and Young before and after the 1990 BNZ audit but not actually at the time of the audit. At that time he was apparently chief financial officer for DFC (formally the Development Finance Corporation). This entity was a government institution for helping to finance and hence fostering business which along with the BNZ and others was being or had been privatised. Around mid 1991 the DFC went into receivership. Despite protest from creditors the government announced firmly that it would not bail out the DFC. The assumption was that this policy would apply to other government entities including the Bank of New Zealand should they go into receivership or liquidation. Mr Allen apparently remained with DFC until it was wound up and then returned to Ernst and Young as a partner and as far is as known still is. Whether his partnership status was severed while he was at DFC is hard to determine. He nevertheless chose to stay with the partnership when the Securities Commission report was released in 1993 which may be considered to be an aligning of himself with the 1991 BNZ audit. He certainly would have read the report and knew what was going on.

Warren Allen played a large part in introducing the Society's "Continuing Education" requirements which he claimed were necessary for the Society to maintain its International reputation. This increased the cost of full membership by about $2,000 p.a.. It would seem to be the ultimate in cheek to make rank and file members pay for the loss of reputation cased by the wilful action of his associates in certifying the 1991 BNZ accounts. Mr Warren is now the chair of the education committee of the International Federation of Accountants. A person in such a position should not be in a professional partnership with such corrupt personel.

The following year 1988 the president of the Institute was Tim Fairhall, listed above as a member of the Investigations committee in 1993, and a partner of the "big 6" firm of Coopers & Librand which in 1991 carried out an operational review of the Bank of New Zealand for the Minister of Finance without apparently finding anything corrupt about the 1991 audit although issues associated with these accounts were looked into. In Nov 1997 Mr Fairhall commented his Investigation work mentioning only J F Graham who in 1991 admitted misappropriating approx $10m of client funds. He then commented that they are still receiving complaints against members but "thankfully" with one exception "none have hit the headlines as John F Graham did." The unashamed wish to try and cover things up is there exposed.

With over 20,000 members why should so many of the hierarchy have such a close association with the 1991 BNZ accounts and Audit.

Then of course we have the chair of the Financial Reporting Standards Board being filled by one Liz Hickey for many years prior to her being being appointed "Director of Education" of the London based International Financial Accounting Standards Committee. Condemnation of her actions in issuing the 1990 audit certificate for BNZ accounts cannot be too strong. She continues to globetrot as a standard setter when surely nobody's accounting standards are lower.

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The Audit certificate for the 1990 Bank of New Zealand annual accounts

Background to Securities Commission Report