English rebuffs call for commission of inquiry into SCF

Finance Minister Bill English has rebuffed a call by Labour for a commission of inquiry into the handling of the South Canterbury Finance (SCF) bailout.

Along with other parties, Labour has been pressing for full disclosure of SCF's situation before it went into receivership, and a parliamentary inquiry into the way the Government handled the crisis.

Labour's finance spokesman David Cunliffe asked Mr English in Parliament today if he would agree to a full commission of inquiry into the collapse, but Mr English said he didn't see anything could be gained by one.

He said the Government needed to focus on getting value for taxpayers, who had paid out $1.6 billion under the Retail Deposit Guarantee Scheme, and trying to recover between $1 billion and $1.2 billion through the sale of the company's assets.

"Secondly, should any issues arise around fault, or cause, or responsibility for what has gone on with South Canterbury Finance, there are any number of regulatory agencies that could investigate those questions."

The Government would soon release "all the relevant papers that can be released, subject to commercial confidentiality, which will allow the member to scrutinise in detail all judgments and processes followed by the Government," he said.

Mr Cunliffe also questioned what reports receiver KordaMentha gave Treasury about SCF using its acceptance into the guarantee scheme to attract more investment and increase its loans.

Mr English said he couldn't answer that in detail, but evidence showed most of the concerning lending activity occurred before SCF joined the guarantee scheme.

Mr Cunliffe said in a statement that there were "troubling" questions around the SCF issue and only a fully independent public commission of inquiry could restore public confidence in the integrity of markets and regulatory processes.

Those questions included how much the Government knew about SCF's situation and when, and whether the decision to place Aorangi Securities into statutory management may have compromised SCF's ability to meet its obligations. Aorangi was controlled by SCF's major shareholder, Allan Hubbard.

Mr English has said New Zealand may get through the guarantee scheme with a net cost of between $200 million and $400 million, but Mr Cunliffe said an estimate from Treasury indicated the residual cost to the taxpayer could be up to $800 million.