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Māori loan affair

May 16, 2023

The Māori loan affair (or Hawaiian loans affair[1]) of 1986 and 1987 in New Zealand was an unauthorised attempt by the Department of Māori Affairs (today called Te Puni Kōkiri) to raise money overseas for Māori development. The affair was first raised in Parliament on 16 December 1986 with a question from opposition National MP Winston Peters about loan negotiations; the revelations dumbfounded ministers; and the House adjourned on 18 December. Peters was reluctant to share all his information with the State Services Commission chairman Roderick Deane or Peters' National Party leader Jim Bolger, and Bolger then downplayed the affair. Peters was getting information from an informant in Koro Wētere's office and from Rotorua businessman Rocky Cribb.[2] Peters was first advised of the affair by Edwin Perry an associate of Cribb and like Cribb a National Party member. The affair helped Peters' promotion to the frontbench after the 1987 election.[3]

Members of the Fourth Labour Government were divided on the action to be taken, with Prime Minister David Lange, Lange's staff, and his deputy Geoffrey Palmer[4] wanting the resignation of Wētere as Minister of Māori Affairs and from his seat in Parliament (Wētere would have had to face a by-election in an election year), though Cabinet decided against this on 9 February. Hence as Bassett later wrote, "Several ministers would agree in later years, however that it was about the time of the Māori loans affair that cabinet solidarity began to fall apart."[5] Finance Minister Roger Douglas later recounted that the "hostilities" within the Cabinet began with the Māori loans affair.[6]

At the beginning of 1987 a Television New Zealand report from Hawaii claimed a link with the CIA and suggested an American attempt to destabilise the Labour government because of its anti-nuclear policy, although Palmer thought the matter involved incompetence in the department.[7]

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]

Roderick Deane, the Chairman of the State Services Commission, was asked to investigate, and when he uncovered evidence of departmental incompetence, produced a fuller report on Christmas Eve. Sometimes working through the night, he found that "some ministers" had known about the negotiations but failed to stop it, and Reedy's signing of a document headed "Unconditional and Irrevocable Fee Agreement" was unauthorised and contrary to Treasury advice.[10][11]

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 Kuwaiti royal family, did not exist.[12] The loan was for US$300 million, and papers released suggested that the proposal would use Māori land as collateral, and that as well as the 3.5% fee to Gicondi there would also be a 2.5% fee for Raepelle, totalling 6%. Trevor de Cleene suggested that the money source might be Ferdinand Marcos, who was then living in Hawaii.[13]

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

 
Māori Affairs Minister Koro Wētere denied all knowledge of the plan.

Koro Wētere the Minister of Māori Affairs "appeared to give the go-ahead" to the Secretary (Reedy) as Māori Trustee to negotiate with an "American (sic) financier"; and although Wētere claimed that the loan had been cleared with the Minister of Finance Roger Douglas, Douglas had no recollection of any agreement.[2] Wētere "denied all knowledge of the plan" to Palmer according to Lange[17] and to Pope,[14] but Geoffrey Palmer wrote that the Minister "did not consent to the raising of any loan" and "knocked the idea on the head when he learned the full import of what was going on".[20] There were suggestions that Wētere had known of the proposal as long ago as 21 October 1986, and that a trip he was to make to Hawaii in December was to discuss the proposal as well as to attend the new Hawaiian Governor's inauguration.[21]

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 Napier and Wanganui on the weekend of 7 & 8 February to consult Māori leaders; supposedly on a secret flight, he was greeted at Wanganui Airport by a guard of honour from territorials exercising there. On his trip he was given the message from Māori leaders outside parliament that what had happened was deplorable but Wetere should be supported, so he "started 1987 by inventing defences for the minister". Lange publicly declared that the minister had acted "unwisely" (in writing a note of support for Cribb).[17] At a meeting of Māori leaders Lange had convened at Palmer's request, something close to a fist fight broke out in front of him; Palmer handed him a note which said "I am not of this planet" and left the room.[23]

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 Peter Tapsell) and also to resign his seat and fight a by-election. Prebble and Douglas got wind of this strategy on the evening of 8 February. So Cabinet on 9 February held a lengthy discussion and the resignation proposal was rejected, with only four ministers in favour (Lange and Palmer plus Russell Marshall and Margaret Shields). Douglas told Wētere at the Cabinet meeting that "I don’t want to see you on television every night for the next four weeks of a by-election campaign talking about Māori loans that weren’t raised when there are ever so many more important matters before us in election year". Prebble said "Better to talk about the $7 billion that was borrowed (by Muldoon for Think Big) than about the $600 million that wasn't". After the cabinet meeting Lange (at the urging of his staff) defended Wētere at a press conference, saying " ... it was odd that he should be pilloried over loans that weren't raised, when the media seemed not interested in the $7 billion that had been raised and squandered by National".[24][16]

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 Graham Scott of Treasury in November. Senior departmental officials had attended a series of meetings in Hawaii.[9] The local middleman was a businessman Rocky Cribb from Rotorua, who Wētere had given a letter of support to, and who went bankrupt. Cribb was the principal informant for Winston Peters.[25] There were proposals to transfer Tamati Reedy to the new Māori Language Commission, but Reedy regarded it as a promotion warranting higher pay.[26]

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

References

  1. ^ "Former Māori Affairs minister Koro Wētere dies". RNZ. 23 June 2018. Retrieved 25 August 2019.
  2. ^ a b Bassett 2008, p. 229.
  3. ^ Hames 1995, p. 53,54.
  4. ^ Hames 1995, p. 51.
  5. ^ a b Bassett 2008, p. 234.
  6. ^ "Hostilities started with the Māori loans affair". The New Zealand Herald. 16 December 1988. p. 3.
  7. ^ Richards 2010, p. 275.
  8. ^ Bassett 2006, p. 165.
  9. ^ a b c d Hensley 2006, p. 292.
  10. ^ Richards 2010, p. 274.
  11. ^ Bassett 2006, pp. 165, 199.
  12. ^ Richards 2010, pp. 274–275.
  13. ^ Hames 1995, p. 48,49.
  14. ^ a b Pope 2011, p. 153.
  15. ^ Bassett 2008, p. 231.
  16. ^ a b c Bassett 2006, p. 166.
  17. ^ a b c Lange 2005, p. 232.
  18. ^ Hensley 2006, p. 292-293.
  19. ^ Hames 1995, p. 47.
  20. ^ Palmer 2013, p. 404.
  21. ^ Hames 1995, p. 50.
  22. ^ a b Bassett 2006, pp. 165–166.
  23. ^ Lange 2005, p. 298.
  24. ^ Bassett 2008, pp. 232, 233, 234.
  25. ^ Bassett 2008, p. 235.
  26. ^ Bassett 2008, p. 233.
  27. ^ Palmer 2013, p. 403.
  28. ^ Bassett 2008, p. 291.

Further reading

May 16, 2023
māori, loan, affair, hawaiian, loans, affair, 1986, 1987, zealand, unauthorised, attempt, department, māori, affairs, today, called, puni, kōkiri, raise, money, overseas, māori, development, affair, first, raised, parliament, december, 1986, with, question, fr. The Maori loan affair or Hawaiian loans affair 1 of 1986 and 1987 in New Zealand was an unauthorised attempt by the Department of Maori Affairs today called Te Puni Kōkiri to raise money overseas for Maori development The affair was first raised in Parliament on 16 December 1986 with a question from opposition National MP Winston Peters about loan negotiations the revelations dumbfounded ministers and the House adjourned on 18 December Peters was reluctant to share all his information with the State Services Commission chairman Roderick Deane or Peters National Party leader Jim Bolger and Bolger then downplayed the affair Peters was getting information from an informant in Koro Wetere s office and from Rotorua businessman Rocky Cribb 2 Peters was first advised of the affair by Edwin Perry an associate of Cribb and like Cribb a National Party member The affair helped Peters promotion to the frontbench after the 1987 election 3 Members of the Fourth Labour Government were divided on the action to be taken with Prime Minister David Lange Lange s staff and his deputy Geoffrey Palmer 4 wanting the resignation of Wetere as Minister of Maori Affairs and from his seat in Parliament Wetere would have had to face a by election in an election year though Cabinet decided against this on 9 February Hence as Bassett later wrote Several ministers would agree in later years however that it was about the time of the Maori loans affair that cabinet solidarity began to fall apart 5 Finance Minister Roger Douglas later recounted that the hostilities within the Cabinet began with the Maori loans affair 6 At the beginning of 1987 a Television New Zealand report from Hawaii claimed a link with the CIA and suggested an American attempt to destabilise the Labour government because of its anti nuclear policy although Palmer thought the matter involved incompetence in the department 7 Contents 1 The loan 2 The principals 3 The minister 4 The department 5 See also 6 References 7 Further readingThe loan EditThe 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 Maori Resource Development Corporation which would use Maori labour to prefabricate houses for export The Secretary of Maori Affairs Tamati Reedy was negotiating as Maori 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 Roderick Deane the Chairman of the State Services Commission was asked to investigate and when he uncovered evidence of departmental incompetence produced a fuller report on Christmas Eve Sometimes working through the night he found that some ministers had known about the negotiations but failed to stop it and Reedy s signing of a document headed Unconditional and Irrevocable Fee Agreement was unauthorised and contrary to Treasury advice 10 11 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 Kuwaiti royal family did not exist 12 The loan was for US 300 million and papers released suggested that the proposal would use Maori land as collateral and that as well as the 3 5 fee to Gicondi there would also be a 2 5 fee for Raepelle totalling 6 Trevor de Cleene suggested that the money source might be Ferdinand Marcos who was then living in Hawaii 13 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 Maori people needed far more than 600 million and the government should let them borrow it 14 The principals EditThe 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 Maori whingers and activists with something of a cargo cult mentality which is an utter betrayal of what Maori 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 Maori 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 Maori 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 Edit Maori Affairs Minister Koro Wetere denied all knowledge of the plan Koro Wetere the Minister of Maori Affairs appeared to give the go ahead to the Secretary Reedy as Maori Trustee to negotiate with an American sic financier and although Wetere claimed that the loan had been cleared with the Minister of Finance Roger Douglas Douglas had no recollection of any agreement 2 Wetere denied all knowledge of the plan to Palmer according to Lange 17 and to Pope 14 but Geoffrey Palmer wrote that the Minister did not consent to the raising of any loan and knocked the idea on the head when he learned the full import of what was going on 20 There were suggestions that Wetere had known of the proposal as long ago as 21 October 1986 and that a trip he was to make to Hawaii in December was to discuss the proposal as well as to attend the new Hawaiian Governor s inauguration 21 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 Wetere as well Lange baulked 22 Reedy and his deputy Neville Baker were suspended for a time but restructuring of the Maori Affairs Department was put on hold In January when a large group claiming that Maori were not being treated fairly by Deane and demanded to see the Minister Wetere 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 Napier and Wanganui on the weekend of 7 amp 8 February to consult Maori leaders supposedly on a secret flight he was greeted at Wanganui Airport by a guard of honour from territorials exercising there On his trip he was given the message from Maori leaders outside parliament that what had happened was deplorable but Wetere should be supported so he started 1987 by inventing defences for the minister Lange publicly declared that the minister had acted unwisely in writing a note of support for Cribb 17 At a meeting of Maori leaders Lange had convened at Palmer s request something close to a fist fight broke out in front of him Palmer handed him a note which said I am not of this planet and left the room 23 Lange told Wetere on his return that the Maori leaders he had consulted favoured his resignation and a by election and Wetere offered to resign Lange s own account says that Wetere s future was in the balance but does not mention that he wanted Wetere to resign as minister to be replaced by Peter Tapsell and also to resign his seat and fight a by election Prebble and Douglas got wind of this strategy on the evening of 8 February So Cabinet on 9 February held a lengthy discussion and the resignation proposal was rejected with only four ministers in favour Lange and Palmer plus Russell Marshall and Margaret Shields Douglas told Wetere at the Cabinet meeting that I don t want to see you on television every night for the next four weeks of a by election campaign talking about Maori loans that weren t raised when there are ever so many more important matters before us in election year Prebble said Better to talk about the 7 billion that was borrowed by Muldoon for Think Big than about the 600 million that wasn t After the cabinet meeting Lange at the urging of his staff defended Wetere at a press conference saying it was odd that he should be pilloried over loans that weren t raised when the media seemed not interested in the 7 billion that had been raised and squandered by National 24 16 The department EditThe Ministry of Maori Affairs was headed by the Secretary of Maori Affairs Tamati Reedy and his deputy Neville Baker Reedy was negotiating as Maori 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 9 The local middleman was a businessman Rocky Cribb from Rotorua who Wetere had given a letter of support to and who went bankrupt Cribb was the principal informant for Winston Peters 25 There were proposals to transfer Tamati Reedy to the new Maori Language Commission but Reedy regarded it as a promotion warranting higher pay 26 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 Maori Affairs because the minutes went straight to the press 16 Lange and Douglas had seen the need for a competently run Maori business development arm and also for a reorganisation of the shambles in the Maori Affairs Department Departmental reorganisation was postponed but on 10 February 1987 the government resolved in principle to establish a Maori Development Corporation and this was done in the 1987 budget 5 Later Bassett said that ministers adopted a double standards of expectation where Maori were concerned and standards of accountability for the expenditure public money by many Maori groups remained foreign Problems included MANA Enterprise established by the department in 1985 which was mired in accusations of mismanagement 28 See also Edit 1980s portalLoans affair in Australia 1975 List of political scandals in New ZealandReferences Edit Former Maori Affairs minister Koro Wetere dies 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 Maori 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 EditBassett Michael 2008 Working with David Inside the Lange Cabinet Auckland Hodder Moa 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 Hensley Gerald 2006 Final Approaches A Memoir NZ Auckland University Press ISBN 1 86940 378 9 Lange David 2005 My Life Auckland Viking Penguin ISBN 0 67 004556 X Palmer Geoffrey 2013 Reform A Memoir Wellington Victoria University Press ISBN 978 0 86473 905 6 Richards Raymond 2010 Palmer The Parliamentary Years Christchurch Canterbury University Press ISBN 978 1 877257 92 6 Pope Margaret 2011 At the turning point my political life with David Lange Auckland AM Publications ISBN 978 0 473 190255 Report in Australia Sydney Morning Herald Retrieved from https en wikipedia org w index php title Maori loan affair amp oldid 1144064587, wikipedia, wiki, book, books, library,

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