The meaning of accountability though seems to have gone over the heads of those at the Institute of Chartered Accountants, when Bruce Arnold Mincham and Michael Derek Wood, directors at Queen St accountants O'Halloran HMT, were censured and ordered to pay costs of $133,347.18 over their involvement in the collapse of National Finance 2000.
Mincham and Wood breached some basic accountancy rules. They failed to report in writing to the Covenant Trustee Company of breaches to the trust deed and neglected to ascertain sufficiently, National Finance's claim that advances made to motor vehicle dealers were secured over the trading assets of the companies and by personal guarantees.
At the very least these two accountants should have been struck off as Chartered Accountants, for life.
At the upper end of the scale, striking off and a much larger fine would probably have been more appropriate. In this way the pair may have been able to have more sympathy for some of those small investors that lost their life savings with National Finance 2000, losses that were aided and abetted by the slackness and lack of care for their profession.
Small investors placed their faith in these accountants that the company they were doing the accounts for was operating in a safe and professional way and it was partially their responsibly to let the appropriate powers that be know that something was going wrong.
The Institute of Chartered Accountants, like the Real Estate Institute, Registered Master Builders Federation and others have always been backward when coming forward when it comes to censuring their members and the IOCA should be ashamed of their slap on the hand with a wet bus ticket attitude to their two highly tarnished members.
These two will only be the tip of the iceberg when it comes to the last two years and the 24 finance company collapses that have so far occurred. The IOCA decision could have been the start of something positive-responsibility for actions taken and a promise of more to come. Instead, with so far over 2 billion dollars at risk, zero people have been held to account, be they accountants, financial advisers or finance company directors.
This area of investing, like much of the investing and finance industry in New Zealand seems highly protected, incestuous and highly cosseted by those on the inside. Not on this blog though.
There appears to be at least one other finance company ready to do a belly flop next week, according to Leighton Smith this week on Newstalk ZB, and risks to even some of the bigger more respected ones also look to be growing.
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