Story image

NZ Superfund spent $150,000, so far, in legal fees in Portuguese banking case

26 Feb 15

The New Zealand Superannuation Fund has so far spent about $150,000 in legal fees as part of its case to overturn a decision by the Bank of Portugal to move the fund's US$150 million investment into a "bad bank", thereby voiding its insurance on the investment.

The sovereign fund has written off the value of its investment after the Portuguese central bank decided to place the Goldman Sachs-organised loan to Bank of Espirito into the "bad bank" part of BES rather then the new state-supported "good bank" it set up following a reorganisation. The Superfund is among noteholders contesting the decision, which reversed an earlier ruling by the central bank.

"We can't forecast total cost," Superfund chief executive Adrian Orr told reporters after appearing before parliament's commerce select committee. "What I can say is we will be sharing our cost and with confidence around the case we should also have some cost repaid back to us when successful. The spending we have done to date has been around 60,000 British pounds in terms of getting our legal cover and around $30,000 so this is not a cheap exercise.

"If found to be correct we would get all of the money back," Orr said. "We are very confident."

The Superfund has had similar investment strategies worth more than $1 billion over the past five years, regularly using credit default swap insurance, and all have worked "exactly as anticipated", Orr said. The fund currently has no exposures structured in a similar way to the Goldman Sachs-organised loan, where bonds were issued through a finance vehicle called Oak Finance Luxembourg.

A preliminary review by the Superfund's risk compliance unit, which was tabled at a board meeting last week, found the fund's managers didn't overstep their authority or move outside of investment policies when they decided to make the Portuguese investment, Gavin Walker, chairman of the Guardians of New Zealand Superannuation, which governs the Superfund, told the select committee.

The fund is still considering what it has learnt from the process, he said.

"We will probably have some refinements around our process. They won't be material in nature," Walker said.

How blockchain will impact NZ’s economy
Distributed ledgers and blockchain are anticipated to provide a positive uplift to New Zealand’s economy.
25% of malicious emails still make it through to recipients
Popular email security programmes may fail to detect as much as 25% of all emails with malicious or dangerous attachments, a study from Mimecast says.
Human value must be put back in marketing - report
“Digital is now so widely adopted that its novelty has worn off. In their attempt to declutter, people are being more selective about which products and services they incorporate into their daily lives."
Wine firm uses AR to tell its story right on the bottle
A Central Otago wine company is using augmented reality (AR) and a ‘digital first’ strategy to change the way it builds its brand and engages with customers.
DigiCert conquers Google's distrust of Symantec certs
“This could have been an extremely disruptive event to online commerce," comments DigiCert CEO John Merrill. 
Protecting organisations against internal fraud
Most companies tend to take a basic approach that focuses on numbers and compliance, without much room for grey areas or negotiation.
Telesmart to deliver Cloud Calling for Microsoft Teams
The integration will allow Telesmart’s Cloud Calling for Microsoft Teams to natively enable external voice connectivity from within Teams collaborative workflow environment.
Jade Software & Ambit take chatbots to next level of AI
“Conversation Agents present a huge opportunity to increase customer and employee engagement in a cost-effective manner."