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Call for bigger fines for dodgy finance deals

Contributor:
Fuseworks Media
Fuseworks Media
Mark Berry
Mark Berry

Wellington, March 25 NZPA - There have been calls for a massive boost in the fines for those convicted of running dodgy financial investments.

The Commerce Commission appeared before Parliament's commerce select committee today and was grilled over its handling over the recent collapse of a number of finance companies and investment funds.

Chairman Mark Berry said its investigation into how the ANZ National Bank promoted two now frozen ING New Zealand funds would be delayed by a fortnight due to a higher work priority.

The regulator is investigating if the sale of ING's diversified yield and regular income funds breached the Fair Trading Act by ANZ/ING saying they were a safe investment and collecting around $700 million from 4000 investors before freezing the funds in March 2008.

Almost all the investors accepted an offer from ING for a 60 cents in the dollar for money in the diversified yield fund, and 62 cents in the regular income fund.

There has been heavy criticism that those taking the payment had to sign a legal waiver and some doubt whether that waiver is legal.

A number of MPs questioned Mr Berry about whether fines of $200,000 were enough to deter breaches of the law.

ACT MP John Boscawen claimed that ANZ senior staff had been dismissive of the fine and suggested a maximum fine of $50 million might make large companies take notice.

Mr Berry said the adequacy of fines or otherwise was a matter for politicians to sort out, he also declined to comment on the ANZ/ING case though he defended the commission's handling of the matter.

There had been a substantial investigation into a complex matter covering 23,000 documents and hundreds of people to interview, he said.

Committee chairwoman Lianne Dalziel, talking about the wider spate of financial companies collapsing, said there was no doubt that criminal activity was involved and there might be a need for greater penalties.

She also expressed frustration that regulatory agencies tasked with covering the finance sector had seemed impotent, saying everyone could see the problem but no one took any action.

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