One of Taranaki's largest private investment projects has gone horribly wrong, losing close to $20 million in a series of high-risk financial ventures.
The loss means Taranaki's most northern iwi, Ngati Tama, has shed all of a $14.5m Treaty of Waitangi payout it received in 2003.
Shocked iwi members learned of the financial disaster at a hui at Pukearuhe Marae this weekend.
Where, one should ask in the wake of this stuff-up, does the government’s obligations end. Treaty settlements are full and final. However, I don’t think - and I’m open to correction on this point - that the Waitangi Tribunal, Crown Law or Cabinet have ever interpreted full and final to mean that the government’s obligations end once settlement legislation is passed. Indeed, if the government knew a tribe’s settlement was close to collapsing, and did nothing, then the government would be liable for a contemporary breach of the Treaty under the partnership and active protection principles. So, despite the full and final aspect of settlements, the government retains on-going obligations under the principles of the Treaty. The full and final notion relates to, I believe, the redress component. It does not nullify other obligations the government has towards Maori.
With this in mind, does the government owe Ngati Tama compensation? Personally, I don’t think so, but I know other Maori think compensation is appropriate. From what information is in the public domain, the government had no idea of the situation and no hand in it. Ngati Tama’s loss came as a result of poor management. However, if the government can guarantee risky finance companies and, when they go bust, pay out sums well in excess of all treaty settlements combined, why can’t the government guarantee treaty settlements? A valid question and one I can’t find a compelling answer against.
It is negligent, on the government’s part, to absolve itself of responsibilities once treaty settlements are passed. After all, the government is in a sense making an investment. Therefore, the government should ensure appropriate mechanisms are in place to manage the settlement. Before a settlement can be transferred, a tribal organisation must be in place, but it is not a requirement that an adequate corporate arm is in place. This is inadequate.
Once settlement legislation is passed, it is on iwi to make what they will of the settlement. However, many of the smaller iwi, have no experience, expertise or knowledge in and of commercial matters. The larger iwi tend to do okay, for example Ngai Tahu and Ngati Awa, but the smaller iwi often do not have expert tribe members to draw on. This isn’t universally true, I should add, Tainui came close to bankruptcy a few years ago.
I agree with Richard Jones who says that “an extra layer of due diligence is necessary when planned investments are outside the traditional areas such as the primary sector and property”. Maori tend to do very well in primary industries and property, yet no so well in the sort of investments Ngati Tama made. In fact, I think it is almost unprecedented for an iwi to invest heavily in an overseas company, and a software company too.
Ultimately, Ngati Tama had too much exposure to what were a handful of very, very risky investments. I can understand the desire to make something of a miserly settlement, but I don’t think Ngati Tama’s leaders kept in mind that management of treaty settlements should be conservative. The settlements are meant to be sustainable and intergenerational; it’s not for current generations to milk it for all it’s worth with risky investments. Having said that, I shouldn’t speculate on what was motivating Ngati Tama leaders and what, I suppose, really happened.
I think the CEO of Ngati Tama, Greg White, and the Board owe the people of Ngati Tama an apology.
i couldn't disagree with you more. the crown has always been explicit that the use of settlement money was the responsibility of the iwi themselves. this actually was the demand of the original negotiation team if i remember correctly?
ReplyDeleteif it didn't i could equally see critics characterising the crown as "patronising", and "treating maori as irresponsible children".
the people at fault here are the iwi, and the iwi alone. as you state in your quote, "high risk ventures". the iwi should have invested this money wisely, not slurged foolishly.
perhaps, just perhaps they could have brought in one of those people who advises lottery winners, or bought a farm, or invested in slow-growth real estate.
k/o
DeleteThe iwi is at fault? All five thousand of them, including those who didn't vote for this team and/or their strategy?!
This tragedy has more in common with the recent collapse of NZ financial companies than just the concept of taxpayer bailouts. Check Ngati Mutunga chair, Dion Tuuta's, supportive words...
http://www.stuff.co.nz/taranaki-daily-news/opinion/6753867/Risky-path-ends-in-disaster-and-shame-for-whanau
Iwi are a microcosm of many issues afflicting the world concerning investment, scale, ability, and responsibility. Much 'cleverer' professionals have lost much, much more, and with little of the comeback that will dog the Ngati Tama board.
Oh, before I forget, the 'Crown' (which is actually the NZ government in this instance) has always been explicit about private enterprise too: capitalism entails risk, to be borne by the investors. Unless, as we now know, you're investing in a really really big company or bank. In which case they may prop you up with tax-payers money. Or they may not. They kinda make it up as they go along.
DeleteIt's not patronising then, it's patronage.
But you knew that, ay.
yeah, the iwi are at fault. before the crown transfers assets it looks for assurances that the people taking receipt of assets are "accountable" and "representative" of the iwi.
Deletethere have been many, many criticisms of the model the crown adopted, and one of those is that you can't be sure that the people you're handing to the assets to aren't just going to blow it on the pokies. so the treaty settlements blokes follow their processes, and just have to trust that the iwi won't squander it.
the crown's obligation reaches to restorative justice, not hand-holding. let's not forget that. these assets aren't being handed over to enrich an iwi. and they sure as hell are *not* being handed over to address maori poverty - MSD is there to handle that brief. the money is reparation for the misdeeds of previous Governments, nothing more, nothing less.
this may have helped ...
ReplyDeletehttps://www.sorted.org.nz/a-z-guides/investing
"Having said that, I shouldn’t speculate on what was motivating Ngati Tama leaders and what, I suppose, really happened."
ReplyDeleteThe reason is greed combined with stupidity. Are you still too scared to voice an opinion after the 'house nigger' post?
What? If you haven't noticed, I've been voicing opinions just as controversial of late. See the post titled "Pig brutality".
DeleteActually, Waikato Tainui were never at risk of bankruptcy. In 1995 they received $170m in their settlement. In 2000, the asset value had risen to $245m, but they wrote off $40m of debt, which brought them down to $205m asset value.
ReplyDeleteAlso the Maori fertility rate is about 1.4% p.a, and inflation last year averaged 2.6%. That means iwi needed to make 4% just to keep the real value of their assets - let alone fund their administration and provide services to their people.
That doesn't excuse investing in a poorly conceived investment, which was clearly badly managed. But "slow growth" and farming are not the answer.
Personally, I find it incredible that they received just $14m for their settlement. They were a raupatu iwi and received a pittance. We should all be ashamed
I think the finance company analogy falls down.
ReplyDeleteThe finance company guarantees were for the investors in the business, not the business itself. The businesses that were guaranteed no longer exist. Should we disband the iwi or find another iwi to merge the bankrupt iwi with?
Personally I think the finance company guarantees were reprehensible and allowed a lot of adventurism and risky behaviour that never would have happened without the guarantee. One can only imagine that there would be a lot of similar behaviour by other iwi going forward if there was a guarantee system put in place.
New Zealand's insurance for failed investors and iwi members should be limited to what is available under the social welfare system.
I don't think any private sector investments should be "Guaranteed".
ReplyDeleteThe number of "insider" investors who put money into South Canterbury Finance, knowing they were going to make a killing with the inevitable bailout, was disgusting.
Even guarantees for compulsory savings, such as Kiwisaver, put the risks back on those who do not stand to make any gain..
Not that I am happy with the financial gambling which passes for investment, either.
I would prefer to see banking removed from private hands.
Then Government and Iwi could invest directly as a "bank" for ourselves.
See. Public banking in North Dakota.