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Bernard Hickey details the key news overnight in 90 seconds at 9am in association with the BNZ, including news that former ASB banker Stephen Versalko has been convicted of fraud and sentenced to 6 years in prison after stealing NZ$18 million from 30 wealthy ASB clients over a 9 year period.

Versalko was running a classic Ponzi scheme and hiding it from ASB’s systems. He was only found out after a client saw a documentary about New York Ponzi schemester Bernie Madoff and got curious and worried. The client talked to another ASB banker and the fraud was quickly identified. Versalko used the money to buy luxury properties and a portfolio of investment properties. He also spent NZ$3.4 mln on two prostitutes, althought NZ$1.2 million of that was extortion from one of the prostitutes. Meanwhile, he was also using new money being invested to pay the interest on previous money invested — a classic Ponzi scheme. The NZHerald has more detail here on how the “pathetic creep” stole the money and why his wife was not in court yesterday.

The SFO summary of facts shows that funds were taken from ASB client accounts to Versalko’s personal accounts or a “ghost” account created in the name of an existing client. Versalko was able to manipulate the ASB computer system so that none of the transfers were recorded on bank statements.

Wayne Kiely, a senior investigator at Paragon New Zealand and a former head of security for New Zealand Post and Kiwibank, was surprised at how long Versalko managed to get away with the fraud. While it can be hard to detect a “cunning operator” like Versalko, Mr Kiely said tighter checks and balances could have prevented the fraud.

“That’s the big question: If the money went into an ASB account, and they didn’t pick it up in an audit, then something is terribly wrong. There also should have been controls in place about employees opening accounts. You can only do something like this if you’re in a position of trust.”

But how did he get away with it for so long while operating under ASB’s noses? How well was he supervised? He called himself ‘Mr Invincible’. ASB has repaid clients the lost money and says it has changed its systems to stop a repeat. The full ASB statement is below.

Meanwhile, the government is setting up an Australian style Productivity Commission as part of its coalition agreement with ACT. It will cost NZ$5 million to run.

Finally, Finance Minister Bill English has signalled tax cuts in the May 20 budget are likely to be smaller than expected because Treasury’s forecasts of revenues from property tax tweaks are lower than the Tax Working Group’s estimate of NZ$1.3 billion, Radio Live and Radio NZ have reported.

ASB statement below.

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Bernard Hickey details the key news overnight in 90 seconds at 9am in association with the BNZ, including news the NZ dollar strengthened to new highs against the US$ and Euro overnight.

The Kiwi$ rose to a two month high of 71.6 USc and a 2 year high of 52.1 euro cents as our interest rates appeared relatively more attractive than US and European rates.  This followed news that US producer prices fell 0.6%, which was more than expected.

This reinforced expectations that the US Fed Funds rate will stay “Exceptionally low” for an “extended period”.

The makes the NZ$ relatively more attractive, given our rates are expected to start rising from the middle of 2010.

The NZ$ also rose vs the euro as fears returned about the Greek situation. German officials said no rescue deal was done for a summit next week.

Meanwhile, the Bank of Japan has loosened monetary policy again by doubling a loan programme for banks because of its weak economy This also makes the yen relatively less attractive than currencies like the New Zealand and Australian dollars.

The NZ dollar rose to a 2 year high vs the Euro. It is up to 52.1 euro cents from 39 cents a year ago.  This makes life very tough for NZ exporters to the eurozone.

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Bernard Hickey details the key news over the weekend in 90 seconds at 9am in association with the BNZ, including news that Strategic Finance was put into receivership late on Friday. Campaigners who had been pushing for receivership were happy, including John Lacey, known as ‘The Jackal’ for his tireless campaign. Here’s what he told the Sunday Star Times.

“I worked hard for this,” he said. “I don’t drink, but I’m taking my wife out for a steak.”

He heard the news in the car park of Work & Income in Nelson, where he has worked as a security guard since his savings were frozen by Strategic in August 2008. The former accountant, nicknamed “the jackal”, had campaigned for 18 months to have receivers appointed and felt vindicated.

“The jackal’s done his job,” he said. “I had their arses in a thorn bush and they had nowhere to run.”

Lacey, who is owed NZ$379,000, believes investors will see less than 50 cents in the dollar back. Here’s what he told the DomPost.

The receivers should appoint a liquidator and forensic accountant to investigate Strategic’s transactions and sell the company’s assets in a “timely manner” rather than in a firesale, he said.

“If people aren’t repaying their loans, get someone in there who’s an 800-pound gorilla to start kicking the little chimpanzees’ derrieres and make them pay.”

Meanwhile, there’s more news on where some of the money behind Mark Bryers and Blue Chip Investments might have gone. The Herald on Sunday reports that Bryers had a secret trust known as the Sebastian Trust, which was named after his son. Bryers was still paying out cash from the trust months after the collapse of Blue Chip Investments.

Meanwhile, talks will begin in Melbourne today over a multilateral trade deal with America and 7 other nations including New Zealand, the NZHerald reports. Those nations include the United States, Peru, Chile, Singapore, Brunei Australia, Vietnam and New Zealand America seems keener on these bilateral and multilateral deals than deals through the WTO.

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Bernard Hickey details the key news overnight in 90 seconds at 9am in association with the BNZ, including  news the RBNZ held the OCR at 2.5% yesterday and signalled it would not hike it until the middle of 2010, as expected.

But it increased its inflation forecast and said it may not have to increase the cash rate as much as it has in the past because of higher bank funding costs. The RBNZ said it expected these higher costs to remain high for the foreseeable future because of heavy government borrowing globally. This means variable rates are likely to remain cheaper than fixed rates for longer.

Westpac and ANZ have cut their longer term mortgage rates, but they are still more expensive than short term rates. See all mortgage rates here.

BNZ economist Tony Alexander told the DominionPost he expected the OCR to rise 3% by early 2012, which would push variable rates up to 8.6%. He says variable looks a cheaper deal than fixed for now, but to think about fixing some time soonish.

Borrowers should stick to floating mortgage rates, despite the expectation that they would gradually rise. But in coming months, borrowers should think about moving into a one or two-year fixed term rate, because the average rate should be lower than floating rates over that period.

Meanwhile, Marac Finance was granted an extended government guarantee overnight. It is the first finance company to get the guarantee. Many finance companies will be watching nervously over the coming months, including South Canterbury Finance.

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Bernard Hickey details the key news overnight in 90 seconds at 9am in association with the BNZ, including news FAI Money, the finance company owned by Eric Watson and Mark Hotchin, has told shareholders in a letter it will stop taking in new money from March 22 and repay its outstanding debentures with interest.

The NZ Herald reported the change in approach.

FAI Money falls below the threshold of NZ$20 million to be in the Reserve Bank’s reporting regime and it doesn’t have a credit rating. FAI Money has been criticised in recent weeks over changes to its trust deed to start property lending. It is still advertising on its site.

Meanwhile the unleaded petrol price rose over 182.5 cents/ltr at BP stations overnight, its highest level since mid-October 2008. The oil price has risen over US$82/barrel and the NZ$ has weakened off its highs of a few months ago.

Meanwhile in Greece, the European Union has warned that Greece’s tax hikes may not be enough to fix its big budget deficit, raising fears again of new attacks on the euro.

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Bernard Hickey details the key news in 90 seconds at 9am in association with the BNZ, including news the NZHerald is reporting that Commerce Minister Simon Power is expected to announce tougher rules for KiwiSaver funds reporting results later today.

This follows the controversy around Huljich Funds Management, which issued misleading performance figures. The government is concerned that the public don’t lose confidence in KiwiSaver and is likely to force all fund managers to report their results in the same way. Currently the default funds have tougher rules.

Meanwhile, Portugal has announced measures to bring its budget deficit under control, including cuts to investment and a cap of public sector wages. It wants to avoid Greece’s debacle.

In the United States, a survey of economists has found most now expect the US Federal Reserve to hike its key funds rate within the next six months.

Meanwhile, Europe appears set to build its own regional version of the International Monetary Fund to help bail out countries such as Greece when they’re in trouble.