WELLINGTON: New Zealand customs has said that almost $200 million in taxpayers’ money invested through the New Zealand Superannuation Fund has been lost after the collapse of a Portuguese bank where the money was invested – supposedly as a “risk-free” loan.
The fund, set up with public money to partly cover the retirement costs of Baby Boomers, revealed yesterday it had been caught up in the collapse of Banco Espirito Santo (BES), and a US$150 million investment made in July had been wiped out. The investment was a contribution to a Goldman Sachs-organised loan to the bank, but only weeks after the money was injected it imploded. President and founder Ricardo Salgado was arrested as part of a criminal investigation into tax evasion. After disclosing billions of euros in losses, and facing a run on funds by depositors, the bank collapsed in a heap and was broken up in August.
Despite the legal action, Super Fund chief executive Adrian Orr conceded yesterday that the entire investment had been written off as a “conservative” precaution. But Green Party co-leader Russel Norman said the minister should be demanding answers from the fund leaders on “why they gambled US$150 million in this case, and why it’s come unstuck”. The episode also illustrated what the Super Fund should try to avoid.
While the Bank of Portugal stepped in to manage the collapse of BES, it found that Goldman Sachs’ shareholdings were not covered by Portugal’s insolvency regime. The loan has not been transferred to the newly formed bridge bank Novo. The Oak Finance investment represented 0.7 per cent of the NZSF. Fund returns this financial year are expected to be 0.69 per cent pa lower as a result of the Oak loan. The fund’s expected annual return rate has been calculated to drop from 10.01 per cent to 9.98 per cent.
