The New Zealand Shareholders Association today slammed the actions of Pyne Gould Corporation and its related subsidiaries Perpetual Trust, PAM and Torchlight.
Association Chairman John Hawkins said the actions by the George Kerr controlled com
pany appears to fall far short of the standard of behaviour expected by investors. Perpetual is currently under investigation by the Financial Markets Authority and subject to action by its statutory supervisor Trustees Executors over a large related party loan from Perpetual Cash Management Trust to Torchlight. This was requested in an email from Mr Kerr on 19 February 2012. Hawkins said that despite no formal information, creditworthiness assessment or financial position information being available, the Perpetual board chaired by Brian Mogridge approved this non complying request the following day.
Incredibly the PGC board allowed Torchlight three months to provide supporting asset valuations following the drawdown of the loan said Hawkins. By 4 April the original $18m had grown to $28.22m, apparently without any further formal consideration. Some $15m has since been repaid.
On 27 April the PGC CEO John Duncan resigned. On 1 May the PGC auditors, KPMG, also resigned, apparently in regard to disclosure of these related party loans. In the meantime the company and its subsidiaries were being investigated by FMA following concerns from Trustees Executors.
PGC and Perpetual have fought all the way to the Court of Appeal to prevent disclosure of these transaction details, and it was only early and decisive action by the FMA that forced their release said Hawkins. Not surprisingly, investors have voted with their feet and a run on funds has forced Perpetual Mortgage Trust to institute a moratorium from today until August 31. This will stop investors withdrawing funds and could have a devastating cash flow effect on some said Hawkins. He added that not only was the stubborn reluctance to disclose material matters to current and potential investors completely unacceptable, but the resulting action is rubbing salt in the wounds. We understand further court action against Perpetual today has resulted in additional supervision and a number of orders being made to safeguard the investor’s position said Hawkins.
Hawkins said that in the Associations opinion Mr Kerr has demonstrated a cavalier attitude towards governance processes and sensible business practise. Just because he is the major shareholder, he is still required to meet his responsibilities toward all others under section 131 of the Companies Act, he said.
Hawkins said that Mr Mogridge as Chairman of PGC and a director of both Perpetual and Perpetual Asset Management at the time was deeply involved in this debacle. In the Associations opinion, along with the other directors he has seriously compromised his obligations toward investors. The NZSA believes the reputational damage is such that he should step down from his other public positions to avoid any collateral damage by association.
John Hawkins
021 640 588
Ends
Format
The New Zealand Shareholders Association today slammed the actions of Pyne Gould Corporation and its related subsidiaries Perpetual Trust, PAM and Torchlight.
Association Chairman John Hawkins said the actions by the George Kerr controlled company appears to fall far short of the standard of behaviour expected by investors. Perpetual is currently under investigation by the Financial Markets Authority and subject to action by its statutory supervisor Trustees Executors over a large related party loan from Perpetual Cash Management Trust to Torchlight. This was requested in an email from Mr Kerr on 19 February 2012. Hawkins said that despite no formal information, creditworthiness assessment or financial position information being available, the Perpetual board chaired
by Brian Mogridge approved this non complying request the following day.
Incredibly the PGC board allowed Torchlight three months to provide supporting asset valuations following the drawdown of the loan said Hawkins. By 4 April the original $18m had grown to $28.22m, apparently without any further formal consideration. Some $15m has since been repaid.
On 27 April the PGC CEO John Duncan resigned. On 1 May the PGC auditors, KPMG, also resigned, apparently in regard to disclosure of these related party loans. In the meantime the company and its subsidiaries were being investigated by
FMA following concerns from Trustees Executors.
PGC and Perpetual have fought all the way to the Court of Appeal to prevent disclosure of these transaction details, and it was only early and decisive action by the FMA that forced their release said Hawkins. Not surprisingly, investors have voted with their feet and a run on funds has forced Perpetual Mortgage Trust to institute a moratorium from today until August 31. This will stop investors withdrawing funds and could have a devastating cash flow effect on some said Hawkins. He added that not only was the stubborn reluctance to disclose material matters to current and potential investors completely unacceptable, but the resulting action is rubbing salt in the wounds. We understand further court action against Perpetual today has resulted in additional supervision and a number of orders being made to safeguard the investor’s position said Hawkins.
Hawkins said that in the Associations opinion Mr Kerr has demonstrated a cavalier attitude towards governance processes and sensible business practise. Just because he is the major shareholder, he is still required to meet his responsibilities toward all others under section 131 of the Companies Act, he said.
Hawkins said that Mr Mogridge as Chairman of PGC and a director of both Perpetual and Perpetual Asset Management at the time was deeply involved in this debacle. In the Associations opinion, along with the other directors he has seriously compromised his obligations toward investors. The NZSA believes the reputational damage is such that he should step down from his other public positions to avoid any collateral damage by association.
John Hawkins
021 640 588
Ends
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