Rakiura to be sued

Press, 8 February 1986, Page 2

Rakiura to be sued

PA Wellington Rakiura Holdings, Ltd, the company which last month defaulted on a payment for $lOO million of Government stock, will be sued for a sum believed to be $B.B million, Wellington’s “Evening Post” newspaper reported yesterday. The “Post” said the legal action was expected to be lodged by the Solici-tor-General in the High Court either yesterday or on Monday. Neither the Crown Law Office nor the Reserve Bank would comment yesterday on the decision to take action against Rakiura. Rakiura Holdings, a one-man merchant bank with a nominal capital of $lOOO and headed by Mr Brian Alexander, of Wellington, defaulted mid-way

through last month on $lOO million of stock it had acquired in the December tender. Mr Alexander advised the Reserve Bank that he would be unable to pay for the stock. Attempts to reach Mr Alexander have been unsuccessful and he is believed to be out of New Zealand. His Oriental Bay house is up for auction. The default temporarily left the Government $lOO million short in its tendering programme. This forced the Reserve Bank to hold a special tender on January 31 to resell the defaulted stock. Meanwhile, interest rates had risen and the stock, originally sold at a rate of 16.69 per cent, was resold at an average rate of 19.369 per cent. The rise in rates effec-

tively meant the Government would lose just under $9 million on the stock. The $B.B million for which Rakiura will be sued is believed to represent the most accurate indication of the loss. The Reserve Bank has indicated from the start of the affair that some legal remedy would be sought against Rakiura, apparently to preserve confidence in the tendering system. Since the default was announced, the Reserve Bank has been reviewing its internal administration of tender procedures. The outcome of this is expected soon. The Attorney-General, Mr Palmer, said yesterday he had no comment.