Labour leader Phil Goff accuses PM John Key of pushing ahead with asset sales before gaining mandate from electorate

Labour Party leader Phil Goff has written to the boss of one of the investment banks advising Treasury on the National Party-led government's planned partial sales of state owned enterprises (SOEs) telling him his company's contract will be terminated if Labour wins the election.

Goff has written to John Wylie, the Melbourne-based managing director of Lazard, which was appointed Treasury's independent adviser on the proposed asset selldowns late last month. The chairman of Lazard's international corporate advisory arm is former Australia Labor Prime Minister Paul Keating.

In his press release and letter Goff made no mention of the other investment banks advising Treasury on National's proposed SOE selldowns, which so far include Deutsche Bank, Craigs Investment Partners, UBS, Macquarie, Goldman Sachs and First NZ Capital. More will follow - assuming the selldowns go ahead - as managers of the share sales are yet to be named.

“My message to these Australian bankers is simple – hands off our assets,” Phil Goff said of Lazard.

“These assets – Mighty River Power, Meridian Energy, Genesis Energy, Solid Energy and Air New Zealand – perform exceptionally well in the interest of all New Zealanders. They return hundreds of millions of dollars in revenue to the taxpayer every year. If (Prime Minister) John Key is allowed to sell them they will be gone forever and New Zealand will be poorer."

Goff said he didn't want Australian bankers "pocketing NZ$100 million as they clip the ticket during the sale." It's estimated the bankers will be paid tens of millions of dollars in fees from advising on the sales.

'Sales process already started'

He said his first action as Prime Minister, should Labour lead the government after the November 26 election, will be to cancel the sale process that National has already started despite Key promising his party will get a mandate from the New Zealand people first.

“There is no need to sell our assets. Labour’s plan for a fairer tax system pays off New Zealand’s debt, provides tax cuts for most New Zealanders and allows us to keep our assets,” Goff added.

Lazard's job description is to advise Treasury in areas such as the design of and participation in the pre-qualification process for the joint lead managers of the proposed SOE sharemarket floats and appointment of sales syndicates. Lazard will also provide "independent quality assurance" of the sales programme advice prepared by Crown Advisor Deutsche Bank and its 49% owned Craigs Investment Partners, plus independent advisory services during the consultation and execution phase for each transaction.

Treasury has also had UBS working on a scoping study of Solid Energy, Macquarie on Mighty River Power, Goldman Sachs on Genesis Energy and First NZ Capital on Meridian Energy. 

The government instructed Treasury in January to conduct preparatory work to enable partial sales of Mighty River, Meridian, Genesis, and Solid Energy and to reduce the Crown’s 74.69% shareholding in Air New Zealand, with the Crown retaining a majority stake of at least 51% in all the companies.

Any SOE sell-downs, through sharemarket floats, would happen over a three to five year period starting in 2012. Treasury estimates implementation of this so-called mixed ownership model would raise between NZ$5 billion and NZ$7 billion. 

Read Goff's letter in full below:

14 November 2011

 

Mr John Wylie
Managing Director
Lazard Pty Ltd
101 Collins Street
Melbourne VIC 3000
AUSTRALIA

 

Dear Sir

I note that on 1 November 2011 the New Zealand Treasury appointed Lazard Pty Ltd as financial advisors to design the sales process for the disposal of New Zealand state owned assets.

The companies include Mighty River Power, Meridian Energy, Genesis Energy, Solid Energy and Air New Zealand.

I write to place Lazard Pty Ltd on notice that an incoming Labour government will terminate Lazard’s appointment forthwith.

A Labour government will not be selling state owned assets and Lazard’s services will no longer be required.

 

Yours faithfully

 

Hon Phil Goff

Leader of the Opposition

 

cc Mr Gabriel Makhlouf

Chief Executive and Secretary The Treasury
1 The Terrace
Wellington 6011
NEW ZEALAND