Māori loan affair
The Māori loan affair (or Hawaiian loans affair
Members of the
At the beginning of 1987 a
The loan
The loan, supposedly of NZ$600 million of Middle Eastern petrodollars (including a "finder's fee" of NZ$20 million), was to be used to set up a Māori Resource Development Corporation, which would use Māori labour to prefabricate houses for export. The Secretary of Māori Affairs, Tamati Reedy, was negotiating as Māori Trustee, but had been counselled against the proposed loan by Graham Scott of Treasury in November. Senior departmental officials had attended a series of meetings in Hawaii, and been introduced to the participants by Rocky Cribb, a businessman from Rotorua.[8][9]
The terms of 4% interest over 25 years were not believable; the money according to a telex from the embassy in Washington was probably laundered, fraudulent or non-existent; and the supposed source of the loan, one Achmed Omar of the
The first interest payment would have been $24 million; David Lange, who was in his element, told a hui, "You tell me the kids are out in the streets .... the next minute you tell me you can finance $24 million". Activist Titewhai Harawira told Lange that "the Māori people needed far more than $600 million, and the government should let them borrow it".[14]
The principals
The principal was Max Raepple a "self-styled German financier" with a friend Michael Gisondi. Raepple had arrived in New Zealand in January, and on 21 January Lange took a swipe at "some of the Māori whingers and activists (with) something of a cargo cult mentality which is an utter betrayal of what Māori enterprise is about" and "self-appointed activists in international finance ranging from undischarged bankrupts to lapsed priests and all sorts of people who accept the bona fides of (Raepelle) who will not allow his credentials to even be read by a newspaper". Bassett commented that "the likes of Eva Rickard, Sonny Waru, Ken Mair and Eru Potaka Dewes who were strutting about, knew little about business".[15]
Journalists investigated (Rocky) Cribb, the supposed Hawaiian bankers, the shadowy Europeans Max Raepple and Michael Gisondi, and their Māori connections. Deane discovered through his international bank contacts that "Both the Europeans, it transpired, were specialists in phoney money schemes, and at Cabinet on 20 January 1987, Lange entertained ministers with lurid accounts of Gisondi's activities".[16] Lange wrote that the story "had the lot: con artists, Hawaiian middlemen and shady Middle Eastern financiers".[17]
Gerald Hensley, the head of the Prime Minister's Department, wrote that a small group from the Reserve Bank, Police, Ministry of Foreign Affairs and intelligence agencies helped by the FBI and Washington's currency protection office investigated the people involved and uncovered "a convoluted rat-run of money-launderers, criminals, and snake-oil salesman who had descended on the Pacific and our own Māori Affairs Department in the wake of the petrodollar boom". They were variants of the "brokered loan confidence game". The Arab connection was said to be a former Kuwaiti finance minister, plus other rogues like a retired Air Force general who was a "playboy and drunk", someone hinting of links to the CIA, a fashionable interior decorator and other "convicted fraudsters, bankrupts and promoters of collapsed companies".[18]
Raepple "was regarded by overseas currency and fraud protection services with a marked distaste increased by the fact that in a series of dubious operations no one had been able to fasten a criminal conviction on him".[9] He operated in the Pacific; in July 1986 in the Cooks as a "Californian philanthropist with an interest in low-cost housing", then in Vanuatu offering to raise funds from Middle East sources for a new airport, then a fiasco in Tonga over an unbuilt "Crown Prince Hotel", and talk of setting up an “International Bank of the South Pacific”.[9] Lange suggested in Parliament that Raepple was the same man as one Werner Rohrich, who did have a police record.[19]
The minister
Deane had found evidence of "considerable chaos" in the department, and discussed with Lange whether to remove Reedy and restructure the department; however, as this would involve firing Wētere as well, Lange baulked.[22] Reedy and his deputy, Neville Baker were suspended for a time, but restructuring of the Māori Affairs Department was put on hold. In January when a large group claiming that Māori were not being treated fairly by Deane and demanded to see the Minister (Wētere), Deane, at the urging of his deputy Don Hunn, arranged a full day of discussion with food and cups of tea at the State Services Commission building. Eventually feelings were calmer and relations more friendly.[22]
Lange flew to
Lange told Wētere on his return that the Māori leaders he had consulted favoured his resignation and a by-election, and Wētere offered to resign. Lange's own account says that Wetere's future was in the balance, but does not mention that he wanted Wētere to resign as minister (to be replaced by
The department
The Ministry of Māori Affairs was headed by the Secretary of Māori Affairs Tamati Reedy and his deputy Neville Baker. Reedy was negotiating as Māori Trustee, but had been counselled against the proposed loan by
Palmer stated that the department was incompetent and "spent much of its time and energy in administering financial assistance programmes of various sorts". The saga ended before anything happened, but negative media coverage intensified. Jim Callaghan, the recently retired Secretary for Justice was brought in to bring some order to the department.[27] Palmer noted that it was no longer possible for Cabinet's decisions safely to be communicated to Māori Affairs because the minutes went straight to the press.[16]
Lange and Douglas had seen the need for a competently run Māori business development arm, and also for a reorganisation of the "shambles" in the Māori Affairs Department. Departmental reorganisation was postponed, but on 10 February 1987, the government resolved in principle to establish a Māori Development Corporation, and this was done in the 1987 budget.[5] Later Bassett said that ministers adopted a double standards of expectation where Māori were concerned, and standards of accountability for the expenditure public money by many Māori groups remained foreign. Problems included MANA Enterprise established by the department in 1985 which was "mired in accusations of mismanagement".[28]
See also
- Loans affair in Australia, 1975
- List of political scandals in New Zealand
References
- RNZ. 23 June 2018. Retrieved 25 August 2019.
- ^ a b Bassett 2008, p. 229.
- ^ Hames 1995, p. 53,54.
- ^ Hames 1995, p. 51.
- ^ a b Bassett 2008, p. 234.
- ^ "Hostilities started with the Māori loans affair". The New Zealand Herald. 16 December 1988. p. 3.
- ^ Richards 2010, p. 275.
- ^ Bassett 2006, p. 165.
- ^ a b c d Hensley 2006, p. 292.
- ^ Richards 2010, p. 274.
- ^ Bassett 2006, pp. 165, 199.
- ^ Richards 2010, pp. 274–275.
- ^ Hames 1995, p. 48,49.
- ^ a b Pope 2011, p. 153.
- ^ Bassett 2008, p. 231.
- ^ a b c Bassett 2006, p. 166.
- ^ a b c Lange 2005, p. 232.
- ^ Hensley 2006, p. 292-293.
- ^ Hames 1995, p. 47.
- ^ Palmer 2013, p. 404.
- ^ Hames 1995, p. 50.
- ^ a b Bassett 2006, pp. 165–166.
- ^ Lange 2005, p. 298.
- ^ Bassett 2008, pp. 232, 233, 234.
- ^ Bassett 2008, p. 235.
- ^ Bassett 2008, p. 233.
- ^ Palmer 2013, p. 403.
- ^ Bassett 2008, p. 291.
Further reading
- ISBN 978-1-86971-094-1.
- Bassett, Michael; Bassett, Judith (2006). Roderick Deane: His Life and Times. Auckland: Viking/Penguin. ISBN 0-670-04567-5.
- Hames, Martin (1995). Winston First: The unauthorised account of Winston Peters' career. Auckland: Random House. ISBN 1-86941-257-5.
- ISBN 1-86940-378-9.
- ISBN 0-67-004556-X.
- ISBN 978-0-86473-905-6.
- Richards, Raymond (2010). Palmer: The Parliamentary Years. Christchurch: Canterbury University Press. ISBN 978-1-877257-92-6.
- ISBN 978-0-473-190255.
- Report in Australia: Sydney Morning Herald