Montana probe tapes no longer exist, brokers say

By Jock Anderson

Friday 7th September 2001

SIMON ALLEN: Tapes not mandatory

Stockbrokers deny the existence of tape recordings sought by a Stock Exchange probe into claims that Allied Domecq had an illegal deal with Montana chairman Peter Masfen to buy his Montana stake.

Pursuing a complaint by jilted Montana bidder Lion Nathan, the NZSE's Montana standing committee wants any tape recordings of client instructions handed over for its hearing of the case on October 13 and 14. But the committee may as well have asked for notes written in sand, so shambolic are broker practices for keeping tape recordings.

In a bizarre twist, if a July recommendation had been mandatory in May it could have caught taped conversations that might have been crucial to the Montana investigation - a proposition NZSE chairman Simon Allen agreed with.

While some of the NZSE's 26 members use tape recordings for verification and protection of clients' instruction, some don't and there is no requirement for it.

A recommendation circulated from April 1 that brokers keep tape recordings for a minimum of 30 days, or longer in the case of any known dispute, took effect only from July 19.

While brokers knew the 30-day recommendation was in the pipeline and if enforceable would have covered the period of the Montana transactions, brokers from some major firms said it was a recommendation only - they did not have to comply.

Not even Mr Allen's firm, ABN Amro Craigs, keeps tapes for the recommended 30-day minimum.

Mr Allen agreed any tapes relating to the Masfen/Montana transactions could have been caught if keeping taping for 30 days had been mandatory.

Likening broker tapes to those in aircraft cockpit voice recorders, Mr Allen said tape recordings were capable of becoming evidence in "other situations," which he said was not the intention of the rules or guidelines.

Brokers at the heart of the queried transaction are JB Were and UBS Warburg, who, along with Mr Masfen, the Montana independent directors and ANZ Bank, have been requested to hand over documents.

UBS Warburg's Campbell Stuart, a member of the NZSE board, said his firm did not tape everything but when it did it kept tapes for three days before they were re-used and could not see any reason to keep them any longer.

NZSE general manager Bill Foster, who said he expected members to regard the 30-day period as a benchmark toward standardisation, said keeping tapes for only three days was "an unusually short period."

JB Were did not keep tapes of everything but kept those tapes it did make for seven days before re-using them, according to compliance manager Michael Jeffs, who doubted if many Stock Exchange members would use tapes.

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