John Boscawen’s timing could not have been worse. When the ACT MP dished the dirt he’d found in Strategic Finance’s latest annual accounts, the Parliamentary Press Gallery’s annual Christmas Party had been going for almost an hour.

He began his adjournment debate speech by saying it would be devoted to a “very serious matter” — his discovery in Strategic’s most recent accounts of a previously undisclosed security called a “second mortgage with subordinated position.”

“That’s defined to be a second mortgage where the company participates with other lenders and investors but the company’s position is subordinated to those lenders and investors.

“The effect of this is real and substantial,” Mr Boscawen told Parliament.

“While the mortgage on the face of it may be a second mortgage, the substance is that the transaction is now a third-ranking security. I don’t believe that the investors who voted in that moratorium last December knew that a significant number of Strategic’s assets were third-ranking securities.”

Mr Boscawen said the accounts revealed that second mortages valued at some $68 million were in fact third-ranked securities.

“The directors have already written $28 million of this off. And I wouldn’t be surprised if the balance of the $68 million has also been written off.”

Mr Boscawen said Strategic’s directors were entitled to enter into securities that were effetively third-ranking.

But he said the information should have been disclosed and called on the government to put the company under statutory management.