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From our inception 20 years ago, CAFCA has specialised in telling you all about Comalco which remains the consummate example of a transnational ripoff in this count/yo We've now decided to widen our rogues gallery and we have a rich field to choosefrom. But it wasn't hard to pick one above others. TV gives you the Ford Report and Holden's Law. Watchdog offers instead the Telecomedy. Except that nobody is laughing Ed.

We're an export-driven economy, so it's important that we should know something about our major exports, right? You'll struggle to find out anything about this one in the media or from the academic "experts" It's the export of money by transnational corporations (TNCs) reaping super profits in our wide open economy. Wisconsin Central picked up New Zealand Rail for next to nothing, after decades of the taxpayer shouldering its losses and promptly started reaping profits. The cutting rights to the publicly owned State forests were sold for a song to both local and international Big Business. Now New Zealand pinus radiata is flavour of the month and prices have rocketed. Carter Holt Harvey, New Zealand's biggest forest owner, is now Americanowned. It announced a $325 million record profit for 1993/ 94. Seven TNCs between them reported a 1993/94 profit of

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The Ripoff Instead

$1 billion. Fletcher Challenge, which is over 40% foreign owned, set an NZ record with its 1993/94 $675 million profit (of which it paid all of $]3 million in tax). Those are examples of huge sums of money leaving New Zealand, money made from taking over productive New Zealand enterprises.

But the daddy of them all is Telecom. Richard Prebble said it wouldn't be sold, then promptly turned around and sold it. Remember those TV ads with the promises graven in polystyrene? At $4.2 billion it was the biggest single State asset sale by the Labour traitors but that price was only a fraction of Its worth. Ever since, its new owners have been laughing all the way to the bank and that bank is in the US. Telecom NZ is owned by Ameritech and Bell Atlantic, two "baby Bells" created out of the forced break up of the American Telephone and Telegraph Company (A T&T) into seven separate companies. It has announced a record profit every year. For 1993/94 it was $528 million (a New Zealand record for any company, until Fletcher Challenge upstaged it). It was a jump of several hundred million dollars from 1992/93 alone. For the six months ended September 1994 Telecom declared a further profit of $293 million and declared that it was on target for a record $600 million profit for the 1994/95 year.

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The sheer of bloated

staunch Establishment insiders like Don Trow,

He

fill' near and that it should be inves-

the Commerce Commission, But it's no! simply

the sheer obscene amount but the high

'>"lnH~'" of it that shipped out pay

out about 50%: Telecom has and in 1994 announced that it was 90%, As Telecom's owners are American, this means that it sh ipped several hundred million dollars to the US in the last year alone. Total profit (actual and projected) 1991-95 is over $1.5 billion. Calculate a minimum of70% ofthat and you can see that the repatriation of money as TNC profits is a major invisible export from New Zealand.

And we're looking at one TNC!

At the same time these super profits, Telecom has been costs. How? By the time honoured method of sacking workers. When it announced if s then record ]993 profit, it announced it was making 40% of its total staff redundant over five years. From 1993 to 94 it cut staff costs by 25%. The announcement of the $528 million 1993/94 profit was accompanied by the news that another 1000 workers would go this year. Restructuring (or "re-engineering" as the A mericans call it) is ongoing. In September 1994 Telecom announced that it was closing its customer premises equipment with a national loss of380. "The proposal signals Telecom's move to quit the smaller end of the market" 3/9/94). The 1994 half yearly report staled that total staff (including that of an Australian subsidiary, Pacific Star Communications) was 1200 less than a year earlier.

For the remaining staff, Telecom has tried to ram through an Americanisation of conditions did the US owners of the Interisland Line in their semi-successful blitzkrieg on the Cook Strait unions midyear). Telecom told its workers that it wanted them to work under the same conditions as in the US - a ten hour on a Saturday or Sunday, all to be taken out of the contract and

no union refused a percent-

age increase and offered a sum per worker per

year. This approach achieved the near impossible - it got Post Office workers to strike. The old Post Office Union was one of the tamest cats in the public service and the new

Communications and Workers Union has had prob-

lems of its own its own clumsily handled restruc-

turing). Nonetheless workers were angry and, for the first time since in March 1994. 111e union said: "The prevailing mood in the strike was anger. Members are sick ofthe constant restructuring and mucking nNWW'O lives around" 1994} It was an angry and bitter strike which attracted an enormous amount

of public and the sympathy of the normally hostile

tabloid such as "Holmes". The contrast between

and the way in which it treated its own part of making those profits was too the high paid muckspreaders ofthe

Like all good Telecom has hit back with a PR offen-

sive. We've had the little Maori and cutesy

animal ads on TV for years now, a glossy with

their phonebill out Telecom role benefactor of

the saviour of the friend of the commu-

nity. We have no doubt that Telecom directors help old ladies across the road too, It quoted a Victoria University study showing its economic benefit to the it patted itself on the back as a major and one of the country's biggest employers (although it's working on that

If it's quitting the "small end of the market", where is it putting the emphasis? At the big end, of course. It has made business users its top priority, Cellphone conections increased 48% in the September 1994 half year, along with network integrating telecommunications and computing systems, It's also into personal communication networks (ie a single portable number for every customer); and the use of its fibre optics to provide home information and entertainment services, which has already been trialled in Auckland.

"The growth trends mean that local service and toll call revenue is falling as a percentage of Telecom's earnings, accounting for only 67% of revenue in the first half, down from 74% in the previous first half'

4111/94).

All self respecting yuppies must have a cell phone (so they can shout "Sell everything" every time Jim Anderton says "Boo!") and Telecom is intent on the yuppification of not only the nation but of the landscape itself. The Ol.C decision sheets regularly record approvals for it to purchase parcels of rural land for transmitter towers. Now it is marching into the cities and into schoolyards for tnt: same purpose. It is offering schools $4500 a year to allow the installation of cellphone transmitter towers in their playgrounds. This has attracted flak in Christchurch, the city which rallied behind the Wizard to keep phoneboxes red several years ago. Parents at Opawa School are concerned at the safety implications of low level radiation in a playground and have commissioned an Auckland University scientist, who has partly backed their concerns.

But the irony is that schools, which have been reduced to begging at supermarkets for dockets, are tempted by this money from the greatest beneficiary of New Zealand's economy being "made attractive to foreign investment". Part of that process was the deliberate gutting of the State sector and relentless privatisation of previously publicly funded areas, such as education. Now schools are grateful for the odd $4500 morse! being slung their way (it's not much out of $600 million, after ali). As the principal of Shirley Intermediate put it so succinctly: "If we had the funds we would like or really we probably wouldn't even consider it" (ibid).

Yes, Telecom you're definitely a winner. Which means that the rest of us must be the losers, Now if only we could be made to love you. Unfortunately, unlike TV dogs in corporate Fantasyland, we won't roll over and let you tickle our

belly. We know when our pocket's picked.

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Watchdogs 73 & 76 detailed the purchase of the Mackenzie Country's Lilybank Station by Hutomo Mandala Putra, better known as Tommy Suharto, the most notorious offspring of the corrupt and bloodstained Indonesian ruling kleptocracy, This constitutes the most high profile foreign purchase of South Island high country.

Well since then the news has all got worse. In August 1994 the $4 million luxurious Lilybank Lodge was opened on the station, as an exclusive hunting resort for what it happily refers to as the "filthy rich". You can stay there for a basic $700 per night or you can go helihunting the imported game available (such as deer, elk, chamois, thar and wapiti). A kill is guaranteed for these brave "big game hunters". But they don't want things too spartan. According to the Press (25/8/ 94), the lodge boasts "an air-locked foyer, which maintains a separate climate inside from the harsh alpine climate". So Tommy has introduced a change of climate in every sense of the word.

A major attraction for the filthy few is that because New Zealand is such a nice, safe country they can leave their goon squads behind and happily strafe the hippity hoppity wapiti without having to worry about the natives blazing away at them. These are people who arc not only different from us in culture and class but they sound like they're from a different planet. "When the son of the Indonesian President, Tommy Hutomo, made a toilet stop at Geraldine he told Mr Olde-Olthof (Lilybank's managing director) it was the first time he had been to a public lavatory" (Press, 27/8/94, "Tekapos happy hunting ground for the wealthy'} So it was our dunnies which swung the balance. The filthy rich feel at home in them. How appropriate. What about a marketing campaign. "Come to New Zealand, the land of clean, green public toilets. Guaranteed to wash away the toughest bloodstains and clean the dirtiest money".

"The Suhartos are filthy rich, and corrupt to the core".

The classic Kiwi attitude is to welcome the foreigner and if he is subject to criticism, respond by saying "He's a good joker". If it really comes to the crunch, the response is "His

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money's as good as anybody else's" In the case of Tommy or any other member of the Kleptos, this is highly unlikely. But you won't learn anything at all about this from the New Zealand media, which have run only grovelling features about Lilybank or straight news reporting with nary a whisper about the owner. They either don't know, don't want to know or are just plain gutless. When CAFCA offered an article on Tommy and the rest to the Press, the reply was "They're a litigious bunch". But there is no excuse for local journalists not knowing about about Tommy and his real life Addams Family.

Watchdog 73 quoted Time and extensively from the Far Eastern Economic Review (30/4/92) which devoted several pages to the Suharto family and the billions that all of them have reaped from being at the top of a kleptocracy for nearly 30 years. We won't go over it all again, we refer you to either Watchdog or the original articles. Contact us if you'd like a copy.

There's been similar material much more recently than that. National Business Review (23/9/94) ran an article by veteran American journalist Jack Anderson entitled "Indonesia's first family siphons billions from a struggling nation". Its central conclusion is quoted in the above subheading.

"Intelligence sources estimate Mr Suhartos family wealth at between $US3 billion and $US5 billion. Sadly, they note, it is not illegal for the family to accumulate such a fortune, because Mr Suharto himself is the law. But even $US5 billion take home pay is a pittance compared to the billions more they control in businesses ranging from banks and cement factories to toll roads and restaurants. For more than a decade, Mr Suhartc' s wife, Tien, has been irreverently referred to by Indonesian critics as 'Madame Tien Percent', suggesting the portion of the overall Indonesian economy that she and her family take ... The Suhartos have skimmed billions of the country's wealth for themselves and their posterity. In the mid 1980s, when Australian newspapers dared to broach the subject of Suharto family corruption, Australian journalists were banned in Jakarta".

Ibm.! Hartomo ----- SUi Hartil'lah

(bro/her) 1923

Suharto _._-....,--- Probosutedjo

1921 L (112lJro/her)

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1949 1951 1953 1959 1962 1964
sm Harilijanti H:.IsMi Sigit Harjojudanto BamiJang Trfhatmudjn 8m Hedijanti Helijaili Hutomo Mandala Putra 8m Hutami
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We haven't even mentioned Timor or the fact that a US court has ordered an indonesian general to pay $23 million to a New Zealand woman for the murder of her son in the 1991 Dili massacre. We havent mentioned the routine brutality and State murder that so shocked Phil Goff when he was in Indonesia with the multiparty MPs' delegation. He reported the common police practice of summarily executing criminals. He was to Jakarta, not Timor, Irian Jaya or any of the other war zones under Indonesian occupation. This is the country presided over by the Suhartos,

Now if an ideologically sanctioned enemy (let's say, a Nazi war criminal) used several million illgotten dollars buying up 27,500 ha of the South Island high country and building an exclusive resort for people of his ilk to kill things, there would be uproar. But although Tommy may be "a son ofa bitch, he's our son of a bitch", to quote the old American aphorism. He's on our side. This has always been Landslide Jim Bludger's belly crawling policy towards all things Indonesian, And Indonesia is accepted, even if rather queasily, as a member of the Western Alliance. Hence Clinton (and Bludger et al) went there in November 1994 for the annual regional summit of the Asia Pacific Economic Cooperation forum (APEC). According to Anderson's article, there was frantic behind the scenes work by Indonesia to ensure that human rights didn't come up on the agenda. And the Kleptos' institutionalised corruption is definitely a big no-no item for public discussion, either internally or with neighbours.

So welcome to New Zealand, Tommy, This country grew rich on the smell of shit on the paddocks. And you're definitely one of the richest shits that ever plopped onto a South Island paddock. We're just starting to get the first whiff of the smell.

the Overseas Investment Commission's ambit if the investment was less than $10 million.

"You can buy an awful lot of land for [up to] $10 million."

Lands Minister Denis Marshall has confirmed that the .Government expects to make a decision within weeks once it has consulted other parties, particularly Labour.

But New Zealand First opposes the plan and the Campaign Against Foreign Control of Aotearoa said it had no confidence in the Overseas Investment Commission.

Campaign spokesman Murray Horton said the commission had approved 6734 applications since 1987 and rejected just four. No applications had been rejected since 1990.

He said agriculture businesses would buy New Zealand farms, alienating the land from New Zealanders. Already. foreigners were buying dairy farms, speculating on the expectation of big profits from dairying because of the Gatt deal.

Caygill supporting 1 ~ ~ lans

By BRENT EDWARDS Political reporter

Government plans. to cut restrictions governing the sale of land to foreigners seem set to get Labour Party support.

But opponents say plans to make the Overseas Investment Commission solely responsible will make it easier for foreigners to buy New Zealand farmland.

Labour deputy leader David Caygill said he supported the commission having sole responsibility as long as special rules still applied to the sale of land to foreigners.

It was an emotional issue, but he didn't know of anybody "advocating open slather for overseas investment."

Proposed changes would actually close a loophole which allowed some sales to proceed without any checks. The Land Settlement Promotion and Acquisition Act covered only the sale of land to individuals. A foreign investor could easily

David Caygill - special rules still needed for foreign buyers.

around that by setting up a New Zealand company to buy the land. The investor could then buy shares in the company. In that instance the purchase was not supervised by the Minister of Lands, nor did it fall under

Company

Iff!li'illffi.fl (Established 1984)

Major owners Tommy Suhartn Sigil Harjojudante

Activities

Oil and gas transport Wood Banking Construction Fertiliser

Toll roads Trading

Sugar Palm oil Shipping Aviallon

1991 Group revenues Rps 2trillion (est.)

No. of subsidiaries

69 (est)

No. of employeos . 13,000

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Fishing is the only industry which attaches any restrictions on foreign ownership. To quote from the Overseas Investment Commission's 1994 "Foreign Investment Policies of New Zealand":

"100% overseas ownership can be approved in ALL sectors. However the Fisheries Act 1983 precludes the allocation of fishing quota to an overseas person unless the Director General of the

Ministry of Agriculture and Fisheries grants an exemption".

What this means in practice is that the industry is dominated by New Zealand companies - the big three are Sealord, Talley's and Sanford. Foreign involvement comes in the shape of joint ventures, with the overseas partner usually providing the boats and crews; the local one the onshore processing. and workers. The Government has been committed to a policy of New Zealandisation ie progressively introducing New Zealand boats and crews. Nick Smith. National MP for Tasman, has been vocal for several years about the laxity of the Immigration Service in issuing work permits to foreign fishermen (principally Russians) whilst up to 500 New Zealand fishermen are unemployed.

Doug Kidd, the Minister of Fisheries, is committed to New Zealandisation and in June 1994 announced a plan to have 75% of the quota taken by New Zealand boats and crews by 2000. This led to a backlash from some local processors, led by Christchurch's Independent Fisheries, which claimed that it might have to close its Woolston plant, scrapping 435 jobs and costing Canterbury more than $50m a year. Independent director Mike Dormer said that the wages and conditions of foreign crews were no concern of

the New Zealand industry.

'It should be the right

of any business to make decisions of a commercial nature on a cost effective basis and if companies find it uneconomic to purchase and operate deepwater trawlers for the catching of low value fish species as opposed to chartering foreign vessels, then that should be their right" (Press, JS/fi/94).

Ten other Christchurch firms, including Ngai Tahu Pacific

WATCHDOG 77

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Ltd, backed Independent This revealed an interesting split in the industry. Michael Talley, of Talley's Fisheries, claimed that Independent was only defending foreign joint ventures because it involved cheaper labour. If it used New Zealand boats and crews:

"He will then have to pay New Zealand company tax and minimum wages, but is this wrong? Foreign fishing vessels do not pay company tax, P A YE tax, GST, minimum wages, so I suppose Mr Dormer could charter their boats cheaper. But this is hardly creating jobs and is contributing nothing to New Zealand society" (Press, 22/6/94).

Independent Fisheries could well win the Hypocrite of the Year Award for its professed concern for its process workers. Throughout 1992 it was locked in a bitter dispute with Lyttelton maritime unions and the CTU over constant allegations that it was using foreign fishermen to unload its vessels, rather than the port workers, (This whole issue resurfaced In October J 994 when Translink Pacific, an Aucklandbased shipping company, announced that it intends to use Russian seamen, not Lyttelton port workers, to tie and untie cargo on its ships, Not surprisingly the port unions reacted strongly).

Independent was one of the first employers to take full advantage of the Employment Contracts Act and recruited nonunionised gang members from the dole office to work in its coolstore as casuals. Conditions proved so bad that they all walked out in August 1992. The union movement offered to help them organise but they ended up being blacklisted and replaced with other casuals, Nor were they exaggerating about their appalling work conditions, In June 1994, the same month that Independent was waxing eloquent about its staff, it was fined $4000 in the District Court for a breach of the Health and Safety in Employment Act. The charge? One of its workers contracted frostbite!

Not that Talley's exactly smells of roses in this regard either. In 1992 it was fined $6300, plus $20,000 costs, by the Employment Court for refusing to hand over more than $24,000 in union fees to the Food and Chemical Union. It refused to obey the court order, which led to the Court severely criticising it, concluding that it wanted a union-free workplace and that it acted towards its workers in "a harsh manner and with oppressive and tyrannical arrogance" (Press, 7/11192). So these are the champions of New Zealand workers. Who needs enemies?

The Dickensian Dormer was back in the national spotlight in October 1994 when it was revealed that Ukrainian seamen working for Independent's joint venture get paid $4.50 per day,

"What the Ukrainians get paid is their employer's af-

fair, We don't like being told what to do either. It's nothing to do with morals or guilt. Ifit was Rwandans they might be getting $1 a day. We have to do what is cost effective for us" (Press, 3/10/94),

Dormer also accused the Ukrainians of lying, saying that they are actually paid $USIO per day (wowl). This was so outrageous that it even motivated Doug Kidd to promise a new policy of making New Zealand law (such as the princely minimum wage of $NZ245 gross per week) stick in the 320 kms Exclusive Economic Zone. Immigration has toughened up its act and forced companies, including Independent, to advertise for New Zealand staff. Work permits will not be issued to foreign seamen until the company can show that New Zealanders are not suitable. Dormer claimed that the likelihood of New Zealanders working on Independent's joint venture ships would be remote, because they would have to fit into the "culture" of a Russian boat (Press, 3/10/94). So not only is the guy a champion of the working class but culturally sensitive to boot. Give him $4.50, someone.

Vacuum cleaning the sea; prlvatisinq the industry

The New Zealand-owned and crewed sector of the industry has not been a model of responsibility, In October 1994 the Government announced heavy cuts in quota for orange roughy catches (down from 21,300 tonnes to 14,000 tonnes), This is the domain of the domestic industry; the foreign joint venture boats work the hoki fisheries. For several years MAF Fisheries, the Commissioner for the Environment and groups such as Greenpeace have been ringing alarm bells about drastic overfishing of orange roughy, the country's premier export fish.

This might be a shortlived respite however. At the same time as it announced the cuts, the Government announced yet more restructuring - as of July 1995, Fisheries is to be split from the Ministry of Agriculture and will undergo substantial privatisation into the hands of the industry. There are no market forces as far as fishing is concerned. Legislative moves are afoot to wipe $20m of fishing industry resource rentals (the charge for taking fish). This is effectively a subsidy. Disgust at this whole move led to the Environmental and Conservation Organisations walking out of talks with the Government There was no call for public submissions and the Department of Conservation, Ministry for the Environment and Te Puni Kokiri (the Ministry of Maori Development) were deliberately excluded from the whole process.

The New Zealand people should be aware that this whole industry, protected by law and of vital national importance, is being handed over on a plate to the likes of Mr Dormer. Fishing in this country is being set up as sharkbait - just watch the feeding frenzy.

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The Government has sold off another $1 billion worth of Housing Corporation mortgages, to the ANZ and Countrywide banks, This is in addition to the $91 Om worth previously sold. It's instructive to look at what happened to the $590m worth sold to Fay Richwhite. It placed them in Mortgage Corporation which sold them to US investing institutions as bonds and involved a complicated deal with Fay Richwhite guessing the rate at which they would be repaid over the next ten years, Iftoo many people repaid their mortgages early and unexpectedly, it buggered up Fay Richwhite's profits. So Mortgage Corporation sought to discourage early repayment by setting a discharge fee of two months mortgage payments plus $100 (most banks charge $25),

Several mortgageholders have successfully taken Mortgage Corporation to the Disputes Tribunal and won, They have now been backed by the District Court, despite Fay Richwhite' s high powered attempts to quash it. So mortgages are the latest thing to be gambled with in the market and people are penalised for trying to repay them, It's the modern equivalent of serfdom, where you are sold from one owner to another with no say whatsoever in the process,

This has emerged as a major political embarrassment to the Government which so hastily dumped its housing responsibilities, Mortgage Corporation was forced to undertake a belated PR offensive, featuring its Maori woman boss (very politically correct) and offering concessions - in five years time!

This whole revelation of a market consisting of bets on repayment rates, etc, means that our old mates Fay Richwhite are leading New Zealanders into the snakepit called the American derivatives market. Say what? It is a financial parallel universe. Derivatives are simply bets on "exotic securities", such as swings in the finance markets, which have already cost millions because of punters picking the wrong outcome on interest rates, etc. They attract speculators who are always looking for new titillation, Time (10/10/94) detailed how giant TNCs such as Procter & Gamble and Glaxo have lost big money on derivatives ($US 157m and SUS 115m respectively), American municipalities, colleges and even an Indian tribe have suffered catastrophic losses,

The fact that the $US 12 trillion (yes, trillion) derivatives market is unregulated and controlled by 15 closely linked dealers has greatly concerned the General Accounting Office, the investigative arm of the US Congress, which has warned of derivatives being a likely cause of an American market collapse with global consequences. As New Zealanders are repeatedly told that if Wall Street sneezes, we catch a cold, this has got everything to do with us. This means that the most defenceless of New Zealanders, the bottom income bracket trapped with former Housing Corporation mortgages, are being used as pawns by gamblers in the "global market's" newest casino, The implications are absolutely horrifying.

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Sir Graham Latimer is definitely the chairman of the Brown Table. His iwi power base is the Tai Tokerau Maori Trust Board, in Northland and this has provided the most sharnbolic example of Maori capitalism thus far. The debacle surrounding the takeover of the Waitangi Resort hotel is detailed in BiII Rosenberg's analysis of the July 1994 Overseas Investment Commission decision sheets in this issue. Hotels are not Sir Graham's only business ventures, The Maori-owned and directed Tai Tokerau Forests Ltd owns and manages 4,700 ha of radiata pine forests in Northland, In September 1994 it launched a subsidiary, Tai Tokerau Forests Investments and floated 50% of that on the sharemarket to raise $70 million. That company will hold the other 50% of the cutting rights on the tribe's 15 forests, plus 100% ofPouto Forest Farms, near Kaipara Heads and will concentrate on forestry, not downstream processing, The float featured an iwi share similar to Telecom's Kiwi share (Press, 1/10/94).

In the South Island, Sir Tipene O'Regan's Ngai Tahu are eager to let the world know that they can foot it with the big boys, A tribal consultant, Ray Davy, addressed a forum organised by the obnoxious Building Owners and Managers' Association,

"Ngai Tahu was poised to become a major player in the South Island commercial property market.i.rthey) had structured their commercial property operation so that it was totally divorced from any social activity, Their property dealings were as 'hard-nosed' and profit-driven as those of any other business entity involved with commercial property. "Ngai Tahu are keen to point out that they are pro-active, pro-development and keen to get deals under way'" (Press. 29/ 6/94),

When they come to make the movies or Tom Scott docudramas of this era, we can suggest a title: "Once Were Stockbrokers", It has a certain ring to it, don't you think?

WATCHDOG

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Back in the Stone Age of New Zealand TV (ie the 1960s) the whole country was completely transfixed a British series called "The Power Game". Everybody watched it; elected bodies and boards of directors arranged their meetings so that they could watch it. Why? Because it "''''''-1'',,,,,,,'<1 a style of ruthless capitalism that was so foreign 10 New Zealanders' experience (including our own capitalists) that it was exotic. Shortly thereafter came along an unprepossessing young man called Ron Brierley who from collecting stamps to collecting companies. The rest is history. Nowadays foreign TV could come here for a few tips on predatory capitalism and boardroom shenanigans.

Nowhere is the Power Game best demonstrated at present than in the world of - power. Ever since the Government forced deregulation upon electricity supply authorities in 1992 there has been an increasingly mad scramble to merge, take over, engulf and devour. For ordinary old power consumers (who fund this circus) it's very confusing. We'll try to make some sense of it.

At the top of the heap is good old BeNZ Electricorp). Its monopoly is intact, as evidenced

former its

million profit (for 1 months) in 1993/94. It's still in empire building mode, warning that up to 15 more dams the size of Clyde are needed in the next decade and is pushing ahead with schemes such as the Stratford gas fired power station in the face of strong grassroots opposition. The Wholesale Elec-

Market Development Group has recommended to Government that BeNZ be forced to lease out up to 40% of its generation capacity to encourage competition in the industry. So tar this hasn't been acted upon.

Both Labour and the Alliance have called for Government action to prevent a looming blowout in power prices. BCNZ has confirmed that it will increase the value of its assets, from $4.7 billion to $7 billion, by borrowing and passing on the capital gain to its sole shareholder - the Government. Jim Anderton stated that this could lead to price increases of $200 per year to domestic users. As it is, power supply companies are changing to a new accounting system - "optimum value" - which will increase the valuation of the in turn, lead to higher domestic bills. Some companies have already stated that this will be the case for their captive domestic customers (for its part Christchurch's power company, Southpower, says that it won't increase

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Some of the biggest in the country are entering the electricity market Fletcher Challenge, the biggest electricity user in the Bay of Plenty, is acquiring up to 25% of Bay of Plenty Electricity, This is all part of a complicated manoeuvre to stop a takeover by Tauranga's Trustl'ower and involves Fletcher's being allowed to go above the 20% cap set on anyone shareholder, BOP Electricity plans to merge with Rotorua Electricity and be known as Horizon Energy, Fletcher's has a finger in all the pies, owning 8% ofRotorua and 2% of TrustPower.

But this is overshadowed by the entry of New Zealand's richest family, the Todds, into the power scene, Valued at minimum of $600 million, the Todds have interests in energy, mining, natural resources, communications and property. 'They own 21 % of Clear, 50% of the Kapuni gas scheme and significant Australian mineral holdings. Todd Corporation has formed a working alliance in the power supply field with Uti Ii corp, the US company that owns WEL Energy, the Hamilton power company, Todd has bought a 21 % stake in Utilicorp and will join the board of WEL. Todd has a 10% stake in Power New Zealand, the result of the merger between Waitemata Electricity and Thames' Valley Power. Power New Zealand's prospectus reveals - in one line - that Utili corp is permitted to go far beyond the 20% single shareholding cap and is forecast to end up with 37.5% (bought cheaply to boot), which will give it outright control.

Todd has also bought a 19.2% stake in Energy Direct, the Hutt Valley supplier. Energy Direct is at the centre of the most complicated manoeuvrings of the lot Firstly, Power New Zealand wants to merge with Energy Direct, thus creating the country's biggest power company with one fifth of the country's consumers and an annual turnover of $350 million, The fly in the ointment is the hostile bid by Auckland's Mercury Energy, the country's biggest supplier, to take over Power New Zealand. If successful, it would split off Valley Power and not proceed with the Hutt Valley adventure, having secured control of the Greater Auckland area, Mercury is headed by Australian New Rightist Wayne Gilbert, who has a union busting track record and who is on a much higher salary than the Prime Minister.

But Power New Zealand is not the only player involved with Energy Direct. Christchurch's Southpower, which is now the country's third biggest energy retailer, owns 57% of North

Island

company Enerco, Enerco, in tum, owns just unDirect Both Enerco and Energy Direct Commerce Commission permission to bid Power that Fran Wilde's

perm iss ion for Enerco to the public interest

decreeing it not to be in

The reality of transnational ownership of local power companies is clearly understood by the people of Hamilton, Pat described as the lone battler on the WEt Energy Trust (which owns one third of WEL Energy), says:

Utilicorp has paid up only $5 million of tile $38 million it has promised WEL Energy - instead it has become financially involved with the Todd Corporation on one hand and Power New Zealand - both of whom have their noses in other electricity ventures in New Zealand' ... Mrs Neagle believes that far from fulfilling earlier hopes of emerging as 'a major player' in New Zealand's power company merger process, WEL Energy is instead a 'sitting duck to be gobbled up by other larger interests', She fears Utili corp will emerge at the end of the privatisation process as the power behind the throne of a large combined New Zealand power conglomerate"," (The Week, 15/9/94).

As for our very own Southpower, it's in the thick of things via Enerco, Funnily enough it chose not to trumpet the fact that by September 1994 Enerco's shares were worth $20 million less than what Southpower paid for its stake in December 1993. This didn't daunt Southpower's directors who (unsuccessfully) sought a 40% increase in their fees. That, in turn, so infuriated Southpower members of the Southern Local Government Officers' Union that they announced strike action to speed up their stalled pay talks (suddenly Southpower decided it would negotiate).

Koa Saxby, of the Campaign for Peoples Sovereignty, put it most succinctly in a letter to the Press (5/10/94): "It is all too reminiscent of the wheeling and dealing before the last sharernarket crash, Why on earth is our asset (Southpower) being put at risk with these sharemarket games?" This question is equally valid at the national level. Unfortunately, all indications are that we ain't seen nothing yet. We warned of this from the word go.

E

"

"

The demonisation of Piggy, safely after his death and the glorification of Lange has a very definite political agenda. We certainly don't carry a flag for Muldoon (see his obituary in Watchdog 71) but nor do we consider him some sort ofNZ equivalent of Kim II Sung, Both the documentary on him and the docudrama "Fallout" glorified Lange and the free market hitmen (such as Rod Deane) who have turned this country upside down for the last ten years, And it was very interesting to see Labour's nuclear free and free market policies presented as one and the same, not as the apparent contradiction they had always been thought It illustrates the folly of single issue people (such as the peace movement) who clung to nuclear free Labour while it was busy tearing the to Both these programmes were not so subtle pieces of straight political propaganda and what's worse, didn't even show us a reconstruction of Bob Jones' sister attempting to drown a naked and pissed Piggy by sitting on his head, We can only fondly imagine,

PAGE 10

Y HORTON'S 1993 T U FIN LLY OV

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Australian retailer Foodland is a typical transnational

game with our money. It is sure its profits are made

in Australia rather than Aotcaroa so that its Australian share" holders can claim dividend tax imputation credits, according to the Australian newspaper. In Aotearoa, Foodland is the owner of Farmers, Deka, James Smiths, and Toy Warehouse, and is 57% owner of Progressive Enterprises, the supermarket chain, which is not involved in this legal fiddle.

By transferring the costs of servicing its debt to its Aotearoa operations it is lowering its taxable profits here and hence the taxes it pays here. The Aotearoa operation will be landed with $250 million in debt plus another $125 million in working capital to service, leaving only $36.2 million in working capital to service in Australia. While taxes payable will be higher in Australia, they can count against shareholders' taxes there ("imputed") to reduce their taxes. Progressive Enterprises is not involved.

U

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Murray Horton spent three weeks touring the North Island and the northern South Island in late 1993, on an extremely valuable speaking tour which gained excellent media coverage, picked up a lot of new members, touched base with a lot of our existing members, plugged into all sorts of other networks and generally put CAFCA on the map. It proved physically impossible to take up four invitations - to Taupo, Taranaki, Kaitaia and Russell. He undertook to do so as soon as possible. Taranaki was visited in January 1994 (and remains Murray's most successful trip, as measured by new members), He got to Taupo in March.

Funded invitations to Auckland and Hamilton in October enabled him to finally get to Kaitaia and a couple of venues in Hokianga (his Russell contact had moved there in the interim. Even more disturbingly he is Murray's doppelganger). These trips are vital for making contacts and just basically fronting up. Even with very small meetings (the record being four people in the Kohukohu Fire Station) valuable contacts are made. They're never a waste of time.

All sorts of unexpected spinoffs can arise from these forays. For example, Murray's "Frontline" interview for its programme on Rimbunan Hijau/Ernslaw One was done ad lib as a result of a casual phone call while he had a few minutes to kill before speaking at the Auckland Peoples Centre. When he was about to speak there, he was upstaged by an old bloke in the audience collapsing with a heart attack. Fortunately he lived, due to the lifesaving work of the

FI T

In accountant-speak: "When YOLI are doing business crossborder you have an ability to determine where you will make profits because you have an ability to determine where you will pay interest costs" (John Shewan, a Coopers and Lybrand taxation consultant)

The practical effect is that you and I have to pay higher taxes on our personal income because this corporation is avoiding them. And Aotearoa's debt increases simply as a result of a book transaction. Remember that next time you are told "our" national debt is a result of "us" spending more than we earn.

Thought for the day: is Ansett New Zealand (which has been making losses for years now, yet is still flying) playing the same game to the benefit of its Australian owners?

(Ref: "Foodlands refinancing could cut New Zealand earnings", Press, 20110/94, p.33.)

R

Peoples Centre doctor and Caroline Hatt of the Auckland Unemployed Workers Rights Centre. (Murray is starting to think it's something about him. Whilst being interviewed in Westport in December 1993, the elderly reporter had a [nonfatal] heart attack).

If you would like Murray to speak in your town (and think the locals can live through it), contact CAFCA. OUf basic rule is that the issuer of the invitation has to fund the trip.

Fore ign ownership w3tehdog group secreterv .Murrey Horton with H list of land ,WId to foreign Investors in eeceut. year!'>

11

The Western news media is currently salivating about the infinite prospects for profit and exploitation in China. One billion people are apparently just busting their guts to own a K'Tel patty stacker. And it presents a more appetising prospect than the PR disaster for capitalism that is Russia today, a society uncannily resembling gangland America before the gangsters went corporate. To quote from Transnationals (March 1(94), the newsletter of the UN Conference on Trade And Development (UNCT AD) Programme on Transnational Corporations:

"China, which received some $US26 billion in foreign direct investment in 1993, is now the largest host developing country and among the world's top investment recipients. It is also a significant outward investor. Liberalization, rapid economic growth, cheap production costs and a large and growing domestic market have all worked to make China a key point on the global investment map, And with inflows continuing to flood into the Chinese manufacturing and exportoriented sector, investments seem poised to expand for quite some time".

The article reports on a September 1993 conference between the Chinese Government and 40 of the worlds leading TNCs to "take stock of the boom and design further changes in investment policy".

The reality of this is the steady growth of capitalism in China with all its attendant social problems, massive environmental degradation and the life threatening exploitation of China's cheap labour ("the low production costs" lauded by UNCTAD). There have been several fatal factory fires that have killed large numbers of workers locked into the sweatshops where they work, live - and die. Next time you pop down to the Warehouse or any of the other burgeoning junk palaces catering to New Zealand's nouveaux poor, think about that when you yourself a cheap pair of "Made in China" shoes.

As UNCTAD points out, China is now a significant outward investor. It is not yet one of the big players on the New Zealand scene but Chinese investment is definitely a growing presence in this country, It does not currently come within a bull's roar of the Overseas Chinese who are a major player - in 1993, Singaporean investment here totalled $540m, Hong Kong $520m and Taiwan $74m. Chinese investment covers a range of sectors in the New Zealand economy. One of the biggest is in the booming pinus radiata plantation forestry industry and it might surprise New Zealanders to realise that one of the new major foreign owners of our forests and indeed the biggest forest owner in Otago, is Chinese, namely Wemra.

Unlike the widespread operations of other forestry TNCs Wen ita has confined its acquisitions to one region, Otago/

I

pital

Southland. It is ajoint venture whose principal shareholders are the China National Foreign Trade Transportation Corporation (Sinotrans), a major SOE based in Beijing (45%); Togen Enterprises Ltd, a Hong Kong based forestry and shipping company owned by the Liu family (45%) and Chen Wen Dong, of! long Kong (10%). It started in October 1990, buying the Crown Forest licences for the Berwick Forest Unit and the Otago Coast Forest Unit, for a total of $115 million. In April 1992 the Commerce Commission granted permission for it to acquire up to 100% of Timberlands forestry assets and licences in the Otago/Southland region ("Press", 24/4/92).

In December 1992 Fletcher Challenge's subsidiary, Tasman Forestry, announced it was selling its 4,600 ha Mount Allan forest in Otago, to Wenita. This was part of Tasman concentrating its forest assets in the central North Island and Nelson! Marlborough. Wen ita is now the biggest forest owner in Otago and owns a total of 25,000 ha which means that it owns 1.9% of New Zealand's planted production forests. It mills about 300,000 cubic metres of logs a year from the forests, which have an average age of 16 years. The great bulk are destined for log exports.

The "New Zealand Forestry Bulletin" (December 1992) quoted local timber companies on Wen ita. Paddy Enright, of Enright Timber:

"I am very happy with the presence ofa foreign owned company in Otago because it has created a commercialism that was not there before. It has created an environment whereby these forests have to pay their way, when previously taxpayers subsidised any lack of return. Now the forests fund themselves and New Zealand still gets a healthy return on the land which it still owns".

Wen ita chief executive Craig Sheffield said it provided a previously lacking continuity of employment and put $1 million per month into the local economy. And David Harvey, of Rosebank Timber, said he had no problem with Wenita being 100% foreign owned. Prescient words because Wen ita has now bought out Rosebank, in Balclutha. Craig Sheffield says that about $2 million will be spent upgrading it technologically to double processing capacity to about 100,000 cubic metres oflogs per year. However he does not expect any major increase in the current staff of90, although there will be downstream opportunities, including remanufacturing ("Press", 23/7/94).

In July 1994 the OIC approved Wen ita restructuring in preparation for floating on the sharemarket. Wen ita Forest Products Ltd bought up the entire share capital of Wen ita Holdings (NZ) Ltd and issued 199,999,900 $1 shares divided among its three owners according to their percentage of ownership.

PAGE 12

Otago and Southland have been picked as a future boom region. A Ministry of Forestry study that the annual Otago/ Southland cut will double to 2.2 million cubic metres per year by 2002 and rise to more than 4 million by 2020 ("Greymouth Evening Star", 3/2/93). Wenita has secured itself a commanding position in the regional economy. This extract on Wenita isfrom Murray Horton's "Clearcut",

Chinese forestry investment is not confined to Otago or Southland. In April 1994 the ole approved the magnificently named Fortknox Investments Ltd (owned by the Provincial Government of Gwangdong, the most rabidly capitalist region of China) spending $5,855,000 buying 75% of Agroforestry Development (NZ) Ltd, which owns a 557 ha forestry block at Mangamuka, Northland. The previous owners were Singaporeans who paid $4m in 1993, so this is a classic example of the Mainlanders taking over the Overseas Chinese (although the latter made a tidy profit). Another move into the primary sector is that by .Iianlibao (another Guangdong based company) which bought the disused Paeroa dairy factory in 1993 for use as a fruit juice extraction plant (Waihi Leader, 31/8/93). It talked of a $20m capital development and 150 new jobs, with expansion into brewing, winemaking, dried fruits and tourism.

At least one other purchase has reflected the Asian propensity for commercial property. In July 1991 the OIC approved Cheeminet Finance Ltd, a subsidiary of the State-owned China National Metals and Minerals Import and Export Corporation, buying 20 Auckland commercial properties for $35.8m from their (unidentified) insolvent owner. It's worth remembering that it was a Chinese SOE which bought the New Zealand Steel mill at Glenbrook, from the lightfingered Equiticorp (which bought it from Roger Douglas. BHP owns it now). In June 1994 the OIC approved Paul Y-HC Construction Holdings Ltd, a Hong Kong company, buying one of New Zealand's biggest construction companies, Downer Group Ltd (previously owned by Brierley's). Paul Y-ITC includes some Chinese shareholding, namely Shougang Concord, the investment arm of

US SOA

LI ING --

Shougang, the Beijing steel conglomerate,

Maybe the ultimate irony came in March 1994 with the headline "China interferes in NZ, says union" (Press, 14/3/94). The Seafarers Union picketed the Chinese Embassy in Wellington because of the role of the Chinese State-owned shipping line in the newly formed Chamber of International Ship Operators. This had been set up to lobby for the fiercely contested Maritime Transport Bill and put the Chinese in league with Federated Farmers and the Business Round Table. Gerry Evans, the union's then national secretary, said:

"This is a lobby group of foreign shipowners formed to try to get New Zealand laws changed so that they can operate on the New Zealand coast. The union sees this as the direct involvement of the Chinese Government in the domestic politics of New Zealand. China would not tolerate a foreign State shipping line involving itself in China's affairs, neither would they allow a New Zealand ship running around their coastline".

Obviously things (and China) have changed since the early 70s when the National Government deregistered the Seamens Union whose leaders, such as Rudd Hughes, approvingly quoted Chairman Mao's saying that "political power comes out of the barrel of a gun". Then the media would have been keen to prove Chinese interference in New Zealand via unions such as the Seafarers.

China is now a capitalist country in all but name and is in the process of becoming a major transnational investor. As such its increasing presence in this country is one that is of concern to New Zealanders and one that will be monitored and exposed by CAFCA, on exactly the same basis that we oppose other TNC parasites, whatever their nominal country of origin. It is appropriate that the imperialist carve up of 19th century China presents a very good model for the TNC takeover of present day New Zealand. Maybe the outcome here will mirror what happened there as well, Wouldn't that be ironic?

ESTME Y TIFYIN

A recent report by Coopers and Lybrand ranking population growth in Australia and New Zealand indicates that "in the five years to June 1993, total Australian investment across the Tasman soared from $AS.1 billion a year to $A8.1 billion - a rise of 59%" ("Business eyes across the Tasman", New Zealand Herald, 21/9/94, p.Z). To put these figures in context (if we can indeed believe them), total applications to the Overseas Investment Commission in 1993 from all countries were valued at $NZ9.4 billion - less than the approximately $NZ 1 0 billion in the report for Australia only. The OIC reported only $NZ2.2S billion in applications from Australia in 1993, Remember too that OIC statistics probably over-estimate the actual amounts invested, as it is not known how many of the applications proceed after approval.

If Coopers and Lybrands' figures are correct then a huge amount of investment is coming from Australia in projects of less than $10 million (only amounts above that must have the approval of the OIC), or in lending, bank deposits or bonds, or is ignoring the OIC altogether.

If that is correct for Australia, then it implies that the OIC statistics, rather than over-state the total position, may understate it, and the $9.4 billion may be not even half of the actual investment

WATCHDOG

13

GATT (General Agreement on Tariffs and Trade) is due to transform itself into the World Trade Organisation (WTO) on I st January 1995. While opposition has grown in various quarters as the citizens of the world become more aware of what their governments have committed them to, it seems probable that the WTO will come into existence in early 1995. This is despite some constitutional/legal wrangling in both Europe and the US. At this stage, it is difficult to assess just how much this wrangling is only posturing and manoeuvring for the best corporate box seat since GATT in general has some momentum now to impel it along. Commitments have been made that will not be easy to break although the longer term is a lot more problematic.

It should still be noted here, however, that the Western ruling elite may becoming more divided on the issues at stake as the ramifications of free trade sink in. In the US conservatives like Pat Buchanan and Ross Perot are campaigning against GATT along with Ralph Nader's Public Interest Research network. the trade unions and environmentalists. The steel lobby has been fighting for tougher anti-dumping provisions applying to foreigners against other big corporate groupings which depend heavily on imported materials. Even "Time" magazine is worried about the political situation! (1711011994)

Whatever the outcome ofthe wrangling, short of open trade wars, the corporate drive will continue in one way or another. Whether internationally or regionally, the aim is to gain greater power through the use of free trade agreements and forums. Next to GATT, the NZ government's main priority in trade policy is the Asia-Pacific Economic Cooperation (APEC) initiative. On our back door, CER (Closer Economic Relations) with Australia carries on towards more integrated linkage despite the odd hiccup.

Hayek is

Peter Sutherland, the GATT Director General, has laid out his world vision for the new It is in line with the hard right-wing philosophy of Friedrich von Hayek, one of the leading ideologues of the free market In November 1989, the elitist and Mont Pelerin Society held a meeting in Christchurch to celebrate the Rogernomics record in undermining human rights in Aotearoa/NZ (see Foreign Control Watchdog, 63, April 1990). The Mont Pelerin Society is a sort of international

lobby group that takes its inspiration from and pushes

the corporate free market It is hoping to a new feudal

order where the serfs really know their place.

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Hayek theory advocates that a very severe restriction on the growth of the money supply is necessary in order to control the growth of even if such a policy leads to very high levels of unemployment Making people bleed at the bottom ofthe socio-economic system is how the champagne and caviar quaffers of Mont Pelerin like to justify their own existence (see Watchdog, 63 for the list of NZ members and fellow travellers at the time, as well as attendees from overseas).

Accompanying a GAn press release (16/6/94) is the Director General's speech to the Institute of Economic Affairs in London, the Third Hayek Memorial Lecture (on file at the NZ Parliamentary Library, Wellington). The title of Peter Sutherland' address is "A New Framework for International Economic Relations" It contains many significant indications ofthe meaning of the New World Order according to GATT (or rather the WTO, the central Brother organisation of the near future).

In the draft agreement for the GATT Uruguay Round, the so-called "Dunkel draft" there is a section calling for closer

co-ordination among the International Monetary

Fund (IMF) and the World Bank "NZMonthly Review",

346, Sept/Oct. J 994 for role of BanklIMF). But in this "Functioning of the GATT System: Draft Decision" it was explicitly recognised that the new Triad should avoid "the imposition on governments of cross-conditionality or additional conditions". This was indeed reaffirmed in the "Final Act", settling the Round. Yet, hardly is the ink dry and the GA TT bureaucrats are already starting to rejig the rules. The aim is to more effectively enforce the corporate command economy.

In his Hayek speech Sutherland suggested that rather than the IMF, GATT and the World Bank separate reviews of country policies, "is there not case to be made for a more integrated approach, building on precedents in the GATT in this area?" 9 of the GATT media package).

Sutherland gave various indications ofthe coming global reach of the WTO, He noted that.t'Greater difficulties are likely in the case of trade restrictive polides that until recently have been considered strictly domestic. Technical standards, health and safety requirements, government procurement were among the examples I mentioned earlier of policies that have been

brought into the international sphere the ongoing

integration ofthe world economy" (p. In challeng-

ing other policies that have traditionally been consid-

14

ered domestic, Sutherland observed that, " ... it is inevitable that countries will find that there are increased external influences on what used to be considered purely domestic policies" (p.

He went on to say: "Indeed, the range of policies considered as trade-related has steadily grown, from measures applied at the border on imported products to policies whose trade effects are incidental to their main purpose, such as production subsidies, taxation, investment, anti- trust and technical standards and domestic regulations" So there it is - Big Brother is reaching everywhere to promote and protect corporate interests. New issues on the GA TT agenda, or issues demanding greater attention, include the environment, labour standards, immigration, competition policy, investment, regionalism and finance.

Sutherland responded to the charges of the threat to national sovereignty from the WTO. "Part of the explanation undoubtably involves a development I touched on earlier, namely the tendency for trading partners to seek to influence a range of policies that traditionally have been considered strictly domestic. Two more specific charges levelled by those who are concerned with the possible erosion of nation a! sovereignty concern the way in which rules may be changed under the WTO and the binding nature ofthe new dispute settlement procedures. Both of these concerns are completely unfounded" (p,

The first thing 10 note here is that Sutherland is careful to avoid the mention of "democracy". Reference to democracy would too clearly reveal the contradictions of GA TT. According to our present tradition, democracy is only effectively exercised within the context of the national sovereign state. This is the largest unit of human organisation in which the democratic process can meaningfully involve the participation of people to hold their leaders accountable, and

similarly facilitate the making. How work in of course, may be another story altogether but at least the principles and the potential capacity for democracy are evident

Previous issues of Watchdog have described the highly undemocratic operation of GATT and the consequent implications of the WTO. This undemocratic operation includes the way rules are actually applied in GATT, or indeed changed as the history of the Uruguay Round attests. The new dispute settlement procedures are even more undemocratic than in the past. Whereas previously there had to be a consensus for the adoption of a dispute panel finding, a finding is now automatically adopted (unless subject to an appeal). In fact, for a panel finding not to be adopted, there now has to be a consensus not to adopt this finding. The WTO is set to reverse the previous practice! In Aotearoa/ NZ, any critical discussion of the negative aspects of GATT continues to be systematically suppressed except for the odd token gesture. Yet this strikes at the heart of our democracy or what we have left of it

Sutherland is happy to appeal to Hayek on the question ofnational sovereigny (and democracy), "He was, as I have already noted, an articulate modem advocate of the view that freedom should not be equated with an absence of restraints on behaviour. Freedom, rather, is possible only under the law ... If sovereignty is equated with the ability of a government to carry out its legitimate functions, the acceptance of the new WTO rules and procedures by governments around the world will increase the sovereignty of each and every one of them."

This is obvious gobbledygook and Orwellian cant. Sutherland has in the same speech, as we have seen, shown the growing intrusion into the domestic scene of the WTO and its agents. It is therefore sheer absurdity to claim that

15

adherence to the WTO will increase national 0CH""r,,,nnh What is the legitimate function of government is becoming more and more a moot point as the GA TT extends it grasp.

In their book. "The for Com-

panion Volume to the Television Patrick

Watson and Benjamin Barber see the democratic process as "a protracted and painful struggle between freedom and equality that has to be waged over and over again" (p. 218). But, while these two commentators identify the role of the transnational corporation (TNC) as a major they fail to really discern the nature ofthe democratic struggle as it is taking shape both today and for the future. The corporate command economy is suppressing freedom and equality in the name of a freedom which is increasingly meaningless as more and more people are made dependent on the play of external forces.

lambasting labour with the

Sutherland has a grand view of the WTO: "The significance of the entry into force of the WTO, however, extends well beyond the completion ofthe Bretton Woods architecture. It will mark a major advance in the rule of law ininternational economic relations. As such, the WTO will play the central role in helping governments deal with the challenges confronting them in the conduct of international economic relations."

One of the matters with which governments will apparently need help is going to be labour competition. The GATT Director General notes a four-fold origin to "the current challenge confronting international economic relations": (a) "the ongoing integration of the world economy"; (b) "the sharply different demographic trends in the developed and developing countries"; (c) "the spread of market-oriented reforms"; and (d) "the end of the Cold War" (pp, 2-5)

In a call that will bring cheer to the ragged ranks of the victims of Rogernomics, Sutherland says that:" The common element in these four developments is continuous pressure for structural adjustments in patterns of production, investment and world trade ... A key task of the WTO will be to help countries meet both the economic and political challenges of coping with continuous structural adjustment" (p. 5). So we are in for the joys of permanent structural adjustment as mandated by the corporate captains of the wrol IMF/World Bank.

With regard to (b), Sutherland points to the projection that "of the nearly t\'\I'O billion people who will be added to the world's population in the next 20 years, 95 out of each 100 will be born outside the current OECD area. One consequence is that between now and the year 2015, the number of new jobs required to keep unemployed rates unchanged in the developing world will exceed the current populations of Western Europe and North America combined. the economic implications are manifold, including competition for capital and a continuing shift in competitiveness in labour-intensive activities to high population

growth countries. Nor is a coincidence that tion, and the linkage between pressures for from low-income countries and trade barriers in the rich countries are up the international agenda" (p.

The issues involved here certainly constitute an enormous challenge to the international community. GATT's prescription compounds the problem rather than helping solve it

In an earlier speech to the Canadian Club,

Economic Globalisation" (21/3/1 Sutherland also re"

ferred to the unprecedented that is pro-

ceeding now. He argued that: "What is needed at home more

than anything else, to make high standards available

broadly throughout society, is real

economic growth". This appeal to "trickle-down" economics, premised on a fundamentally ignorant understanding of environmental constraints. is directed against the international labour movement Somehow [he capitalist system is supposed to embrace the masses of the Third World and yet raise material living standards worldwide to even higher levels than in the most "developed" countries today. It is another of the absurdities that GATT is foisting upon us.

Of course, the prospect of a reserve of many millions of workers, a vast untapped labour pool for capital exploitation, is making the corporate bosses rub their hands with glee. Currently in Asia companies are migrating to country after country in search of the cheapest labour available. Competition forced on workers will drive wages and conditions lower and lower. But Sutherland is committed to the corporate vision of GATT. He denounced what he called the discredited theories of the threat of "pauper labour", and attacked efforts to counter "so-called ceo-dumping or social-dumping" .

As new technologies continue to chew away at and the living standards of the majority, the WTO will be holding fast to Hayek's faith in the role of the to distribute the benefits and the rule of law to coerce dissent To return to Sutherland's Hayek Memorial Lecture, "The price system, acting to 'co- ordinate the separate actions of different people', permits that knowledge to guide, spontaneously, the

ing allocation of scarce resources".

Yet as in reality the centralised corporate powers decide the prices, allocate the costs and benefits, and write the laws to suit their own special interests, there is to be much greater contest over the challenge that those who have the gold make the rules. The human and environmental cost is

mounting and the newly revamped GATT is to

greatly increase it. Those who the natural of

the golden rule must be held to account if sustainable development is ever to be possible.

WATCHDOG

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Employment Creation Big GATT Problem

The programme of the General Agreement on Tariffs and Trade (GATT) is driven by the power of transnational enterprise. But the transnational corporations (TNCs) do not create much employment. Some analysts, like American writer and activist, Jeremy Rifkin, would indeed say that overall TNCs will destroy more jobs than they create. In his book "The End of Work", Rifkin asserts that corporate re-engineering and restructuring will eliminate a multitude of jobs in the years to come as computerisation and automation really take hold. He cites a Wall Street Journal article that projects a two million job loss in the United States each year!

Problems of job creation are even acknowledged in a United Nations' press release on its latest pro-1NC annual report"World Investment Report 1994: Transnational Corporations, Employment and the Workplace" (UN Conference on Trade and Development): "The most striking fact about employment by TNCs worldwide is that, in spite of a substantial increase ofFDI (foreign direct investment) flows during the past decade, employment levels in TNCs as a whole stagnated". While employment in affiliates abroad did increase, there has been a marked trend to attract foreign investors through liberalisation which has increasingly redefined "the relationships among the principal actors - firms, trade unions, governments" .

In the case of governments, the Report's message for them is to get their human resources educated and trained so as "to be able to deal with the fast-changing demands of an integrated international production system" i.e, adapt to TNC demands. If you like the next turgid quote, then you are in danger of becoming a creature of GA TIzilla! -

"The network of micro-economic connections at the firm level is now so woven into the cross-border fabric of internalised and externalised patterns of producing and distributing goods and services that policymakers have few options but to recognise the new landscape of international production and international competitiveness." Of course, one of these options would be to choose a people-centred development path that makes long-term sense in a world of finite resources. But, then, that would not be GATT-compatible.

But, surely we can all take heart from the reassurance by the Report that, as the press release puts it:

"In the case of TNCs, their growing role in the integration of the global economy implies increased social responsibilities, which has encouraged the business community to establish voluntary standards and individual firms to adopt their own corporate guide-

WATCHDOG 77

T

e

s

Dennis

especially in the area of human resources development".

So throwaway your Multinational Monitor and rejoice in the new dawning enlightenment of the Tl'JCs. Forget the actual practice of democracy and reconcile yourself to being a human resource under benign corporate rule with perhaps, if you are lucky, sovereign personal participation as a tax-payer and consumer. And, finally, feel truly thankful for the corporatisation ofUNCTAD, once the bastion of the Third World movement to reform the world order. Or we can continue the fight for a fairer future.

The Marrakesh Proposals for Sustainable Trade

As a creative response to the signing of the Uruguay Round Agreement in April at Marrakesh in Morocco, more than 75 representatives of non-governmental organisations (NGOs) and individuals from 14 countries of the world offered a proposal for a sustainable "green" trade agreement. The signatories agreed that the Uruguay Round agreements fail to protect the environment, safety and health. On the contrary, these will jeopardise nations' rights to environmental, safety and health regulations. With this document, the signatories emphasise that multilateral policy on trade and the environment should be developed within the context of the United Nations institutions. People can save the UN as part of sa ving the planet.

A number of AotearoaINZ organisations were among the signatories to the document which endeavours to integrate concerns for sustainability, participation and equity. It includes special safeguards and provisions to both protect and promote the rights and interests of Third World nations.

NZ's Gaping Gains from GATT

AotearoaJlNZ, which has been stupidly made so much more vulnerable to the games of the big boys in world trade, might suffer badly from internal US "horse-trading" over arrangements to implement the Uruguay Round Agreement. The Clinton Administration has legislated to expand the country's Dairy Export Incentive Programme and this Programme could set out to damage the interests of nonsubsidised exporters (NZ Herald, 15110/94). Yet according to NZ government estimates our dairy industry would supposedly be the major beneficiary from GATT!

Of course, even the optimistic official estimated gains from GATT are derisory, amounting per year for the next decade from less than a half to less than a third of Telecom's annual profits. Independent projections revise these gains downward. Meantime, Telecom is now a foreign-controlled company that remits most of its profits overseas even as it peels away employment here.

PAGE 17

Commitments under the GATT General Agreement on Trade in Services actually promote the use in this country of foreign labour in direct competition with NZ labour. For instance, specialist personnel "with trade, technical or professional skills" can be brought into the intracorporate transferees, for periods of up to a maximum of three years". This arrangement facilitates strike-breaking and general lowering of conditions for NZ workers. It also makes education and training within our country much more uncertain in addressing future requirements.

Cases of the use of

labour over NZ labour arc be-

coming quite common. A current local dispute centres on the use of foreign labour to tie and untie cargo on the Lyttelton waterfront The port unions are opposing the intention of Translink Pacific to use Russian seamen rather than local workers for this task. Another labour dispute concerns the strike by junior doctors at the Whakatane Crown Health Enterprise (CHE) and the CHE's use of Australian doctors to replace them during the strike. There are indications that a number of consulting firms in NZ have developed links with US based anti .. union consultants.

New Zealand's Role as Environmental Reactionary

Material obtained under the Official Information Act confirms the perception ofNZ's role as an environmental reactionary. NZ supported the GATT panel finding against the protection of dolphins in the second challenge to the US Marine Mammal Protection Act In the view of the NZ govern-

ment, the GATT report "upholds principles which un-

derpin the successful functioning of the multilateral

. This is seen the NZ government as "vital to the

achievement of sustainable development in ali countries".

There is a clear contradiction between the free trade

model that NZ has embraced and the requirements of sustainable development, which is again highlighted by the principled arguments against dolphins.

Further information relating to GATT and the Government's application of the Montreal Protocol on Substances that Deplete the Ozone Layer showed the contorted line of argument that the Government adopts on these matters. In the tuna/dolphin case the Government's submission to the GATT panel appealed to "cooperative approaches to solving global or transboundary problems" in implementation of the Montreal Protocol, a cooperative environmental treaty on a matter of the gravest importance to Aotearoa/Nz, the Government continues to drag its feet

In late 1993 Fisher and Paykel requested that the Government place prohibitions on the import and manufacture of domestic refrigerators made with Of containing chlorofluorocarbons (CFCs). The company requested that these COlltrois parallel those already agreed to in Australia. But the Government refused, despite a previous pledge.

The Ministries of Foreign Affairs and Trade, Commerce, and Agriculture & Fisheries were "particularly concerned that the proposed prohibition could be against the GATT".

Australia was considered to be

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open to challenge on GATT grounds. What is clearly brought out here is the inhibiting constraint of GATT on positive environmental initiatives, even if a commitment has supposedly been made to an international co-operative approach. It takes enormous individual country initiative and work to actually reach the stage of an international

like the Montreal Protocol. While NZ contributed to this process, it is now signalling that trade considerations still operate a very constraining influence.

The Government, in fact, argued that there was an important point of precedence in", volved in that "a decision to take trade measures to assist a domestic company, on the grounds of a perceived cornpetitive disadvantage imposed by environmental regulations, could lead to other such ap-

18

preaches". Overall, the trade-off in costs and benefits is biased in favour of trade over the environment When the environment is damaged,

then of course there will be no more trade,

The NZ government has boasted how it has exceeded the tariff reduction requirements of the GATT, opening up a small vulnerable country to the trade winds, In a submission on the post- J 996 Tariff Review, the NZ Trade Union Federation (TUF), the progressive branch of the organised labour movement, pointed out that: "The pressures unleashed by lowered tariffs have been shifted (by surviving businesses) onto the shoulders of labour, The lowering of tariffs plus other deregulation policies have contributed to the growing inequalities in New Zealand society." TUF appealed to the Government for key tariffs to be raised to maximum levels allowed by the GATT.

In both this submission and in a submission on the GATT (Uruguay Round) Bill, ]lJF presented a set of telling criticisms of GATT and the effects of the government's policies on workers, TUF supports the inclusion of a social clause into GA TT, "but not necessarily in the form proposed by the US and French governments".

HJF, indeed, "believes any Social Clause should target companies even more than countries and should also target the international financial institutions of the International Monetary Fund and World Bank. We understand some of the concern of many Third World countries on the Social Clause proposals. We note that many Third World countries are in the situation of having many of their anti-worker policies dictated to by the IMF-World Bank. We also note that over 40% of the world trade actually takes place within transnational corporations." TUF caned on the government for democratic debate.

Among the unions that TUF represents is the footwear union. The impact of trade liberalisation on the footwear industry is the focus of "Dumping, Protectionism and Free Trade" by R. Sheppard and C. Atkins, (Discussion Paper, 140, Sept. 1994, Agribusiness & Economics Research Unit, Lincoln University). Predictably, this academic study is pro-GATT and free trade, It indicates that further research is being undertaken to identity the level of "welfare costs" imposed on NZ by protectionism, These ivory tower theoreticians should consult TUF which points out some of the human damage that has been done.

The study is following up the effects in particular of the welfare costs due to anti-dumping measures taken in the "Chinese shoes" case. Evidently it is beyond the capacity of this Research Unit to comprehend the competitive effects on labour conditions and wages of adding hundreds of millions of workers to the international capitalist economy through the integration of China and other countries. The

reserve army of labour is with mu ltitude

time, academ ia dreams on and out-dated assumptions.

Structural Adjustment, and the World Bank

Structural Adjustment Programmes (SAPs) are the means whereby the West has drained away from the Third World a shocking net transfer of financial resources to the commercial banks, The haemorrhage in debt dues amounted to US$I78 billion between 1984 and 1990, This is the blood sucked from the Third World poor to sustain the ruling Western elite in its bloated life-style, even as this elite cuts deep into the flesh of its own poor. A former World Bank executive director has declared: "Not since the conquistadores plundered Latin America has the world experienced a flow in the direction we see today"

NZ, like other Western countries, has been enjoying economic sustenance from this flow, As well, it has its own de facto SAP - "Rogernomics" - for inspiration. The July/August 1994 Multinational Monitor, which contained some devastating information on the operations of the World Bank, included a couple of interesting observations on NZ's role.

Consultants can be "paid out of trust funds administered by the Bank, but set up by donor governments, whose purpose is often to further the interests of donor country corporations. This interest frequently conflicts with the interests of the communities in which development projects are being conducted. But it is donor countries that dictate the funds' terms" (p. 17).

Later on page 19, the "MM' issue notes that seven countries - "Australia, Britain, France, India, Japan, New Zealand and Switzerland - require that final approval for consultants be given the donor in question, not Bank management". NZ is keen to ensure that it as much as possible from the rampant commercialisation of aid. Indeed, NZ is doing well: "Some OECD countries that now maintain trust funds won more contracts in ] 993 than they have averaged in the past 48 years". Among these winners is New Zealand. There is money in keeping people poor.

Plains fM 96,9 Community Acess Radio, Christchurch, is running a 13-part series on GATT titled "The Secret Side of Free Trade" every Tuesday night, 7.30-8pm. The series began on October 25, It includes interviews or excerpts from the work of leading GATT critics, people like Vandana Shiva, Hazel Henderson, Martin Khor, Mark Ritchie, Noam Chomsky and Ralph Nader, Congratulations to Plains Radio! (Information can be got direct from the US Contact TUC Radio, Box 410009, San Francisco, California 94141, for a booklet (USS] 2) and/or a set of7 tapes (US$35)).

19

10

in mind that GATT is no means

of the Asia-

the

Pacific Economic in mid-November in Indonesia has high for NZ government, big business and attached academics. The Ministry of Education, for instance. is involved in the APEC Human Resources Working Group. A current suggestion being considered is for the establishment of an APEC centre in NZ.

Already. three "networks" and a "forum" associated with APEC are operating here a business management development network; an industrial technology network; an economic management development network; and an education forum. It certainly sounds significant that NZ was successful in getting the theme of "the Management of Change" into the business management development network - more "Rogernomics" restructuring on the way for our human resources? Indeed, so-called "human resource development" is obviously a leading A PEe objective i.e. tailoring human beings to fit in with corporate demands.

At the time of writing, the issues of human and labour rights seem unlikely to be on the agenda at the Indonesian meeting. This is hardly surprising. Leaders of the 18 APEC nations are expected, however, to endorse a call for free trade in the region and to further promote foreign investment. A report by "an eminent persons' group" has advised member countries to set a tree trade goal by 2020. Indonesia will no doubt provide plenty of inspiration to how to deal with dissidents and union activists.

for

Trevor de ACT law and order spokesperson, is so blatant with his class bias that he is openly calling for harsher sentences for crimes against the person, and lighter sentences for white collar criminals (Radio U 11/94). Good old Trev. He certainly sets a good example, sleeping with his gun under the bed. Maybe he's got a bad conscience. ACT policies are designed to screw the poor and aggravate societal tensions so Trevor surely knows who to target and who to look after. It fits nicely with his proposal to hand the young unemployed over to the army.

Information obtained under the Official Information Act shows how the NZ government is lowering our food safety standards. The government is out our sovereignty in this area by under Closer Economic Relations (CER) with Australia to assume the status equivalent to an Australian state like Victoria or South Australia within a new Australasian

As part of the process establishing the new regime, Australia is also evidently lowering its standards. The National Food Authority (NFA) in Australia has a set of five objec-

tives, The fifth of these calls for: "the promotion

between domestic and international standards

(where these are at it does not lower the

Australian review conducted by the

NFA has recommended the section in brackets be removed and NZ has concurred with this. Australian standards have been previously criticised as looser than ours by the Consumers' Institute , May 1991 p. 3). TNCs effectively control the Australian food

While the NZ government is for certain provisions that will help safeguard some independence in food standards, the process of harmonisation under way represents a huge change to the current situation. An overarching consideration is the requirement to conform with GATT-mandated standards set by the Codex Alimentarius, an international organisation which is widely seen as dominated by TNCs and consequently a potential threat to good food and health standards. Codex standards are often lower than those required by a number of countries. It is most important and urgent to try and monitor what is happening and defend NZ sovereignty in food standard setting

Clarifications and amendments to the last Watchdog issue: (a) The title of the radio item "The Invisible Wall" (on the division that GATT is deepening between the Third World and "developed world") got the badpun treatment ("The Invisible War" l);

(b) Apparently the Ministry of Foreign Affairs & Trade (MFA 1) organised ajunket in Auckland as well as Wellington to promote GATT to selected business and media people. MFAT actually complained about the attendance of (J certain enterprising person at the Auckland gathering. This person was not specifically invited hut still succeeded in gaining entry as a journalist. The complaint was made to the person's employer for harassing AfFATfor entry! Big Brother is alive and well in NZ today.

Action for Fair Trade PO Box 33-176 Otautahi/Chrjstchurch

"1

to of the 1""'''.~_,

l'I'l.e' the best deal,"

TRiPping on drugs is part of the programme ofthe 'JICIlH",", Agreement on Tariffs and Trade (GATT), Greater protection for Trade-Related Intellectual Property Rights (TRIPS) is intended to boost the power of transnational corporations (TNCs) to grab more profits and markets. This greater protection for TRIPS, of course, contrasts glaringly with the supposed principles of freer trade and points up the hypocrisy of so much of the rhetoric,

In a letter published late last year in the Listener (18/12/93, p. 15), the president of the NZ Institute of Patent Attorneys, D.C Calhoun, strongly criticised an article on GATT by Gordon Campbell (see Campbell's "Political Diary" 01'25/ 9/93), Campbell had defended India's 1970 Medicines Patent Law against the GATT push on TRIPS, Calhoun, however, considered that the Indian legislation unfairly protected and subsidised Indian generic medicines at the expense of "patent owners from outside India and their governments",

He actually labelled the Indian law an example of "unfair and inequitable treatment", an extraordinary Orwellian reversal of the basic meaning of "justice", But then the New Right would indeed tum the meaning of "justice" on its head - the level playing field is really a cliff with TNCs at the top and poor people at the bottom. The former keep pushing the people back down and adding more to their number.

Campbell got a good brief reply emphasising national sovereignty and the assertion of patient care ahead of drug company profit, as well as the need for controls on the corporate development of'bio-technology or genetic engineering. The letter reproduced below, now somewhat supplemented and modified, was submitted unsuccessfully to the Listener as a contribution to the public consideration of this most important matter.

An Open letter - Response to D.C.

"D, C. Calhoun's criticism of India's 1970 Medicines Patent Law is an indicator of how remote many privileged people in the West seem to have become from the fundamental facts of poverty and exploitation. As president of the NZ Institute of Patent Attorneys, D. C Calhoun, takes issue with Gordon Campbell on a matter that can literally mean life or death for poor Indians.

The GATT proposals on so-called intellectual property rights i.e. patents, plant variety rights, trademarks, etc. constitute a grave threat to the well-being of the majority of the population of the Third World (or the South), The Indian law has enabled cheap and adequate generic medicines to be available to those who would otherwise have had to suffer and even die. It has thus performed a vital social function for the collective good. But the NZ Institute of Patent Attor-

neys evid tly the Indian law as 'unfair' because Western patent owners, i.e. transnational pharmaceutical companies, are 'not able to benefit from their patents in India in the same way that they are entitled to in their home countries and in most other countries',

In a booklet titled "GATTastrophe" (]993) the Indian Public Research Group has described the threat to India's people from GATT and transnational control. The pharmaceutical industry is a sector of particular concern to organisations in India which have been campaigning against the GATT proposals, Completion of the GA TT Uruguay Round now means that hundreds of millions of poor Indians face the threat of higher prices for essential drugs,

The record of the pharmaceutical companies in the Third World has often been deplorable and the subject of some highly revealing studies, When Bangladesh asserted a measure of independence from the Western drug firms by developing an essential drugs policy using generic forms, the drug companies and their home countries like the United States and Britain tried to undermine the Bangladeshi policy by blatant pressure and harassment. Even the world's poorest countries and poorest peoples are viewed as fair game for bully-boy tactics.

A United Nations publication "Intellectual Property Rights and Foreign Direct Investment" (1993) has indicated how the US has forced many developing countries to adopt intellectual property legislation that conforms with the profit objectives of pharmaceutical transnationals. To quote: 'Together with pharmaceutical TNCs, the Government of the United States, acting under Section 301 of the Trade and Tariffs Act of 1984 (as amended in 1988), developed a strategy to alter a situation regarded as hampering the industry's profitability and longer-term R&D efforts' (p. 12). (R & Dvresearch and development).

Aotearoa/NZ has also been a victim of such unilateral strongarm tactics - supposedly contrary to the principles of both the old and the new GATT. In June 1992 the government was accused of bowing to pressure from the US and transnational drug companies when it eliminated an element ofNZ law which allowed local companies to replicate drugs patented by foreign firms (Press, 19/6/92). The Government stated that repeal of section 51 was needed for consistency with forthcoming GATT decisions on intellectual property,

Gordon Campbell had earlier done the public a service when he drew attention to how US and transnational pressure on our pharmaceutical patent law was implicated in the GATT negotiations, and how this pressure in 1990 had forced our government to back down from providing cheaper drugs to

July 1992 saw the Secretary of Commerce acknowledge that NZ was trading off sovereignty in GATT over intellectual property rights with

the US in order to get this country's support on agriculture (Press, 117/92)*. This reflected what Mike Moore had repeatedly indicated, and this sort of trade-off has been the position for a number of Third World countries. The Ministry of Commerce's acknowledgement came very soon after the deletion of section 51 from our Patents Act.

the NZ people (Listener, 29/ 4/91). But then in May 1991 NZ was placed on the US "Watch List" as a country having unsatisfactory pharmaceutical patent law (Press, 29/5/91). If it did not act to conform with US demands it would be the target of trade sanctions. Later in March 1992, the Auditor General slammed the health department for failing in its objective of ensuring that prices of top-selling medicines were internationally competitive (Press, 4/3/92).

What you don't know will hurt you

The elimination of section 51 came at a time too when a local pharmaceutical company, Pacific Pharmaceuticals, was challenging Glaxos monopoly on the top-selling anti-ulcer drug, Zantac. Glaxo is the largest supplier of human pharmaceuticals in NZ. "GATTastrophe" points out that in 1993 Zantac was selling in India for only Rs, 29 per ten tablets, whereas in Pakistan ten tablets cost Rs. 220, in the U.S. $24 and the U.K. 9 pounds.

Like India, Argentina has provided patent protection for manufacturing processes, but not for the products themselves. Argentina has been similarly pressured by the US Pharmaceutical Manufacturers' Association and the US government to include product protection as well in its law. What upset the US again was the fact that Argentina's patent law had led to a vibrant local generic industry, as well as to prescription costs far below what US citizens pay for identical drugs (Multinational Monitor, Nov. 1993, pp. 11, 12).

A Zantac prescription that cost US$91.98 in the US cost just US$J8.17 in Argentina. 'Both are made by Glaxo Pharmaceuticals. The difference is that in Argentina Glaxo must compete with 12 Argentinian national laboratories making the drug and charging an average ofUS$12.75 for the dosage' (M.M., Nov. 1993). Whether it is Glaxo or Merck, the big drug companies have the same broad interest in undermining the ability for local self-reliance in generics and low cost treatment. (A painful irony here is the recent medical finding that antibiotics are the proper treatmentfor ulcers, not the anti-ulcer drugs that have been pushed so long!)

During the 1990 wrangle it was most ironic that the

pushers even called us 'banana . Of

course, banana republics are countries controlled transnationals, This is what this is fast becoming unless enough call a halt to it and reassert some national sovereignty,"

D. K. Small

( Christchurch)

*(In a letter from the Ministry of Commerce dated 2111/93, a Ministry spokesperson stated "The Secretary was making the point that the willingness of other developed countries, such as the United States, to accommodate our interests in an area of vital interest to us like agriculture was likely to be helped by a willingness on our part to assist them in areas such as intellectual property where they have major interests. But the interest of developed countries in protecting intellectual property was not the

only reason for our support for the TRIPS agreement."

"NZ also sees benefit in the provision for better protection of intellectual property rights. NZ is a nation that relies for its economic well-being on a fair and open trading system. We recognise that the protection of intellectual property is an important component of that system and one that NZ companies themselves stand to benefit from when seeking patent, trade mark and copyright protection when they trade overseas." From a narrowly self-interested point of view, this rationale may appear to have a certain plausibility but needs to be weighed against the fact of gross imbalance for NZ on the scales of intellectual property rights, especially when the increasing foreign ownership/control of the NZ share-market and NZ business in general is taken into account.)

It is worth quoting from the November 1990 issue of Multinational Monitor with regard to the practice of the 1970 In .. , dian Patents Act Multinational Monitor pointed out that:

"The 1970 Indian Patents Act sought to encourage domestic production of patented inventions and ensure that the products were available at a reasonable price" (p. 10). The benefits reported at the time were that, "drug prices in India, among the highest in the world before the 1970 law, are now among the lowest; the Indian pharmaceutical industry has flourished ... ; and India is nearly self-sufficient in the production of bulk drugs. Despite its beneficial effect in India, the Indian patent law is exactly the sort targetted by the Ll.S. Pharmaceutical Manufacturers' Association."

A perspective that further assists us in putting the issue in context is provided by the NZ government publication, "Re-

WATCHDOG 77

form of the Designs Act 1953 and other Issues: Proposed Recommendations", (Ministry October 1992). To quote a couple of paragraphs on the NZ situation, and the role and services of local patent attorneys:

"Foreign applicants (for patents) tend to be large international companies seeking to protect their intellectual property rights in NZ. The majority of foreign patent applications relate to pharmaceutical compounds and compositions."

"The current licensing regime for services under the Patents Act means that foreign consumers can identifyappropriately skilled and experienced practitioners to act on behalf of those consumers in relation to their industrial property rights. However, in practice, most foreign patent applications are referred to suitable NZ patent attorneys by practitioners in their own countries. This is the so called 'network of foreign associates'. Established association, reputation and past performance are important factors taken into account by foreign practitioners when identifying suitable local practitioners on behalf of foreign applicants. The participation ofNZ patent attorneys in international professional associations such as La Federation Internationale Des Conseils En Propriete Industrielle and the A sian Patent A ttorneys Association also serves to facilitate professional exchange and the identification of established firms and practitioners."

Patent applications by foreigners constitute by far the dominant proportion in NZ. About a third of patent applications between January and October 1991 were filed by US companies alone. In May this year, the Institute for International Research, which calls itself "the world's leading conference organiser", presented a conference at the Hyatt Hotel, Auckland, with the title - "Generating Profits from your Intellectual Property". It brought together government officials, businesspeople and patent attorneys.

Doug Calhoun, a partner, A J Park & Son, gave a paper on "The Strategic Importance to Intellectual Property of the GATT Agreement". Interestingly, one ofthe sections of his paper had the subtitle, "American' Desert Stann' IP enforcement"! Whatever exactly that ML Calhoun had to say about US enforcement of its intellectual property objectives, he certainly chose a most revealing subtitle. (The Institute for International Research will provide the documentation from the conference at a cost of $395.00 + GST!)

Drugs, Politicians and the Subversion of Democratic Control

The high-tech blitzing of Iraq goes hand in hand with the US-led repression of Third World peoples in GATT, and in particular its application to intellectual property. Such military and economic activities all come within the enforcement strategy of the New World Order - the strategy of more efficient exploitation of people and resources across the globe for the benefit of a small proportion of humankind.

john Goodman of the Affairs and Trade indicated surprise in many ways that there is any TR IPS at all. At the start of the there bitter conflict over it between the US and developing countries led India and Brazil." But in the end, we have seen, Third World resistance was worn down. Incidentally. in more public contexts, government propaganda is so distortive of the facts that it is openly trying to rewrite history by Third World support for the GATT agenda. For instance, Philip Burdon, Minister of Trade Negotiations, has said that "Developing countries have been unwavering in their support

for the Uruguay Round. . . 9/2/94).

at the

Third World Resurgence, 46, June published by the Third World Network (the foremost non-government network representing the majority of the world's people) has reproduced a brilliant keynote address by activist and writer David Werner, delivered at the 43rd Annual Convention of the American Medical Student Association. Titled "Pushing Drugs in a Free Market Economy", Werner's paper makes a series of telling observations, some of which are most apposite here.

Basically, Werner argues that "the current pandemic of drug misuse has its roots in the unfair economic and sociopolitical structures of our society", From this standpoint, Werner incorporates the negative fallout from both the legal and illegal use of drugs into an integrated perspective, With reference to Western pharmaceuticals (including infant formula like that peddled by Nestle), Werner points to:

"the double standards practised by multinational drug companies. Time and again, medications that have been banned or restricted in the North are 'dumped' on poor countries ... Earnings from exports of pro' hibited pharmaceuticals to the Third World are rising fast, and now exceed US$20 billion per year, with the US alone accounting for some US$1 billion. The persistently high child mortality rate in poor countries is in part due to the unethical practices of multinational industries.

Werner emphasises the close links, and of much of the Western ruling elite with the drug barons. For example Margaret Thatcher got a million-dollar-ayear consultant job with Philip Morris, the US-based TNC that is the world's biggest tobacco company. The June 1994 issue of MultinationalMonitor was expressly devoted to the threat of=biopiracy", the plunder of world genetic resources by the biotechnology TNCs, including the pharmaceutical and other drug companies. GATT-related drug pushing was demonstrated on a number of fronts.

Carla Hills and Julius Katz, who were respectively the US Trade Representative and deputy US Trade Representative under President Bush, are now both tobacco advocates. Hills is an agent for R.I. Reynolds and Philip Morris. These exponents of the "revolving door" syndrome are appealing to GATT and North American Free Trade Agree··

WATCHDOG

ment (N A FT A) provisions to try and counter a Canadian which would require plain packaging with clear warnings about health risks for cigarettes sold in Canada.

In an article updating US efforts to undermine Argentinian pharmaceutical patent law, the same Monitor issue shows how US negotiators have been insisting "that Argentina adopt stronger law protection than is required under the new GATT or than exists in many developed countries' (p.23). Patent power is now being deliberately and systematically directed against the people and the planet.

An explicit objective of the GATT Uruguay Round was indeed to reduce health standard restrictions on trade. US pressure, intimately related to its GATT negotiations, has forced open markets in Japan, Taiwan, South Korea and Thailand to American tobacco. As consumer resistance has mounted in the "developed" countries, the tobacco giants have moved to exploit other markets, including those in very vulnerable parts of the Third World.

In the West, of course, political initiatives for public-spirited health care reform continue to be constantly under attack from TNC interests as repeatedly exemplified by the struggle to regulate tobacco use in Aotearoa/NZ and elsewhere. With GATT and other free trade agreements lending support, TNCs can be expected to step up their assault on any standards which offer the opportunity for more effective control of damaging activities.

This year in the US a shareholder has actually filed a suit against Philip Morris, alleging the company broke securities laws by hiding evidence that nicotine is addictive. As well, a US Justice Department inquiry has been launched into whether tobacco firms lied to Congress about the use of nicotine in their cigarettes. The Food and Drug Administration there has also recently determined that nicotine is addictive. It will be most interesting to follow the outcome of these actions. Meantime, in our own country some controversy has similarly arisen over the use of additives in cigarettes.

In September 1993 NZ doctors reacted against efforts mounted by food, alcohol and tobacco lobbyists to try and get the government to disband, or at least firmly subjugate, the newly formed Public Health Commission. A number of senior MPs were said to have been upset by indications of the Commission's interest in getting higher standards (Press, 18/9/94). Labour charged the Government with conniving with vested interests because of National's ties to the liquor and tobacco industries (Press, 20/9/94). Currently, there are reviews in process of food safety standards and of the Medicines Act These reviews demand urgent active attention and input from citizens and consumers. They have significant GATTlfree trade-related connections e.g. issues of harmonisation and consumer labelling.

The emerging state of corporate feudalism fosters monopoly trading that enables, for instance, the head of the Business Roundtable to stick up beer prices according to his definition of "free trade" even as big business attacks the mini-

WATCHDOG 77

we have left is simply to the chairperson of the Commerce Commission, Dr. Allan there was no evidence that NZ Breweries (Lion Nathan) and DB Breweries colluded to fix the recent joint I But as the Hotel Association president Commission's requirements for evidence are stupidly naive (if meant seriously). The booze barons have the bureaucrats, like so many politicians, over a barrel. As the former director of the NZ Institute of Economic Research, Dr. Bollard was indeed one of the architects of the new corporate regime.

Power

Over 20,000 pharmaceutical products are peddled across the globe, yet the World Health Organisation has determined that fewer than 300 are really needed. At the same time:

"The US pharmaceutical industry spends US$I billion more each year on advertising and lobbying than it does on developing new and better drugs. Meanwhile, its profits are rising at four times the rate of the national average Fortune 500 company (America's most profitable companies)" (Briarpatch, Dec. I 993/Jan.1994 , p. 3).

We have already noted how effective drug company lobbying can be. So far as the NZ market goes, evidently about 90 firms are involved in selling medical supplies. According to more than one account, current competition here is strong. Certainly, drug pushing films can go to remarkable lengths to make a sale. The government is supposed to be cracking down on financial inducements to doctors but the actual realitv of this remains to be seen. In 1994 particular concern has' been voiced about the growing prescription bill for anti-depressants like Prozac (hooking the unemployed").

A good government initiative is the recent promotion nerics (Sunday Star Times, 2/10/94). But how effective this will be is again highly questionable given the pressure that the drug TNCs have proven they can especially now with the gutting of compulsory licensing as part of our TRIPS obligations under GATT. With echoes of the Bangladeshi experience in the background, a PH ARMAC spokesperson has deplored "aggressive scarernongering" by big brand-name drug companies to get doctors to ignore generics (Press, 24/10/94). PHARMAC manages the regional health authorities' budget for pharmaceutical spending.

In his overview of the international drug culture, Werner ranges from the TNe exporting of prohibited pharmaceuticals to the Third World, through the abuses of the tobacco industry, to trafficking by the Cl A in illicit narcotics. He sums up the global challenge:

"So we are faced with a disturbing reality. In today's so-called 'New World Order' (which is in fact an entrenchment of the Old), the giant killer industries - ranging from infant formula to tobacco to alcohol to the entire military-industrial complex - have more say in shaping the policies of supposedly democratic nations

than do the people themselves. Big business is no longer subject to the law. Rather, it moulds the laws to suit its own interests."

There are many aspects to the issues surveyed Werner. In particular, the promotion of the trade in drugs seems increasingly linked with forms of social control by ruling elites. Aldous Huxley's "Brave New World" is as relevant as ever. The use and abuse of drugs, the connections of all this with

o

ITUA

In September 1994 Basil Meeking, the Catholic Bishop of Christchurch. closed down the Catholic Commission for Justice Peace and Development (CCJPD) whilst announcing plans to replace it with a new Commission to be picked by himself and to work under a new constitution which he has drawn up. He appointed a monsignor to act as an interim administrator. This closure follows a pattern similar to that of other dioceses in this country and throughout the world. Church people involved in social justice and Church hierarchy, personified in bishops, frequently do not see eye to eye about a whole range of issues within Catholicism and the wider world. For instance it is no coincidence that women from the Commission were also among the the new group, Catholic Women - Knowing Our Place, which recently organised a march away from the Cathedral to symbolise the Church's subjugation of its women.

The involuntary closure of CCJPD ends a remarkable body which lasted 25 years and which played a pivotal role in Christchurch's progressive movement throughout that time. It was founded by the late Father John Curnow (see his obituary in Watchdog 68, October 1991). CAFCA has had an active relationship with the Commission since 1982. The relationship with the ABC has been even more active. Throughout the 1980s Commission members (largely women) comprised Ploughshares which for months on end held weekly vigils at the US base at Harewood. During one Stations of the Cross enactment the cops showed good old fashioned sexism by going straight to the one bearded patriarch present (the resolutely non-religious Bob Leonard) and asked him to explain what was going on. He couldn't Ploughshares also campaigned against New Zealand military spending and against the Gulf War. CCJPD was a founder member of the Campaign for Peoples Sovereignty (to which both CAFCA and the ABC belong) and was actively involved in its activities throughout.

The Campaign for Peoples Sovereignty wrote to the Bishop expressing its great appreciation of the role that the Cornmssion has played in international, national and local issues. "We believe it has been an invaluable organisation and one that will be greatly missed". The Campaign also told the Bishop that it considered his closure of CC1PD "a most retrograde step" and called upon him to seriously reconsider it. We're not holding our breath.

CCJPD was perfectly prepared to commit money as well as

global power structures and and with intellectual property

action from who has concern for social justice.

GA TT has several available on intellectual property issues" (1) "Fish and Trips Intellectual Property Rights "; (2) "Seeds of Life ": & (3) 'The Real Pushers and Pirates: GATT and Pharmaceuticals ". Contact PO Box 1905, Christchurch/Otautahi, ph (03) 3662803.

CJ

Henion

people. Accordingly it was no stranger to controversy. Throughout his life John Curnow was regularly attacked by reactionary Catholic organs, such as the Tablet, for funding HART or Filipino groups (which were invariably portrayed as "Communist fronts"). It put money into ABC activitiesmost notably the 1990 Touching the Bases Tour; seed money into the Campaign for Peoples Sovereignty; a significant donation to one of my trips to the Philippines; and, over the space of two years, donated over $200 to the CAFCA/ABC Organiser Account which provides my income. So its closure will be missed in a very practical sense too.

The Philippines Solidarity Network of Aotearoa (PSNA) grew directly out of the Commission, indeed it was essentially founded by John Curnow. John's passionate attachment to the Philippines dated back to his first visit there in 1971 and peaked with his organisation of the 1984 New Zealand Solidarity Conference on the Philippines, the first of its kind in the world. So there has always been a very close relationship between the Commission and PSNA. For a long time the Commission office served as the office of firstly, the Philippines Solidarity Group Otautahi, and latterly, the national network.

As a decidedly lapsed Protestant, working with all these Catholics (of whom the female members all seem to be called Mary) has been a fascinating and worthwhile exercise. We've had a lot of fun. And, given the choice, I'd far rather work alongside committed Catholic than a burnt out commo. All that zeal and stuff about guilt can have positive outlets, I'm pleased to report. The Christchurch movement as a whole owes a large vote of thanks to the Commission and I' 11 single out some of them ~ Eileen Shewan, Pat Smale, Marie Venning, Mary Baker, Mary Reilly, Mary Miller (Hold you), Colleen Costello, Jim Consedine and Mark Moesbergen. There's plenty of others that I haven't worked with personally.

But although the Meeking may have inherited the Earth, all is not lost. John Curnow's work lives on in his Memorial Trust; Ploughshares has been taken up by a younger generation of local Catholic activists such as Moana Cole; and former Commission members continue to be active in a myriad of other groups. For example Eileen Shewan and Mark Moesbergen are leading figures in Philippines Solidarity. The broader movement is the richer; the Catholic Church is most definitely the poorer.

This fascinating autobiography starts and finishes with one central premise - Ron Smith is a communist Not an ex-communist, not a socialist or any other form of vist" Nope, Ron's a commo and bloody proud of it.

"Well, I had chosen my target - communism, the elimination of exploitation of man by man, the socialisation of the means of production, the ending of imperialist wars, the equality of men and women and of nations and peoples - and I was sticking to it"

He was an active member of the Communist Party of New Zealand (now the Socialist Workers Party) from 1941 until the expulsion of the entire Wellington District in 1970. He promptly got involved in firstly, the Marxist-Leninist Organisation and then the Workers Communist League (the Weasels) until the latter's demise in 1990., He is currently a communist without a party but a communist nonetheless. He is perfectly happy to admit the mistakes that obviously happened. The book finishes with an epilogue containing his personal views on the "collapse of communism"

"Working Class Son" is worth reading for a personal account of New Zealand communism alone. I found it intriguing to read about incidents in which I had been on the other side. For instance I was one of the Christchurch PYM anarchists chucking anything that came to hand at the greysuited Communist Party heavies during the 1970 Radical Activist Conference at Victoria University, the one immortalised by a Truth billboard screaming "Reds fight each other" or somesuch, Ah, fond youth.

But it is very much more than that Ron grew from the appalling poverty of Depression Wellington to become a highranking public servant. But he never abandoned his class Of his political faith.That is striking in itself. It provides a rich portrait of over 70 years of life lived to the full It won't win any literary prizes for style but it is a compulsive read. As with all self-published books, there are sections that could have been edited (I don't need to know everything about his scouting career or his tramping trips) but these help build the picture of a complete life

Ron spent 43 years in the public starting as the lowly clerk responsible for working out the nation's annual income tax bill on a manual adding machine (one year he was out by one penny') and ending as a senior officer of the Statistics Department. That chapter alone is a fascinating history of a vanished world .. for example, he was the "bread king" of New Zealand, the man who regulated bread prices in the 19405 era of total price control. He retired before the public service was gutted. Throughout this whole time he was a high profile communist, peace activist and PSA activist. Working life was never dull.

Murray Horton

Ron Smith beingevicted from Bolger's Wellington rally during the 1987 election He was assaulted for daring

io ask policy on nuclear warships. This is

the cover photo Class Son"

Ron has been a peace activist. He ended up in the

Waiouru cells when first conscripted for WWIL Once it becarne an anti-imperialist war he volunteered for the Air Force, firsthand the devastation caused by carpetbornbing After his retirement from the workforce he befulltime peace movement worker and a familiar public In He has never lacked personal courage. He was a Communist Party parliamentary candidate throughout the coldest days of the Cold War; he was physically battered by outraged Tories when he asked Bolger a question at National's 1987 election Leader's Rally (providing the classic photo on the cover); he chained himself to machinery building the Waihopai spybase and was arrested; he was arrested twice at a protest at the US facility at Nurrungar, Australia.

He (and I) were among those who spent a physically exmonth in the Philippines on the International Peace confronting the US bases and their triggerhappy local defenders. He lasted better than me. He was relentless in of materia! for his weekly peace programme on Wellington Access Radio. He astounded an American sailor

recording the GIs haggling over the price with an Olongapo hooker. Ron has never been afraid to front up and he has always done so with the utmost good humour and the good manners drummed into his generation.

WATCHDOG

PAGE 26

It's as a veteran peace activist that Ron is best known to both CAFCA and the Anti Bases Campaign. He been in~ valved in it as long as I can remember - he was at the first wave of bases back in the 70s, the unforgettable Mount John one. He was in every ABC action I can remember and he played a leading role in the 1990

Touching the Bases Tour. He was a in the

ates campaign, annual Hiroshima Day observances and in organising Veterans for Peace. A fter retiring he made six lengthy overseas trips on peace movement business, getting in the front line from the Philippines to Tahiti and Australia. All of that is recorded here. Ron is a CAFCA member and has contributed several hundred dollars to the Organiser Account which keeps me alive. Rest assured that his spirit is undimmed - he was so angered by Watchdog reportage of Tommy Suhartos buying Lilybank Station in the Mackenzie

WHEN IS A FO NOT A FOREI

for the exclusive use ofthe filthy rich that he wrote

that we another Mount John-type demo

up there" Look out Ron on your case!

Four rejected this book as "commercially not viable". More fool them. This is that real people's history, not the academic rendering of the official version. It comes complete with a fulsomely glowing foreword by Vincent O'Sullivan who describes Ron as a man who was "so right, so early, about so much that is now central to what most of us believe". This is the record of a man still able to face himself squarely in the mirror and say "I did my bit". That bit makes quite a story.

COMPANY OMP NY?

I N

When The Overseas Investment Commission Says So

CAFCA has had regular dealings with the Overseas Investment Commission for nearly a decade now but it never ceases to amaze us.

The Commission is the official body charged with responsibility for approving all corporate takeovers by foreign companies involving $10 million or more. In fact it's a glorified rubberstamp, but that's another story. The legal definition of a foreign company is one with more than 24.9% foreign shareholding,

Recently we became aware that the Commission has a list of companies that it exempts from defining as foreign. We requested the list, under the Official Information Act. For the record, here it is.

Fletcher Challenge NZ Guardian Trust Co Brierley Investments Carter Holt Harvey Fisher & Paykel Greenstone Fund Bancorp Holdings Wrightson

Freesia Meat Holdings.

"The Commission considered each application on a case by case basis and where it is established that the control of the company is clearly' in New Zealand hands' the Commission has granted a revocable exemption".

This list makes a total mockery of both the Commission itself and any definition of foreign ownership of the New Zealand economy. It includes the Big Three of the Stock Exchange - FCL, BIL, and CHH. They are all foreign owned companies as defined by New Zealand law. Both Brierley's and Fletcher Challenge have more than 40% foreign shareholding.

As for Carter Holt Harvey, it is an outright American company. Nearly one third of its shares are held by International Paper Co of the US; its chief executive officer, David Oskin, is American; half of its board of directors are Americans from International Paper. How on Earth can this be defined as being "in New Zealand hands"?

New Zealand taxpayers fund the Overseas Investment Commission. It owes us an explanation for this sort of nonsense. Who is it trying to kid?

This is a CAFC/4 press statement which was issued in October. So far as we know, the only outlet to run it was Radio New Zealand Ed.

PAGE

WATCHDOG

Databank Ltd, the computer bureau that is the clearing house fix its owners, Westpac (40"/0), ANZ (20"/0), National Hank (20%.) and BNZ (20@/,,), is being sold to General Motors Corporation subsidiary, Electronic Data Systems Corporation (EDS) for an undisclosed price. Analysts' estimates ranged up to $100 million. Databank subsidiary, Databank Investments Ltd, is part of the job lot. Ens is based in Texas, but is of special interest because it is the source of the wealth of independent (but dependably right-wing) 1992 U.S. Presidential candidate, Ross Perot. The price of his independence was shown when he sold EDS to GM in 1984. EDS employs 70,000 people world-wide (Databank employs 950) and in 1993 had revenues of$US8.6 billion. (Press, "GCS and Databank woo buyers", 26/4/94, p.3J; "EDS purchases Databank" 2115/94, p.29). Its acquisition of Databank is to give it a base for further expansion, either by further takeovers or by selling services in the region, as the Commission reports: "The proposed acquisition of Databank Systems Ltd is in line with Electronic Data Systems Corporation's strategic plan for the Asia/Pacific area and will resu It in the establishment of a significant banking services organisation based in New Zealand. The Commission is advised there are plans to offer information technology services to non-banking customers as well." Currently 25% of Databank's turnover is to customers other than its four former owners.

The Mount HuH Ski Area is being sold by the Japaneseowned but U.S. registered Victoria USA, Inc to Mount Cook Group Ltd, a subsidiary of Air New Zealand Ltd. Air New Zealand is 19.9% owned by Qantas (Australia), 5% by Japan Airlines (Japan) (Press, "Air NZ, BIL may take Qantas stake", 22/9/92), and Brierley Investments Ltd (37.9%) (Press, "BIL has more of Air NZ", 18/6/94, p.IS). The Mount Hutt Ski Area is owned by Mount HuH Ski and Alpine Tourist Co Ltd, but only its Mt Hutt assets are being sold to Mt Cook Group subsidiary, Sepco Holdings Ltd. The assets include 4441.5 hectares of leasehold land. The price is not disclosed, but the price was reported to be less than $7 million (Press, "Mt Cook confirms Mt Hutt buy", 4/ 5/94, p.33). The book value of the assets was about $15 million (Press "Group confirms interest in ski-field", 14/4/94). Mt Cook already owns the Coronet Peak and Remarkables ski areas near Queenstown. According to the Commission, "Mount Hutt is selling the assets because its parent company is retrenching worldwide and it wishes to realise all of its assets outside of Japan as soon as possible ... The Commission is further advised that the proposal will result in Mount Hutt ski field returning to predominant New Zealand ownership" (I), Victoria bought the 74% of the Mount Hutt company it didn't already own in March 1992 (see decisions for that date) for $12 million, giving a valuation of $16.2 million for the company.

U OMM

1

N

In a mysterious transaction described as a "short term investment effectively existing financial accommodation for a term of three years, in manner which maximises the benefit to both ANZ and BIt" (one can only assume "a tax-fiddle"), an ANZ Banking Group (New Zealand) Ltd subsidiary, Endeavour Investments (New Zealand) Ltd is buying Greyloch Investments Ltd from Brierley Investments Ltd subsidiary Greymarsh Investments Ltd for a sum which "exceeds $10,000,000".

Alliance Textiles (NZ) Ltd's wool topmaking business is being sold to a joint venture between Alliance and a French company. The French company is Prouvost Hart (NZ) Ltd, a subsidiary of Chargeurs of France. The 50/50 joint venture has $6 million in capital. "Chargeurs will provide a modern plant to replace the existing plant which is likely to produce greater efficiency and productivity.

SEABIL (NZ) Ltd, subsidiary of SEABiL (NZ) Holdings Ltd, in turn 70% owned by SEA Holdings Ltd of Hong Kong and 30% by Brierley Investments Ltd, has consent for the public share float it advertised lavishly. The float was aimed at raising money to pay for the job lot of properties it bought from Fletcher Challenge. Of the share and convertible note issue, up to 44% was to go to the public, who may be "overseas persons", and up to 61% to SEABIL (NZ) Holdings. See last month for further details.

New Zealand Automobile Association Inc is setting up "an insurance company to supplement the services it presently offers to its members." It is AA-GWO Insurance Ltd which will be 75% owned by GIO (NZ) Ltd of New South Wales, Australia and 25% owned by NZAA. The total investment is $20 million, so NZAA is investing $5 million initially. The new company replaces AA's longstanding official insurance company, AMI. The association ended on 1 March J 994, and the two organisations will no longer share offices. AMI, a mutual company merged from AA Insurance and SIMU, counts as one of its advantages its local ownership. GIO will start in Auckland, offering a "comprehensive range of insurance policies." NZAA has an agreement to increase ownership to 40% during the next 5 years and a provision to go to 50% in the following 5 years. (Press, "AMI unconcerned by AA venture", 17/5/94.)

NRG Victory Australia Life Reinsurance Ltd, ultimately owned by Internationale Nederlanden Croup NV of the Netherlands has consent from the Commission to buy, for $10,719,000, the assets ofNRG Victory Australia Ltd, also owned by the same Netherlands company. This replaces a similar consent given in December 1993 "due to a redefining of the assets being

New Zealand Land Ltd (70% owned Pacific Group Ltd of Singapore) is acquiring the CML in

Auckland, on the comer of Queen and Wyndham Streets for a price that has been withheld. Pacific Group is ultimately owned by Stanley and Freddie Tan of Singapore, and George Horsburgh of Aotearoa. See the April decisions for more details.

The environmental industry is booming. Groundwater Technology (NZ) Ltd is being set up by Groundwater Technology Australia Pty Ltd, a subsidiary of Groundwater Technology Inc of the U,S.A. According to the Commission, it is advised that parent Groundwater "is a world leader in the assessment and remediation of contaminated soil and groundwater ... presently there is little experience in New Zealand in that field and that the proposal will result in the introduction of experience and expertise which is becoming increasingly important with the introduction of the Resource Management Act 199 I "

The environment is also frightfully trendy, what!

"Lady Emma Louise Herbert wishes to retain the land for conservation purposes, allowing regeneration and not to engage in farming activities, other than a minimal number of sheep or cattle on a hobby basis. Lady Herbert wishes to establish a sculpting studio on the property. The Commission is advised local tradespeople will be employed for installation of essential services such as electricity, running water and telephone. The Commission is also advised Lady Herbert may construct a tourist lodge on the property." "The land" is 59.4 hectares at Carey Road, Port Charles, Coromandel Peninsula which is being sold for $110,000.

In rural land:

.... Another two blocks of land are being sold to Taiwanese for forestry development at Broadwood, Far North District. Both will be managed by Far North Afforestation (NZ) Ltd, an Aotearoa company. One block is 27.5 hectares, being sold for $95,000. The buyers are Chien-Fen, Chun-Chiang, Chen-ching, and Chill-Min Hwang, through the company Full Enterprise Co Ltd. The second block is 20 hectares, being sold for $75,000. The buyer is Chen Min-Chill, through the company Flower City Enterprise Ltd. See March and April for more such sales.

.... An Australian company is buying 13.2 hectares of rural land in Albany, Auckland on the expectation that "it will be rezoned residential by the North Shore City Council in its review to be released later this year thus enabling a further residential subdivision to be undertaken in an area that urgently requires such a subdivision due to its locality close to the Auckland CBD [Central Business District]." The company, Wilbow Peck Corporation (NZ) Ltd, has undertaken seven such developments in the Auckland area to date. It is owned by Wilbow Peck Corporation Pty Ltd "as trustee of Willow Peck Investment Unit Trust a private Australian trustee company and Australian Trust."

... RH New Zealand Forests I Inc, a U.S.A. company "ultimately owned by pension funds and non profitable, charitable and educational institutions predominantly from the U.S.A" (but registered in the British Virgin Islands) is buying 730.7 hectares of land ill the Wairau Valley, Marlborough for $850,000 jointly with Tasman Forestry (Nelson) Ltd (51 "/0). Tasman is a Fletcher Challenge Ltd

WATCHDOG

subsidiary. For Rlls last purchase, see December 1993. .:rIl,e Black family of Australia is buying up another

this time for The family is 49,5% owner of

Cratgpine Timber Ltd (Donaghys Ltd owns the remaining 50.5%) which is buying T.lt Ruddenklau Farming Co Ltd, This company owns "730 hectares of land known as 'Clencau-n'. at Dipton, Southland" The farm, which is being bought for $700,000, is to be used for forestry for Craigpine which owns a 5.7 hectare rural property containing a sawmill leased from Addington Joinery Ltd (in receivership), on Main West Coast Road, Yaldhurst, Christchurch. "The Commission is advised that most of the land is of a hilly contour and heavily infested with gorse and noxious weeds and is more suitable to forestry than arable farming." The Black family also owns the Mendip Hills Station in Canterbury (see November 1993).

..,. A BP Oil New Zealand Ltd (U.K.) subsidiary, Bltumix Ltd, has entered into a "profit a prendre" (right to take) over 19.5 hectares of land in Northland owned by Halliwell Farms Ltd "to enable them to quarry, win, work and take stone and metal, thus ensuring a supply ofraw materials for their roading activities". The price is a minimum annual royalty of $50,000.

In internal restructuring, ownership of Arnott's Biscuits (NZ) Ltd is being transferred to Arnott's Foods (NZ) Ltd from Arnott's Ltd of Australia. The two "New Zealand" companies are both subsidiaries ofthe Australia company.

Stenhouse Investment Ltd of Hong Kong is buying Bluepoint Products Ltd for $3, 135,000. Both the companies are owned by Messrs V. Lo and P. Ho of Hong Kong.

Westpac Group Investment - NZ- Ltd is buying Westpac Holdings -NZ- Ltd for $493 million, and is issuing 100 $1 ordinary shares to Westpac Overseas Holdings Pty Ltd for $100.

June decisions

One of our major construction companies, Downer Group Ltd is being sold by Brierley Investments Ltd to Paul YITC Construction Holdings Ltd. Paul Y-ITC is incorporated in Bermuda but publicly listed in Hong Kong. It is owned 45% by International Tak Cheung Holdings Ltd of Bermuda and 20% by Cheung Hong (Holdings) Ltd of Hong Kong and includes some Chinese shareholding (see below).

"Both Paul Y-ITC and Downer carry on business in the project management, civil engineering and building construction filed. The Commission is advised that approximately 50% of Downer's work is now Hong Kong based and with the increasing importance of Hong Kong sourced work Downer is more likely to flourish is merged with and becomes a subsidiary of a well recognised Asian construction company."

The price is HK$245 million (NZ$54.7 million) by way of a share issue by Paul Y-ITC which will leave BIL holding 10.8% of Paul V-lTC's issued capital. NZPA reported (e.g.

PAGE 29

Press, "Brierley puts Downer with Kong firm", 8/6/ 94, pe32) that BIt would usc cash assets from Downer to buy a further 52 million Paul Y -ITC shares in addition to the 98 million acquired in the sale. It has ended up with 159 million shares" or 17,5% of Paul Y-ITC "Brierley Downer sale complete", BlL has retained Downer's smaller non-construction companies, and guaranteed Downer's existing contracts would achieve a certain margin, Downer's contracts included some for the Chek Lap Kok Airport near Hong Kong, lead contractor and project manager for the $HK3,S billion Lantau Island expressway, and construction of a tuna-canning factory in Papua New Guinea, Cheung Kong is "the flagship company of Li Ka Shing." Shougang Concord, the investment arm ofShougang, the Beijing steel conglomerate, is another shareholder in Paul V-ITC

New Zealand Aluminium Smelters Ltd (owned ILKjAustralian company, CKAe and Sumitomo of Japan) is setting up a $200,000 subsidiary, Smelter Development Ltd to expand its Tiwai Point smelter in an upgrade costing "in the order of $400 million, approximately $240 million of which is to be spent in New Zealand," The expansion was publicly committed to only after trans- Tasman armtwisting and threats against governments on each side of the Tasman, to try to get cheaper power out of theme Their power contract was renegotiated by the New Zealand government and despite the opposition of the Ministers of Environment and of Energy , Cabinet agreed to an agreement that is likely again to give Comalco power at highly subsidised and secret rates.

Office equipment manufacturer, Damba Holdings Ltd is being taken over by Malaysian company CHG Industries Ltd, The 57% holding owned by the Van Dam family of Aotearoa is being sold to CHG for $4,268,636, Damba had a factory in Perth which was closed after losses in Australia, and the new owners were considering closing a plant in Sydney, (Press, "Damba to increase output", 3/8/94, p.33.)

NRG Victory Life Reinsurance Australia Ltd is being bought by a German company from a Netherlands company, Nederlanden Group NV for $20 million. The new owners are Hannover Re and Eisen Und Stahl RIO, subsidiaries of the Group ADI Hattpflichtverband der Deutschen Industrie VAG, They are "part of a global insurance and reinsurance group, The acquisition is part of a strategy to develop the life reinsurance business worldwide, " and may be used as a springboard for development into the broader Asian region," NRG is also issuing a further $60 million worth of shares to the two companies in order to enable it to redeem redeemable preference shares held by its previous owner, NRG Victory Australia Ltd,

Retrospective approval is given to share purchases purely for capital appreciation, over a long period, Global Asset Management (HK) Ltd, a subsidiary of Global Asset Management Ltd of Hong Kong, to buy 35,61 %, of the share capital of U-Bb: Business Machines Ltd for $25,978,034.

"The investment mandate permits the applicant to invest in listed securities in New Zealand with the sole purpose of

achieving maximum investment performance for those clients through capital appreciation in the securities invested. The Commission is advised that the shares in U-Bix were acquired over a period of time by standing in the market and that Global Asset was unaware of the Overseas Investment Regulations."

Of the remaining shareholding, 29% is owned by Maori interests (Independent, "The Renaissance of Maori Commerce?" Rebecca Macf'ie, 8/4/93). U-Bix sells photocopiers and telephone systems.

Kiwi Cable Co Ltd, owned by Todd International Ltd of the U.S.A., is being half taken over by VlH New Zealand [fie for U.S.S6 million,

"Kiwi Cable received consent to commence business in New Zealand providing cable, television and telecommunication service in August 1991 , The UIH group canyon business in the U.S,A, developing and managing multi-channel television operations", they will provide Kiwi Cable with technical and management expertise and experience which will assist in developing Kiwi Cable's cable television system."

Tegel Food Ltd, a subsidiary of Wattles Ltd, itself owned by H,J. Heinz Company of the U,S.A., is buying part of a road from the Papakura District Council.Tt "adjoins land already owned by Tegel" in Papakura, Auckland, and the Council intended to close the road. The land is of 1668 square metres and is being sold for "$12 -$15,000".

The giant Thomson Corporation of Canada subsidiary, Sweet and Maxwell (NZ) Ltd, is buying law publishing finn, Brooker and Friend Ltd, for an amount that has been suppressed. In 1986, Thomson was the 7th largest publishing company in the world with $USL5 billion in revenue, $2.7 billion in assets, and 20,700 employees ("Foreign Direct Investment and Transnational Corporations in Services", U,N, Centre on Transnational Corporations, New York, 1989, pe204),

Westpac Banking Corporation is setting up a company, Westpac Lease Discounting -NZ- Ltd for" in excess of $10 million" to "facilitate a structured finance transaction involving the discounting of leases."

A Japanese resident, Saburo Okakura, is buying 80% of Horne Pryde Ltd from Monad Leisuretime Ltd of Aotearoa for $800, which apparently buys him 20.7 hectares of land in Cheyne Road, Tauranga which is proposed to be developed into a residential subdivision of approximately 200 sections. Mr Okakura apparently has the money to do the development

The SEABIL Group of Hong Kong is reorganising after its formation and in preparation for its public float (see May decisions). Two subsidiaries are being set up: Chiraz Properties Ltd and Thersites Properties Ltd. Others may be also being set up without making it to the OlC: these make it because the cost of establishing them exceeds $10 million each, One is owned by SEABIL (NZ) Holdings Ltd, the other by SEABIL (NZ) Ltd, both 70% owned by SEA

WATCHDOG

Holdings Ltd of and 30% owned

Investments Ltd of Aotearoa, At the same Kong and

has been given the right to take over 11 number of

SEABIL assets as loan for $89, ~ million,

The assets are the shares in Glaive Properties

Ltd, and property owned Cujrat Properties tsOIlZO

Properties Ltd, .Iattoo Ltd, Mantua Proper-

ties Ltd, Mlleto Properties Ltd, Ngapur Properties Ltd,

Naseby Properties Ltd, and Ltd,

A Singaporean whose identity is suppressed is buying the 12-storey Housing Corporation building at J 4 Cathedral Square, Christchurch for $5,650,000. He wishes to "develop it into a hotel as an investment for his family." According to the Christchurch Mail ("Another tourist hotel for Square", 18/8/94, p.l ) the hotel will be a 186-room, fourstar one. It is the second time the building has been sold this year: it was bought in April by a company controlled by a "retired Christchurch games operator", Patrick Sloan, who also owns blocks of shops in Riccarton Road and the Main North Road, It has a government valuation of $8,5 million and was sold to Sloan's company VEF Holdings Ltd (a typographical error in the orc decisions names it as YEP Holdings Ltd) for $4.3 million, So Sloan has made $1.35 million. on the deal in a matter of two months. A number of hotel developments are planned for Christchurch currently ~ several being conversions of existing buildings,

A Skellerup Group Ltd subsidiary, Viking Smiths Ltd, to be renamed Smiths Horticultural Distributors Ltd is acquiring for $6 million, Smiths Horticultural Distributors Ltd, a private company, whose assets include a peat licence over 83 ha, of rural land on the Hauraki Plains. Smiths have long been a soil and soil mix supply company, the bulk of whose production goes to commercial growers. Skellerup reckon they will complement its existing company, Watkins Home and Garden Products Ltd, which specialises primarily in the distribution of agricultural chemicals and seeds, It is interesting that Skellerup has "approximately 30% overseas ownership spread widely," The Press reported ("BIL trims Skellerup holding", 18/2/94) that Brierley Investments Ltd owns 30.3% of Skellerup, having reduced it from 70% after a 30% float last October,

In rural land,

ar An Australian is buying 6.0703 hectares of rural land on Mullet Road, Pahia for $87,500. He "intends to set up an integrated organic and biodynamic set up on the land, The Commission is advised after 5-7 years Mr Ens hopes the farm will be mature enough to provide an educative base for 2-3 students where they will be taught the basic principles of biodynamic farming."

... Negociants New Zealand Ltd, a subsidiary of S. Smith and Sons Ltd of Australia, is buying a vineyard of 7.4138 hectares on State Highway Six, Renwick, Marlborough for $420,000. Negociants already owns an adjacent 1.2142 hectare vineyard (see September 1992 decisions). The vendors "are selling the property to reduce their indebtedness and they will continue to manage the vineyard."

WATCHDOG

- U.K citizen is purchasing a 8404 hectare farm in

Wander SOl] for

$1] He is permanent

to build house and carryon some lifestyle farming." <lW' A Canadian is buying 80 hectares of land near Kaitaia for Sll7,50{J via Northland Shelf No. 21 Ltd, He is seeking permanent residency and wishes to acquire the land for forestry He and (presumably) his wife are also buying 48.0 hectares of pastoral land at Oponui for $265,000. They "wish to continue to farm the land as well as developing a new cattle breeding programme.

_. Far North Afforestation (NZ) Ltd is selling off yet another block of land to Taiwanese which the company will develop for forestry. This block is 30 hectares in Broadwood, Far North District, being sold to the Taiwanese-owned Anleigh Properties Ltd (they're running out of ideas for names now) for $124,500, See last month for the last such sale,

"'" Two Hong Kong residents are also buying a forestry block in the same area, though it is not clear if it is related to the Far North Afforestation scheme, They are buying 489 hectares of afforested land in Broadwood in the Far North District for $785,000 via Asian Power International Ltd. .... (I.S.A. owned RH New Zealand Forests I Inc is buying more land for forestry in conjunction with Tasman Forestry (Nelson) Ltd, a Fletcher Challenge Ltd subsidiary, One block is 325 hectares in the Wair au Valley, Marlborough, for $305,000; the other is 1.3 hectares in Wai-it! Valley Road, Nelson, bought from the Crown for $2,000. See last month for the previous purchase by RII and Tasman,

..,. Blakely Pacific Ltd, the U.S.A. company that Matakana Islanders have brought in to run their forest interests, is buying a 341 hectare "unprofitable sheep and cattle station" on Campbell Road, Rotoehu, Bay of Plenty for $1,500,000 for development into a forest. It is acting in this as trustee of South Blakely Trust.

IIU' The U.S.A. Erdman family is buying the 1,899 hectare Coleridge Downs Farm Ltd near Darfield, Canterbury for a total of$I.8 million via Catterick Holdings Ltd. "The Erdman family have extensive agribusiness interests and experience in the U.S.A. The Erdmans state that they propose to carry out extensive developments to Coleridge Downs which is likely to result in a doubling of the current 10,500 stock units over the next five years," No sign of them living here though,

... A U.S.A. resident, Mr D. Josephson through his company, Elements Formed Ltd is buying 5.05 hectares of land at Waikanae for $100,000. He proposes to "build a retreat and conference centre on the land and also undertake some forestry and farming activities .'. the proposal will provide an avenue by which New Zealanders can benefit from the experience of a wide selection of international export presenters in professional training." Presumably will be teaching humility too .

In internal restructuring, Mr A. B.S. Black of Australia is buying a 25%, interest in the Mendip Hills Station, Canterbury, from his family for $1,551,000. The station is 5966.9 hectares. See May 1994 for further details of this family's holdings in Aotearoa.

31

Cutnness Peat Group PLC of the U.K but owned by Ron Brierley, is shifting its ownership of Medic Aid (through its holding company First Medical Corporation Ltd) from subsidiary Parsifal New Zealand Ltd to another subsidiary, Ithaca investments Ltd for $4,000,000. The tale of the GPG takeover of Medic Aid was told in the commentary on the April decisions. GPG acquired First Medical by buying Parsifal from a dubious bunch of fly-by-nighters; it is now consolidating by moving its ownership to an existing holding company.

Pitman-Moore Australia Holdings Ltd is buying PitmanMoore New Zealand Ltd from Pitman-Moore International Inc of the U.S.A., its own parent, for A$2.5 million.

And FAI Metropolitan Life Assurance Company of NZ Ltd, of Australia, is selling 180 Molesworth St, Wellington to a subsidiary, Emeltu Ltd for $18,500,000. Another subsidiary, Emelwon Ltd, is buying all the rentals and other rights and benefits of the property for $21,000,000.

July decisions

Max Resources NL, a New Zealand public mining company 60% owned in Australia has approval to issue shares to other "overseas persons" for a total of $44,55 million to raise working capital. Up to 84 million ordinary 25 cent shares ($2.1 million) are to be offered to "professional investor clients of stockbrokers James Cape! Australia Ltd and Forsyth Barr Ltd". A further 84 million ($21 million) will be by way of options attached to those shares and listed on the stock exchange. A one for two rights issue to all shareholders will raise another $1 "95 million, and corresponding options a further $19.5 million. Acording to the Press ("Max chairman in issues", 30/7/94, p.24; "Max on Brazilian gold trail", 20/8/94, p.39) Max is raising the funds for "a possible purchase of two Brazilian gold projects". It is also buying a "gold tailings resource in Laverton, Western Australia, from KKR Resources NL". The shares will be sold at 2.5 cents each, and the options may be exercised at 25 cents each before 31 July 1999.

The largest hotel owner in Aotearoa, CDL Hotels New Zealand Ltd is issuing up to $52,439,756 worth of shares to fund its acquisition of the Kingsgate chain of hotels and to assist in the funding of a 49% interest in the Waitangi Resort Hotel and a proposed development in Queenstown. CDL Hotels New Zealand Ltd is a listed company which is approximately 69% owned by CDL Hotels Holdings New Zealand Ltd. This in tum is ultimately owned 52.8"/ .. by City Developments Ltd of Singapore, 9.4%, by Hong Leong Parties of Singapore, and 37,8"/0 by "Offshore Institutional Investors". See the analysis of the April 1994 decisions for more detail on the Kingsgate purchase.

The CDL purchase of 49% ofthe Waitangi Resort hotel came amid controversy. It was majority owned by the Tai Tokerau Corporation and was in deep financial trouble. Just when things appeared to be coming right in May, 28 of the 45 fulltime staff were laid off. Workers felt they had been "slapped in the face" after working "damn hard and long hours, some-

WATCHDOG 77

times without extra pay to help the hotel." Owners' repre-

Sir Graham Latimer and John were

accused of lying and the mana of the hotel and its workers" At that time Sir Graham announced that Quality Hotels (a COL subsidiary) would be given a contract to run the hotel. While Tal Tokerau would retain a controlling shareholding, a 25% shareholding owned by French interests including Jean Rousseau-Salet appeared to be up for sale and various interests were considering purchasing it. ("Lay-offs anger 'hard-working' hotel staff', Press, 28/5/94, p.l 0,) CDL bought 49% of Waitangi Resort Hotel in late June for $13,185,000, including at least some from New Caledonian Enterprises, and renamed it Quality Resort Waitangi. The two owners committed themselves to spending $1 million on the hotel. ("eDL buys 49% stake in Waitangi", Press, 1/7/94, p. lS) The controversy intensified when it was revealed that the Minister of Tourism, John (footin-the-mouth) Banks, had put in a bid. Labour accused him of breach of Cabinet rules on conflict of interest and called on him to resign. In defending himself, John (pure-as-drivensnow) Banks attacked the motives of Mat Rata (calling him "Rat Mata") and Sir Graham Latimer. ("Govt tries to justify Minister's bid for Waitangi Hotel" Press, 6/7/94, p.3.)

The Queenstown development is a $32 million 220 room four-star hotel expected to open in October 1995. It "will be the largest built in Aotearoa since the Pan Pacific in Auckland four years ago" and will be called the Observatory Hotel. ("$32m hotel planned for Queenstown", Press, 25/8/94, p.5)

A Swiss freight forwarding company, Kuehne and Nagel International AG is buying a 3003 square metre property at 2 Kingsford-Smith Place, Mangere, Auckland through its subsidiary, Auckland Terminal Ltd. The property will be leased to Kuehne and Nagel (New Zealand) Ltd.

In June, Global Asset Management (UK) Ltd, a subsidiary of Global Asset Management Ltd of Hong Kong, was given approval to buy 35.61 % of the share capital of If-Bix Business Machines Ltd for $25,978,034 "with the sale purpose of achieving maximum investment performance for [its] clients through capital appreciation in the securities invested." Global Asset Management now has approval to acquire up to 45% of U-Bix, the balance to be acquired on the sharemarket. It "is purely a portfolio investment" and they "do not currently wish to seek board representation."

Major forest owner Rayouier New Zealand Ltd (ultimately owned by Rayonier Inc, U.S.A., in turn an ITT subsidiary) is buying 129 hectares of land in Clifford Bay district, Marlborough for an undisclosed price.

"The purchase represents an important strengthening of the support base for Rayoniers's New Zealand forestry operations. The property will be converted into a seed orchard for use by Rayonier and other New Zealand forestry companies as a source of commercial seed supply. The Commission is advised it is Rayonier's intention to subdivide the property and sell off two lots of between 15 and 20 hectares to other major New Zealand forestry companies."

In other rural land sales

we FOlftiHIOX Investments Ltd. owned of the 75% interest in 559 hectares of land at

Northland for from

Ltd (which

Fortknox also has a 75% interest in: see April I

or RH New Zealand I, Inc, owned by "pension

funds and non proftable, charitable and educational institutions predominantly from the V.s.A.e" is buying a further 665 hectares of land at the Terraces, Marlborough for $535,000, for forestry development Again acquired jointly with Tasman Forestry (Nelson) Ltd, a Fletcher Challenge Ltd subsidiary, this is but the latest such purchase: for the previous example, see June 1994,

"'" Fulton Hogan Canterbury Ltd, an unlisted public company 37.46% owned by Shell Oil, is buying COlII' hectares of rural land at Dommett, North Canterbury from Landcorp Ltd for $9,0000 It will use it for access to its river quarry,

lIfT A resident of the David Robert Spencer is buying 54 hectares of rural land on Mcl'herson Road, Hokanui, Southland for $130,000 for forestry, planting pinus radiata, He is buying it from McDougalis Contracting Ltd,

~ Fm:Estatc Cisbome Management Ltd, owned by two Canadians, is buying a forestry right over 286 hectares of land in Ngakaroa Road, Gtsbome for $257,000,

..". A U.K. resident is buying up to 50% of Mount Benger Ltd which owns 1,401 hectares of rural land in North Canterbury. The first 40% will cost him $600,000, the remainder "to be determined by market value when the option is exercised". He is investing "as a business associate" and the farm will be managed by the other shareholder. They are considering developing a tourist lodge and expanding into dairying and forestry.

"'" Another Broadwood, Far North District sale of a small

block of land. This time it is of 61 being

sold to three Hong Kong residents, via Hanbrook Properties Ltd,

Wen ita Ltd, a major forestry owner in Southland is reorganising (it did so previously in November 1993)0 Wen ita is owned 45'% by China National Foreign Trade Transportation Corporation of China, 45%. by Togen Enterprises Ltd of Hong Kong, ami 10% by Chen Wen Dong of Hong Kong. Wenita Forest Products Ltd (same owners) is buying Wenita Holdings and issuing 199,999,900 $1 shares to Togen Enterprises (NZ) Ltd and Sinotrans (NZ) Ltd (89,999,955 each), and to Chen Wen Dong (19,999,990), to finance it. The price for the total transaction is suppressed, but Sinotrans is also buying 4500 Group A shares from Sinotr ans Beijing for $106,135,744. Sinotrans is owned by the China National Foreign Trade Transportation Corporation. Togen Enterprises (NZ) Ltd is owned by the Liu family of Hong Kong,

August decisions

The Tiong family of Malaysia, which owns Oregon Forestry (NZ) Ltd and Emslaw One Ltd, was this month given approval to reorganise some of its holdings. Oregon owns 75,8% of Ascot Management Corporation New Zealand Ltd and fully owns Himley Enterprises No 6 Ltd. Himley in turn is the holding company for the Neil Group of companies "which carries on the business of residential, commercial and industrial land subdivision and development", Ascot wanted to buy Himley for $17 million. To fund this, Ascot proposed issuing up to 140 million ordinary shares for "up to $28 million", which Oregon would underwrite. In the event, Ascot decided against this acquisition, though as a "cash-box" company it is still looking for something to

The t3argain Hunters Arrive Early

33

buy ("Ascot abandons Neil Group bid", 17/8/94, p.26). The Tiong family now have Aotearoa interests in forestry (through Oregon and Ernslaw One). ports (52% of South Port, the Bluff port operator, and 10.2% of Port ["Ernslaw expands", p.20]), and fish farming (7.86% of Regal Salmon ["Singapore firm snaps up Regal shares". Dominion. 29/3/93]). Their holdings are largely through Naraya Holdings, itself owned by Callander Ltd and Siang Yang International (ibid).

Cadenza International Ltd, of the U.S.A. is reorganising its ownership of Wilson Neill Ltd the Dunedin-based brewer. Its subsidiary, Cadenza Securities Trading International Ltd, is buying its parent's 50.01% shareholding in Wilson Neill for $10,114,530. Though Cadenza is owned by Philip Adkins of the U.S.A. it is actually registered in the tax haven of Guernsey. Adkins bought Wilson Neill in 1992, being described in the media as a "high-flier". Wilson Neill was in trouble over the acquisition of Cascade brewery in Tasman ia under the ownership of (then) Brierley's Magnum Corporation, now the DB Group. It was also under the threat of an insider-trading scandal involving former managing director and major shareholder, Colin Herbert, which has still to be fully settled. Cadenza announced in June that it was going to sell off Cascade and 36 hotels in Queensland, and all its debt, to a new Adkins company, Australian Brewing and Hospitality Group, of which Adkins would be Chairman and chief executive. ABH would pay Cadenza International $A 11 million, plus $U5300,000 a year plus Adkins' out-of-pocket expenses in a "service agreement" to Cadenza Japan. Wilson Neill would be left as only a property company with properties in Aotearoa, Hawaii and California, and its shareholders would have ABH shares offered to them. The transfer turned out (as with most things this company has tried to do) to be less than straightforward. A New York Stock Exchange listed company, Leucadia National Corporation, took legal action in San Diego and Aotearoa to prevent the sale of the Australian assets saying Wilson Neill had guaranteed a debt it had contracted, connected with Wilson Neill's investment in the Harbor Drive condominium project in San Diego. It claimed the sale of the Australian assets was an asset stripping exercise at its expense (implying that Wilson Neill would no longer have the money to honour its loan guarantee). Both the San Diego court and the High Court eventually rejected Leucadia' s injunction but not before Leucadia had alleged that the restructuring was no more than an expensive name change which left Wilson Neill insolvent to free the new entity of unsecured creditors like itself. It alleged the assets which were being sold for $A 11 million, were worth $A24 million. Leucadia unsuccessfully appealed the High Court's ruling, offering new evidence that the Australian assets were worth even more: between $A38 million and $A59.5 million. Wilson Neill countered saying their valuation was between nil and $A4.3 million. The president ofthe court, Sir Robin Cooke said the range of values given- of up to $A90 million - was "extraordinary". Meanwhile Wilson Neill has a waiver from the Stock Exchange which expires on 31 January 1995, allowing it to have only one Aotearoa-resident director. (Ref:

"Wilson Neill awaits court decision on payment", Press, 3/ 3/94; "Cadenza vote on W Neill allowed", Press, 25/6/94,

WATCHDOG

p.29; "w Neill head labels action as 2717/94, p.J6; "WNeill clear in U.S," Press, "Court asked to halt Wilson Neill

I p. I court

, "Wilson Neill's fate hangs in balance", 24/9/94, "W Neill restructuring cleared by Court", Press, 1/10/94, p.29; "W Neill appointment" Press, lOll 0/93, p.J3).

The company that is being set lip by Cornalco to carry out the $400 million upgrade of its Tiwai Point alumlnium smelter is shown in this month's decisions. TMB Engineering Partnership (owned in Australia and the U.S,A.) is 50/ 50 owned by Bechtel International Inc. of the U,S.A. and Engineering and Construction Holdings Ltd, a CRA Ltd subsidiary. E&CH also has approval to issue all of its share capital to The Barrier Corporation (Vic) Ltd. In both cases the "expenditure to be incurred may exceed $10 million". This structure has got locals in lnvercargill most unhappy. Both local companies and unions have complained very loudly. The local businesses "are unhappy with the approach Cornalco has taken to the upgrade in setting up its own companies to oversee the project An lnvercargill consulting engineer believes the involvement of TMB Engineering undermines the potential for local businesses to be involved. 'The logic is that TMB will attempt to do the construction using its own direct hired workforce that to me seems to bypass the infrastructure we have here in town. '" ("Smelter upgrade work questioned", Press, 8/1 0/94, p.28.) Engineers' Union national secretary, Rex Jones, said he understood "American company Bechtel International received approval from the Immigration Service to recruit eight management positions from overseas ... the immigration procedure was fast-tracked by a private arrangement between Bechtel and the Immigration Service."("Union attacks Tiwai staffing", Press, 15/10/94, p.7.)

Tyndall New Zealand Ltd, which is 56.5'% owned by Cuinness Peat Group Pic of the UoK. is taking over the New Zealand Guardian Trust Company Ltd for $20,000,000 as a means of expanding into Aotearoa, Guardian Trust belonged to the Scots insurance company General Accident Group and is the biggest trust company in Aotearoa, managing about $4.5 billion of funds. Tyndall, an Australian-based operation, managed only about $A500 million ($NZ614 million). GPG is run by Sir Ron Brierley and is reportedly looking at using its new trustee company to increase Tyndall's stake in Perpetual Trustees from 10%. Under Australian law, a company cannot own greater than 10% of a trustee company unless it is itself a trustee company or acquires one. ("GPG subsidiary takes over Guardian Trust", Press, 4/8/94, p.34; "GPG to increase Perpetual stake", Independent, 5/8/94, p.3.)

Mirvac Ltd of Australia and its "subsidiary companies and trusts" have approval to start up in Aotearoa with an initial capital of $70,000,000. It owns 0.3769 hectares (If land in Auckland "on which it proposes to undertake construction of a multi-storey serviced residential block comprising 164 units." Mirvac has "developed several serviced department blocks in Australia and now wishes to introduce the concept

in New Zealand".

Manders Holdings Ltd, a subsidiary of Manders PLC of the U.K. is buying Morrisoll-P.I.M. (Holdings) Ltd, a Skellerup Group Ltd subsidiary for $27,500,000. This will enable Manders to "expand its business operations in New Zealand" and provide it with an entry into the Australian market. Manders also recently acquired the Croda group of companies including its Aotearoa subsidiaries.

An agribusiness Unit Trust, Agri- Trust has permission "to issue up to 50 million units to members of the public who may be overseas persons" for a price "to be advised" Agritrust will use the money to buy "various New Zealand farm properties particularly those currently owned by New Zealand Rural Properties Ltd." It is not clear what the connection between the two companies is.

In other rural land:

... Glenroy Station Ltd is being bought by a New Caledonian for $1,540,000. Glenroy Station, near Queenstown has 124 hectares of freehold land and 4,879 hectares of pastoral lease. The new owner, Georges Maxime Montagnat, "has considerable cash resources and will be able to develop the property to its full potential without having to worry about fmancial considerations." His plans include diversifying the Station's production, increasing its productive capacity, fencing off the area towards the back of the property for a wildlife park, continuing a horse-trekking tourist operation, and grape growing. It will be managed by DJ.and J. Scott who farm the adjoining Glenlee property.

... Ernslaw One Ltd, of Malaysia is buying yet more land for forestry development. This one is 993 hectares at Craigellachie RD I, Lawrence, for $695,000.

<Ir Two U.K. citizens who have taken up permanent residence are acquiring a 53 U hectare farm on Sherwood Road, Wail'll! for $1,169,000. They are doing it through their company Dinvale Holdings Ltd.

,... Blakely Pacific Ltd ofthe U.S,A. (as trustee of South Blakely Trust) is acquiring 342 hectares of land on Te Matat Road, near Te Puke for $1,650,000 for forestry purposes. Blakely is the company that was brought in by local Maori to buy half of Matakana Island after they forced the withdrawal of ITT Rayonier and Ernslaw One (see the July OIC decisions).

.. A Swiss resident is buying 91 hectares of rural land including forestry assets at Motunau, North Canterbury for $285,000 via Southern Forestry No 27 Ltd.

.... Japanese applicants whose names have been withheld are buying two blocks of land on Lake Rotoiti via companies Omni Realty and Services Ltd, and Omni Resorts Ltd. The first is seven hectares known as "Moose Lodge" and the other is a (presumably nearby) block of 32 hectares, respectively. "The purchasers plan to increase the number of guest rooms" in the lodge, "build a new residence, operate Moose Lodges' boat on the lake for lunch and dinner cruises and widen the access road to the lodge from the main highway". On the 32 hectare block they "propose to develop various recreational facilities including a nine hole golf course, four tennis courts, a club house, a car parking area, a jogging track, a church, a 20 room sports hotel and a horse riding track which will be combined as part of the Moose Lodge operation". $4,700,000 was to be paid for Moose Lodge, and $700,000 for the 32 hectare block - "well above the value of the property for farming purposes" according to the information supplied by the OlC.

..,. Two Hong Kong residents and one from the U.S.A. are buying 70% of Starlight Properties Ltd which owns an "orchard block" on 26 hectares of rural land at Waimate

PAGE 35

WATCHDOG

North

Kerikeri for

,,gr A further 20 hectares of land in

Far North sold overseas. This time it

sold to a Hong Via

for

Rebecca ,I. are buying the remaining 76% of Mille Vigue Del Sur Ltd which they do not own, for $240,000. The company owns seven hectares of rural land in Marlborough to be used for wine making. The Brashes "have a number of wine related businesses in the US.A. and "wish to acquire the land for wine making purposes and intend to export the wine produced to the U.S.A." .... A Taiwanese is buying a four hectare block of land in Marshlands Road, Christchurch for $356,000 "for the cultivation of mushrooms and other vegetables" through the company Tien Treasures Ltd. Mushroom producing facilities already on the property will be upgraded and the previous owners will be employed on the farm and will train new employees. They will also "remain as consultants to the business". "Mr Tien intends to produce the mushrooms for export to Asia on a long tern] basis."

In internal restructuring, Westpac Group Investment -NZLtd of Australia, having been set up by Westpac Overseas Holdings Pty Ltd with a capital of$100, is buying Westpac Holdings -NZ- Ltd for $494,000,000.

And Driehoek Banket B V is taking over the 25% interest of its parent, International Distillers and Vintners Ltd of the U.K., in NewZealand Wines and Spirits Partnership. The other two owners are Gebroeders Steur B V (25%) and Wines and Spirits Holdings Ltd (50%).

Released on appeal

The following are the more significant decisions released on appeal by CAFCA to the Ole.

1994

This month saw Aotearoa Primary Products, a Vestey Group (U.K.) subsidiary, acquiring all the assets of Wed del New Zealand Ltd, another subsidiary. This comprised the meat processing and export business carried on at plants in Whangarci, Cambridge and Feildlng: a by-products division carried on principally at Hastings; and the Head Office Management Division carried on in Wellington. The companies involved were Aotearoa Primary Products (Hastings) Ltd, Aotearoa Primary Products (Whangarei) Ltd, Aotearoa Primary Products (Feilding) Ltd, and Aotearoa Primary Products (Cambridge) Ltd. Since this time of course, Weddel has gone into receivership, but the background of this present movement of assets was that Vesteys was in March reported to be planning to sell off most of its Australian and Asian meat product and food trading operations in a public float Union International, controlled by Vesteys, was preparing to list Angliss Pacific on the Australian Stock Exchange. It was selling most of its Australian assets as part of a restructuring agreement between the Vestey family and its banks in 1992. They would

retain an undetermined stake after the float ness "Vestey interests Angliss Pacific", In this

being in the meat

one crisis" and

bankrupt. This was due to meat and

competition, leading to the crash of the Fortex group. "Meat industry 'in crisis:" One farmer said it was "fairly well known that the meat industry owed about $1.4 billion to the banking system" yet "if all works were sold they would realise about $800 million" mid "new state-of-the-art freezing works could be built to cover the whole of New Zealand's kill for half the price of the

indebtedness." (Press, "NI farmers question gap" 27/

5/94, p.32.) In May it was reported that was ex-

pected to announce a "partial" sale of its equity. but withhold from a public share float its Tomoana meat plant at Hastings, and its neighbouring Kaiti plant at Gisborne. It had planned to float the three companies that are subject to the Ole decisions. Weddel was the fourth-largest New

Zealand meat producer in terms of total assets after Alliance, AFFCO and PPCS, and processed 10.7% of the country's lambs, 11.6% of its sheep, 16.9% of its cattle and 28.6% of its calves. It was established in 19 I 1 by the Vestey family and was long a part of the colonial ties of our meat industry to the British market (Press, "NZ's fourth-largest meat producer ready to sell some freezing works", 21 p.2S.)

Busi-

The U.S.A. forestry company, MRGC Company appears again, buying land in Marlborough, presumably for forestry. The land is 2138.1 hectares and $1.4 mtllion is being paid for it What is particularly interesting about this decision is that it appears (though it is not clear) to show the names behind MROe. The sale is to "MRGC and Associated parties", named as: Judy Trust for David S. Quinn (L54%), for John V. Quinn (3.07%), and for Rebecca B. Quinn (3.01%); J.D. Children's Trust for Willlam C Crow, John T. Crow, Michael T. Crow and Colin C. Crow (each 3.07%); David Quinn Trust (1.54°/0), Yakovich Corporation (2.5''10), Johnson Family Northwest Investment Corporation (21.5%), Reid hue (UI%), Green Crow Pacific Ltd (3.5"/0), Ring Management Company 111CO["ponded (25.1)%) and RDMeO International Incorporated (25'()'%). Previously we had been told the MORC was a 50/50 joint venture between Merrill and Ring and Green Crow Corporation.

ITT Rayonier New Zealand Ltd, subsidiary of ITT Rayonier of the U.S.A. is acquiring some of the assets of Pacific Pine Products Ltd in Receivership for ."-' .. :.-"""_'"

"ITT has acquired substantial forestry interests in and around the Gisborne area. ITT now requires a site in the Gisbome area for storage of logs and for undertaking debarking and anti-sapstaining operations prior to transporting the logs. The offeree company owns two blocks of land totalling 22.3288 hectares and has provided log storage, debarking and anti-sapstaining services to ITT from time to time. ITT now wishes to secure the purchase of the shares in the offeree company so that it acquires land for

Remember Ralf Simon? He's the German given approval by the Overseas Investment Commission to buy Pakatoa Island in 1991. During his 20 months in New Zealand he lived the high life in Auckland. It was only after he'd bought the island that it was revealed that he had a German gaol record for embezzlement - the OIC hadn't checked him out The deal was frozen, he left New Zealand with defrauded German customers him. He was arrested LI1 Thailand, escaped but was finally picked up in Fiji and returned to Germany. He has now been sentenced to five and a half years gaol for investment fraud charges totalling more than $200,000: Simon faces further claims totalling $40 million.

the above activities and ITT also intends to investigate the possibility of reactivating a sawmill situated on the land."

A decision highly significant in the denouement of the Matakana Island story concerns Blakely Pacific Ltd which gets approval to acquire approximately 1,981 hectares of land and certain forestry rights 011 Matakana Island, Tauranga for approximately $15 million. The vendors are Te Kotukutuku Corporation Ltd and Matakana Island Trust Incorporated. The Islanders' battle to get control of the island's forestry resources from ITT Rayonier (U.S.A.) and Ernslaw One (Malaysia), included several months blockading the road to prevent continued logging, and a successfill, precedent setting, appeal to the courts against the arc's decision to give approval to ITT and Ernslaw. It is ironic that having won, the islanders had insufficient resources to develop the forestry on their own and had to sell half of the island to another transnational, Blakely Pacific. However they apparently are confident that this one is better than the long line of corp orates who have exploited the island. In the words of the OIC decision: "The vendors ... who represent the tangata whenua of Matakana Island state the proposal provides the Maori people on the island with the opportunity to preserve and protect all matters of cultural, religious and historical significance while utilising Blakely finance and expertise to develop the island's forestry operation." Blakely Pacific are acting as Trustee of the South Blakely Trust of Washington. It is a subsidiary of 130 year old Port Blakely Tree Farms Ltd (U.S.A.). (For more details of this latest development, see Foreign Control Watchdog, CAFCA, No. 76, September 1994, p. 5.)

April 1994

Australian metal and plumbing supplies distributor, G E Crane NZ Ltd, a wholly owned subsidiary of G E Crane Holdings Ltd of Australia, is taking over the Mico Wakefield group, which was in the same business, for $54,250,000. Members of the group sold are: Mico Wakefield Ltd, Mico Wakefield North Ltd, Mico Wakefield South Island Ltd, Metal Import Group Hold-

I

Coeur Gold New Zealand ulti-

mately owned by Coeur d'Alene

d' Alene, Idaho, and

(NZ) are land swap to enable continued mining op-

erations. it involves acquiring 38,8 hectares of land near Waih! formerly owned by Viking subsidiary, Todd Midland. It is not stated what land it is being swapped for, but is is also "part of an option agreement with the Van Woerdens". Neither is it stated who the mysterious Van Woerdens are.

Air Express International Ltd, owned by Air Express International Corporation of the U.S.A., is buying Banner International (NZ) Ltd for a still undisclosed amount. This will merge two freight forwarding businesses in Aotearoa,

In a decision, most of which was initially deleted, a U.S.A. company was given approval to acquire the standing timber and a Forestry Right over a piece of afforested land in the Watrarapa. The name of the company, the term of the right, the area of the land and the price were all suppressed. An earlier decision, in June 1993, where the U.S. company was given approval to acquire the company leasing the land, had not been released either. Appeal has revealed that the purchaser was MRGC Company which is 50% owned by Merill and Ring Inc of the U.S.A. and 50% owned by Green Crow Corporation of the U.S.A. In June 1993 it was given approval to buy Wairarapa Forest Developments Ltd for a still undisclosed sum. The assets of Wairarapa Forest Developments were not revealed. Further details of the April 1994 decision also now released show the June 1993 was varied to instead acquire the standing timber and a Forest Right over the land. The term of the Right. the number of hectares, and the consideration are still suppressed.

1 Note: All spelling of geographic and company names is as supplied by the Ole unless otherwise it is clear from the context that the source is from elsewhere. Errors are those of the Ole

Areas are rounded to the nearest whole number.

III III

G

detailed as much as know about Cornalcos

new contract with ECNZ for power supply to its Tiwai Point aluminium smelter at Bluff gone through the "will nominate Comalco has now settled down to

the business the increasing output from

tonnes per to 31 J,OOO tonnes by ! 996, New

Zealand Aluminium Smelters Ltd, the actual company that owns the Bluffsmelter (and is itself79% owned by Cornalco and I % by Sumitomo of Japan) has Jet eight contracts for the procurement and construction phases ofthe $400 million upgrade, A lready that process has attracted criticism, as detailed in Bill analysis of the August 1994 approvals of the Overseas Investment Commission elsewhere in this issue.

Although Comalco NZ achieved improved results in the half year to June 1994, its parent company Comalco posted a $A35 million smaller profit for that same period. It blamed this on the "fragile" international market but assured that international governments were doing the aluminium industry's enforcement work in trying to "restructure" the industry, namely by forcing the Commonwealth of Independent States to drastically cut production. Never mind, things are looking up for the bauxite barons. By October 1994 the world aluminium price had jumped to its highest for four

years 1831 per tonne) and had increased by 70% in a year. Falling stocks and buying by speculators were the reasons given for the increase.

In Australia, Cornalco is battling and on several fronts, Having played off Queensland and Tasmania over a couple of years it has now secured ownership of the Gladstone power station that supplies its Boyne Island smelter in Queensland, thus giving it integrated control of the entire aluminium industry in that state, from extraction to process" ing. It couldn't get the power price it wanted in Tasmania nor the ownership of some of the hydroelectric system, so it pronounced that it was walking away from its Bell Bay smelter. The future of Bell Bay, beyond its contract expiry in 200 I, is now very uncertain, It is the oldest and most expensive smelter in Australasia, employing 800 workers, The Queensland Labor government has not only flogged off a power station to Comalco but accepted financial responsibility should Aboriginal land claims be successful against Comalco at its Weipa bauxite mine. Premier Wayne Goss has also said his government will support Comalcos parent, CRA (Con zinc Rio Tinto Australia) in any Native Title court challenge over its Century zinc discovery in north Queensland.

CRA is the sixth biggest mining company in the world and operates globally. One of its most controversial projects is curently the Kelian gold mine in East Kalimantan (in donesian Borneo). Within weeks of its being opened by President Suharto in 1992, managerial negligence had Jed to 600 chemical containers being washed into the river, where their residues burned locals. In September 1994 our London partner .. People Against Rio Tinto Zinc and its Subsidiaries (PARTiZANS), in association with Down To Earth (The Campaign for Ecological Justice in Indonesia) - published "We only eat dust" an eyewitness report on the mine, The title comes from local saying "We only eat dust, while PT KEM (the subsidiary company) takes the gold from our earth" For anyone familiar with the murderous brutality of the Indonesian dictatorship (read any of Watchdog's reports on the Suharto family, including in this issue) it's the same old story, A handful of kleptocrats getting fabulous wealth by collaborating with transnational corporations (TNCs) and brutally repressing any local opposition, Mind you, TNCs like doing business this way - Michael Bunker told an international Global Asset Management conference in Hong Kong (broadcast live by satellite to an Auckland gathering) that "an advantage for many Asian economies was that they were controlled by benevolent dictatorships, so politics was not an issue" (Press, 7!llI94). There's nothing remotely benevolent about the Suharto dictatorship, whether in Jakarta or Kalimantan. (If you would like a copy of "We only eat dust", send $5 to CAFCA copying and postage).

Not surprisingly, other Asian countries

the interest

this most predatory of mining TNCs with CRA and Comalco 's parent is Rio Tinto Zinc

UK, one of the two in the world,

It is following the

mining as part of its

opening to the "global economy" RTZ has subsidiaries in 40 countries, a turnover of over $US5 billion and employs 74,000 worldwide, An Indian newspaper, the Business Standard(217/94) gave an extensive to PARTiZANS and Minewatch (of which CAFCA is a member) and their well founded concerns about RTl, Minewatch has 102 member groups in 42 countries, providing an effective international response. The two London-based groups drew the connection with GATT and pointed out global trend of privati sing the mining industry - in Bolivia, Argentina, Zambia and Russia. As PARTiZANS succinctly put it:

"It is a myth that corporate monoliths like RTZ gener-

CAM

ate wealth for those that have little of it Or return wealth to 10 those whose resources have already been stolen the name of progress. In more than one sense companies like RTZ waste the world",

Nor is this view of RTZ confined to groups that can be labelled as those with an axe to grind, The Guardian in its guide to Britain's top companies called RTZ "unique in the scale of antagonism which it has attracted" (ibid). Indeed it has attracted antagonism up to and including war, as in the case ofthe still unresolved Bougainville tragedy.

The corporate names may vary throughout the world - be it NZ Aluminium Smelters or PT KEM - but behind them stand the owners, RTZ/CRA/Coma!co. Wherever they go they spell trouble, oppression, exploitation and misery, In every sense this is a conglomerate that undermines the world.

LES

AIGN FOR PEO SOVEREIGNTY

The Christchurch City Council reversed its decision to scrap the $100 uniform charge on all ratepayers (regardless of the value of their property. See Watchdog 76 for details), This reversal was brought about by pressure orchestrated by the high profile South Island branch of the Building Owners and Managers Association (BOMA) and ratepayers' groups representing the wealthy suburbs, principally the Merivale Precinct Society. This was the outcome of the 1994 Christchurch rates war which raged for several months.

Th is was on ly one of several high profile campaigns waged by BOMA, personified by spokesperson Hugh Pavletich. BOMA has one theme - privarising Council activities and making things easier for business, Campaign for Peoples Sovereignty (CPS) has decided to pay some attention to it, seeing BOMA as a local equivalent to the Roger Douglas hasbeens' party, ACT Accordingly, we secured SOMA's own membership list and have surveyed 60 of its members, asking if they support the highly partisan political campaigns being waged in their name (and with their money). We'll keep you posted. Members polled range from landlords and employers associations to Lincoln University and the University of Canterbury Students Association! In the meantime, the Merivale Precinct Society has embarked on form-

A revenue policy study that could pave the way for more user-charges for some Christchurch City Council services should be ditched, says the Campaign for People's Sovereignty

ing a citywide ratepayers group to pressurise the Council. Mind you, its principles are strictly pragmatic. Having urged the Council to cut costs, it also demanded that the Council reseal a road that just happens to be where a lot of rich people live in - Merivale.

The Council has been busy itself. It spent $100,000 of ratepayers money commissioning a revenue policy study by A uckland consultants. Stripped of jargon, this recommended a whole range of user pays charges to replace rates. The report was not made public but CPS secured a copy, It is frankly astonishing, with a convoluted definition of "equity" that bears no resemblance to reality, It arbitrarily divided up all Council services into "private/public benefit" and recommended what percentage of each should be charged to the "users". This included sewerage! Fortunately the Council rejected the report at a closed seminar and ordered that it be redrafted, Mayor Vicki Buck said "I am reluctant to head off down a track from which there is no way back" (Press, 17/9/94), We'll see what emerges from the redrafting, CPS congratulated the Council on this and urged that it secure a refund of the $100,000, That's market forces, right?

But other Council moves are ominous, It's still considering asset sales, announcing a public consultation process on whether to sell all or some of its 39% shareholding in the Selwyn Plantation forest. Against the recommendation of one of its own committees and over union objections, it has awarded a maintenance contract for 53 of the city's 575 parks to a private firm (Pacific Architects and Engineers, a USNew Zealand joint venture). It's the first time this has happened and sets a precedent. It also means redundancies in the Council's own Works Operations unit. Fitting every household with a water meter by mid 1995 also sets up the framework for charging for water. So CPS has no shortage of issues to deal with,

PAGE 39

I

Will

Iectri ity Foreig

hi

When does private ownership tum into foreign control?

It looks rather as if the electricity industry is moving steadily across the divide. Recently a couple of us stood for Director of Wairarapa Electricity and the Alliance placed two motions before the AGM which were similar to those passed unanimously at a packed public meeting. All lost. Some 1,000 proxies, gathered through a public campaign, gave around 800,000 share votes. The big shareholders mustered 8,400,000 share votes and we were massacred.

Most shares are now owned outside the area. The process will probably continue until there is direct foreign ownership. This has been signalled by the Wholesale Electricity Market Development Group. A Canadian company, Trans Alta, had paid $100,000 towards the cost of the group and has a seat on the board. That company is mainly into gasfired generation and appears interested in building the Stratford plant.

A Whole New Definition of "Road Toll"

Our other recent battle in the Wairarapa has been against the imposition of a toll on State Highway 2, the only road from Wellington and the Hutt across the Rimutakas. The idea came from the Hill Road Committee, an ad hoc group led by Cabinet Minister Wyatt Creech. While it argued strongly for the idea, the public was almost as unified in opposition. Since the road system is not yet in private hands, the public voice was heard and the idea was dropped.

Some members of the public believed that this proposal was just one step towards the privatisation of all our roads. It would have set a very handy precedent. This concern is supported by statements by the Minister of Transport and by the aim of both Transit NZ and the Ministry to increase private sector involvement. The Business Round Table has been arguing for private control of roads. Many of its arguments were similar to those presented in the Wairarapa debate; and many considerations run counter to both ideas. Both here and nationally, private enterprise wants to be paid for money provided and that alone can double or triple the cost of a project.

The Facts Are Against Prlvatisatlon Roads

CS First Boston has prepared two documents on "Options for the reform ofroading in New Zealand", a 149 page glossy

WATCHDOG

in 1993 and a 17 page presentation to the New Zealand Land Transport Symposium 94. An article in Economic .4ff~irs concerning Great Britain by the Chief Economist of CS First Boston is quoted in both. It includes an argument that "the provision of roads' free at point of sale' is as much part of the Welfare State as the provision of State pensions and schools".

This is then another attack on the Welfare State and on government activities. The privatisation of roads may be opposed for many reasons, since roads are a common good, a basic national facility. However it is noticeable that the facts provided show how expensive private ownership can be. 1 therefore note a few facts from those papers.

It is claimed throughout that "the current system is of concern from an efficiency perspective" and that "options for improving the economic efficiency of the reading network include the commercial operation of privately owned roads". It is assumed throughout that privatisation would increase efficiency. The facts show the opposite.

* Toll road companies charge between nine and 31 cents per kilometre for light vehicles, whereas the Land Transport Fund in New Zealand receives less than one cent per kilometre. An electronic billing rate (per kilometre) for the UK is assumed at eight cents for cars 011 rnotorways and trunk roads and 21 cents in towns.

>I< It is recognised that the cost of an advanced electronic road pricing system ($100-150 million) is "clearly significant". The added cost of around $125 million is 1.2 cents per kilometre, which can be compared with an average cost of 3.3 cents per kilometre of petrol and lead duties for the average private car. The extra $125 million is 40% of the $314 million 1991/92 public expenditure on State highways and 15% of the existing $840 million annual expenditure on reading.

>1< Problems with privatisation are noted, such as the collapse of75% of the private motorway sector in France.

>I< Base rates of return to private companies noted are: in California 17%,20.25%,18.5%, 1.25%; Virginia's Dulles Airport 14-30% (toll 20 cents per kilometre). The Sydn~y Harbour Tunnel includes an interest free loan and financial guarantees from the NSW Government. That's another hefty charge on the motorist.

The extremely controversial Maritime into law in November the New

Zealand coast wide open to shipping, It at the same time as the Australian Government had reneged on its

commitment to open up the Australian domestic air market to Air "New Zealand" (which is owned by Brierley's, Qantas and Japan Air Lines). This Bill had been ferociously opposed by the local shipping industry, maritime unions and all political parties except National (who were led by the nose by Federated Farmers and foreign shippers).

Surprise, surprise. In September leaked documents revealed that the newly formed New Zealand Chamber of International Ship Operators (a group of 12 overseas companies) planned to trade as Coast Line once the bill was In other words, these champions of competition and deregulation to operate as a cartel, which fixes prices and arranges business among themselves to their mutual profit. The Commerce Commission cried foul and said that such a move would break the law. Whereupon the Chamber gave an assurance that no such cartel was planned, Definitely not. We'll sec. In the meantime, New Zealand's shipping industry faces a threat from new Australian tax breaks to its industry (the price of settling a major shipping strike protesting the planned partial sale of the State-owned Australian National Line). The Keating government agreed to urgently consider exempting Australian international shipping lines from paying income tax on its crews. This will undercut the New Zealand industry's competitiveness its bread and butter trans-Tasman route

it also spells out that other countries have no hesitation in helping their own industries. Coupled with the air rights fiasco, it underlines the rank stupidity ofthe ideologues of first Labour and now National who have exposed New Zealand to the global economy with absolutely no protection. Oh hosanna, we are ideologically pure. What a pity nobody else follows our example. They're too busy stampeding to the bank with all the money they're making as a result of our being fair game. The level playing field seems to be tilted downhill and irs all running away from us.

WATCHDOG

41

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This map was produced by the Investment Division of the New Zealand Embassy in Tokyo. We secured a copyfrom the Ministry of Foreign Affairs and Trade (AIFA7) and then thought that Watchdog readers would like their own indiVidual copy So we ordered 400

MFAT told us thai the Embassy doesn 'I plan to reprint it until mid 1995 but if' we were keen they would run ojf a minimum order of 1,000 for us. Cost? A mere $3,849.63 plusfreight. We decided that this was not an appropriate use for a goodly chunk of our entire annual income.

So you'll have to make do with this black and white reduced photocopy We apologise for the loss of quality and, of course, the colour coding of the types of investment is rendered useless. However it is the best we can do .

We suggest you do what we did and write to MFAT, Private Bag 18 901, Wellington, and ask for a free copy of the colour wallsize original.

It's worth remembering that Japan rates a distant seventh of the seven top foreign investor nations in the Overseas Investment Commission's 1993 statistics. The OIC approved US investment totalling $3. 8 billion that year; by contrast, Japanese approvals only amounted to $170 million.

WATCHDOG

PAGE

T

I

A previous Watchdog mentioned the demise ofthe UN Centre on Transnational Corporations. It was a very useful branch of the UN, producing volumes of information on TNCs with the aim of an internationally agreed Code of Conduct for TNCs. It was killed off under pressure from the Bush administration before the Code could be considered. It became the "Division OIl Transnational Corporations", one of nine divisions of UNCTAD and has taken an unblemished politically correct pro- TNC line. It runs under the "guidance ofthe Commission on Transnational Corporations", part of the UN Economic and Social Council (ECOSOC). (All this shows you why the UN has a publication called "Acronyms and Abbreviations Covering the United Nations System and Other International Organizations" which has 36 pages at over a dollar a page.)

The Division "seeks to further the understanding of the na-

ture of to enhance the contribution of international investment; and to strengthen the negotiating capacity of host countries, particularly the developing countries." Worthy, but hardly radical.

But not PC enough. Now the Commission is to be moved to UNClAD a subsidiary of its Trade and Development Board. It will be renamed the "Commission on International Investment and Transnational Corporations" and is "to promote the exchange of views and experience among Governments on issues relating to international investment, transnationals, and the creation of an enabling environment for private sector enterprise and development."

The turnaround will be almost complete from watchdog on the TNCs to promoter.

Letter to tfie t£iitor t6J

I appreciate your reviewing my book "Independence and Foreign Policy" (see Watchdog p 54. Ed). I don't wish to comment in any extensive way on the review, I don't think that's an author's role, but there is one point which I feel is close enough to a misunderstanding and central enough to the argument of the book, to merit a comment.

In his review Owen Wilkes writes "For Mckinnon independence is not secessionist nationalism or revolutionary socialism. Hell no. Independence is the' articulation of interest' within an accepted framework of power",

This is not what I say, although it sounds like it. In the first pages of the book (pp 1-2) I observe: "The word' independence' was used in varying ways to identify the relationships of component parts of the Empire to the whole. Four meanings are important for this study. All have been known and understood in New Zealand. Two have been habitually rejected, two as habitually accepted as appropriate ... " and there then follows the three categories Wilkes listed plus a fourth, the independence of loyal dissent or loyal opposition, which he did not.

In other words what Wilkes calls "my" definition of independence - articulation of interest .. is one I discuss not because I favour it but because it has been favoured in past discussion of New Zealand foreign policy. Wilkes' dislike of it is a quarrel not with me but with history.

Foreign Control Watchdog P.O.Box 2258 CHRlSTCHURCH

Dear Watchdog,

Yours sincerely

Malcolm Mckinnon

'--------------------

7 Percival Street, Wellington.

October 27, 1994.

WATCHDOG

M

N

$400

EA

PEAL

,

In

or Harewood Action on Hiroshima Day

Moana Cole and Ciaron O'Reilly, of Catholic Worker and the Anti Bases Campaign (ABC), were arrested on Hiroshima Day 1994 (August 6) for trespassing on the US Air Force base at Christchurch International Airport Their case was heard in October; they defended themselves. The following is from Moana's own report.

For praying outside the hangar doors of the US Air Force Air Mobility Command on the anniversary of the bombing of Hiroshima, by resisting the Starlifters' role in the continual preparation for aerial bombardment, Ciaron and myself were charged with trespass. The trial is a battleground where the State, with its language of criminal action, vandalism, property damage and punishment clashes with the pleas on behalf of humanity, speaking truth and non-violence.

Our first strategy was to make the court accountable to a law which recognises the legitimacy of occupying a space if trying to protect people or property (section 3ii ofthe Trespass Act under Which we were charged). The court continually rejected attempts to present evidence we believed would prove we were doing just that. Once the court had been exposed as not accountable to its own law, we spoke of our own convictions of repenting of our complicity which enable us to resist continual preparations for the horror of nuclear and conventional war.

The most pathetic figure of the trial turned out to be (USAF) Major De Marco, the occupier (who had to give evidence that he wanted the "trespassers" removed Ed). His sheepish looks to the judge after being asked questions, his refusal to "neither confirm nor deny" whether the Air Mobility Command is responsible for carrying nuclear weapons and his cultivated ignorance of not knowing the destinations of the flights he is responsible for is indicative of the assembly line mentality so pervasive amongst those who prepare for war. Warren Thomson (of the ABC) was able to bring the truth of the role of Starlifter flights, the role of Pine Gap and Nurrungar into the light (but the judge wasn't about to accept Warren as "an expert witness ''. He was possibly un-

Moana Cole and Ciaron O'Reilly being arrested at the US Base at Harewood on Hiroshima day

settled by Ciaron's threatening him with a hanging, citing the Nuremberg Trial precedent for judges. Ed).

Although we were found guilty and fined $400 each, plus $95 court costs, the truth was out. Friends performed powerful street theatre in front of the institutions of power, friends returned to the scene of the real criminal activity (the USAF hangar), friends vigiled outside the courtroom until our appearance. The court audience included a survivor of the Holocaust, a former British Navy commander, WWII conscientious objectors, German peace activists, students, lecturers, Christians, atheists, bearded patriarchs and beardless matriarchs. To the above and to those who called or wrote in support, we thank you.

Ciaron has opted not to pay the fine. Donations for Moana Cole can be sent to her at 212 Condell Avenue, Christchurch 5. CAFCA kicked off the appeal with $50. We support her and the ABC.

ARTICLE

WELCOMED

Watchdog welcomes contributions from CAFCA members. This is one publication that has always attracted a high rate offavourable response from readers. We value the steady stream of clippings and information we receive from members all around the country. You are also welcome to submit articlesfor publication: We don 't guarantee we'll publish them but we especially value receiving material that casts light on what's happening in different parts of the country. John Robinson's article on page 40 is a perfect example - we had no idea of this Rimutaka toll road proposal. It falls exactly into the category of "making the country attractive to foreign investment ", hence it is of interest to Watchdog readers. So, let's hear from you. Ed

WATCHDOG 17

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