Government must answer questions over SCF bailout

The Green Party is supporting calls for an investigation into the Government's management of the Crown deposit guarantee scheme, following the Serious Fraud Office laying charges over South Canterbury Finance (SCF) transactions worth $1.7 billion.

"It appears fraud may have occurred while South Canterbury Finance was covered by the Government's retail deposit guarantee scheme. That indicates a complete lack of Government oversight," said Green Party Co-leader Dr Russel Norman.

"While there were good reasons to introduce the guarantee scheme, it was critical the scheme was managed in a way that minimised tax payer liability. The Government's management of the liability relating to SCF is now highly questionable.

"The public needs to know what Treasury and the Government were doing to stop alleged fraud happening while the taxpayer was underwriting SCF. It seems whatever they were doing wasn't enough."

The Auditor General's report on Treasury's management of the Crown Retail Deposit Guarantee Scheme criticised the Treasury and the Government for not managing the size of the Crown's potential liability. Deposits with SCF grew by 25% after the guarantee was put in place and Treasury did not attempt to moderate this behavior, 'even when it could see the Crown's potential liability increasing'.

"The Government and Treasury need to take responsibility for their actions. There is mounting evidence they made poor quality decisions that benefited those who invested in SCF over the taxpayer," said Dr Norman.

"When such large companies entered the retail deposit guarantee, it was important to minimise any cost to the public. On the face of it, this wasn't the case with SCF, so an inquiry is needed to clear things up.

"We support the Labour Party's call for a thorough inquiry. It should happen immediately. Any inquiry should also cover the use of consultants by Treasury and their role, if any, in this affair.

"We need to determine if tax payer's money has been wasted on SCF through poor decision making, a lack of on-going oversight, and inaction on alleged fraud," said Dr Norman.