The decision whether or not to strip Lombard Finance director Sir Douglas Graham of his knighthood would be a "very big" and complex call, and will not be made until Sir Douglas and other Lombard directors had made it clear they were not taking further legal action over appealing last week's convictions, Prime Minister John Key says.
Sir Douglas, a former National Party Justice Minister in the Bolger government, along with fellow Lombard directors Bill Jefferies (himself a former Labour Party Justice Minister), Lawrie Bryant, and Michael Reeves, were found guilty of four out of five charges laid against them by the Financial Markets Authority relating to their roles in the collapse of property financier Lombard Finance in 2008.
The ruling in the Wellington High Court last week sparked calls from Lombard investors for Sir Douglas to be stripped of his knighthood, a decision that would have to be signed off by the Prime Minister.
Speaking to media in Wellington this morning, Key said he would look at the issue once the four had been sentenced on March 29 and depending on whether they decided to take further legal action over the ruling.
“If they’ve exhausted all of that then obviously the matter should be considered by me, and it will be,” Key said.
Key had asked the Cabinet office “some days ago” for general advice to get a sense of what had happened previously with other cases like this.
“It’s a complex area because we haven’t had lots of people in this position, but we have had some in the past,” he said.
“I always just make sure I absolutely understand what the precedent has been, and there’s a degree of fairness [in needing to know precedents before a decision is made]. If that move was to occur that would be a very big call. Sir Douglas Graham actually made an enormous contribution to New Zealand," Key said.
However in the eyes of the law Graham had got things wrong in the case of Lombard Finance, he said.
Key said he had huge sympathy for Lombard’s investors.
“Finance companies robbed huge numbers of New Zealanders of their nest egg retirement savings. They were entitled to have better protection, the law didn’t protect them and I have great sympathy for them," he said.
“We just need to weigh up all the different factors.”
(Updates with video)
15 Comments
But that relegates considerations of "honour", "trustworthiness" and "respect" to the realm of jurisprudence - perhaps it is the very way financiers/bankers view the world. If technically it's legal - no need to consider the ethical/moral rightness or wrongness of an action/inaction. The Robo signing scandal in the US being but one example.
My issue is not with Sir Douglas, per se, but rather with the moral questions that reveal themselves in terms of the way those with 'elite' powers view this. If John Key believes he has the moral authority to decide who to confer these titular honours on (and remember, he unilaterally decided to restore these titular honours) - should he abdicate that moral authority in deciding whether an individual should be stripped of them?
It sounds to me as if he believes (that is, his moral judgment of it) that Sir Douglas' other contributions to NZ society outweigh his recent detrimental actions - and if that is the case and he (JK) holds the power/authority to make such a moral judgment - then he should just say that and put the "stripping" matter to rest. I'd have more respect for Key if he was prepared to reveal his true morality, even if it has costs in terms of his populist image. But then perhaps his true morality rests on maintaining that populist image for personal gain.
I still find it difficult to understand what this PM "stands for".
Hehehe - it took JK only two weeks following the 2008 election to unilaterally decide to get us back into this titular racket - so I'm not surprised he thinks this decision re Sir DG must also fall to his shoulders alone. On restoring the titles, he should have established an offical review committee, and I'd have thought the oversight of its deliberations would be for our Governer General - not our PM.
But perhaps it just goes to show how politicised these awards really are - crony capitalism disguised as crony colonialism.
What the evidence seems to suggest is that Sir Doug was "trading" on the basis of his Sir-ness, not his business acumen. Whether an appeal finds him technically guilty of fraud or not, the investments went bad and he sat there on his titular behind while signing off on the sham.
I tend to think the fraud was not necessarily deliberate - rather it belies his lofty notion of only needing to bring the title of Sir to the role of Director, not the actual accountability normally associated with directorships. What's the old expression about coming to believe in your own propaganda?
In my opinion DG should keep his knighthood as it was for the services as a minister, for treaty negotiations etc. This is different to the guy at RBS who lost his knighthood as that was bestowed for services to banking, which can hardy be maintained if said bank goes tits up because of your decisions.
DG wasn't knighted for services to Lombard finance so I don't see the problem.
And on the subject of those Lombard finance "investors", does anyone really believe that had a few sentences in a prospectus been different these guys wouldn't have put their money in?
If so I have a rugby union to sell you. All these investors saw was a big fat 9.35% return and went all in undiversified, in a naive belief it was 'safe'.
I say this from someone who tried to warn a friend on 3 occasions that these companies were not safe investments, but people don't listen when a 10% carrot is being dangled.
As for that clown who thinks directors should be personally liable, well that is an option however you can't enact that sort of thing in retrospect. It needs to be an upfront requirement before people become directors.
If you are not competent to be a director of any company,do not accept the appointment.
If you are not competent to be a trustee of a trust,do not accept the appointment.
These Lombard guys have none to blame but themselves.
Regardless of the outcome of this court case,why have so many finance companies failed in this country.
The simple answer is gross lack of competency by those who had the reins.
As with the sharemarket days of the 1980's they got carried away with the hype of it all,thinking that the upward spiral would never end.
The directors of a company carry the ultimate responsibility.
Knighthoods are egotistical rubbish.
I avoid such people.
As for propectuses,the devil in everything is in the detail.
Do not go onto a board just to swell your narcistic head.
Too many people seek such positions for the wrong reason.
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