Media Council rejects PMG Funds’ complaint about NBR

The New Zealand Media Council has not upheld a complaint against NBR made by unlisted property fund company PMG Funds.

Tauranga-based PMG, headed by chief executive Scott McKenzie, took issue with a Hunter’s Corner analysis column by senior journalist Tim Hunter titled, ‘Rubbish real estate funds a hard habit to break’.

PMG claimed the story contained inaccuracies, was unbalanced and defamatory. The heading, and the photo caption, “Unlisted property funds – the cancer sticks of the investment world” were particularly inaccurate, unbalanced, and unfair, it said.

But the Council found the heading and caption accurately represented the substance of the story.

“Unlisted property funds are the cancer sticks of the investment world. They are unnecessary, bad for our financial health and best avoided, yet they linger on as anachronistic parasites clinging to the needs of a dying breed,” began the column, published in December.  

It set out the case of an investor, labelled Mr A, who had put $500,000 in the PMG Generation Fund in 2021. The Generation Fund was described in its Product Disclosure Statement (PDS) as a long-term investment with units that were not saleable on any established market, the story said. Mr A was now in his late 70s and had cancer. He wanted his money out but this was not possible. As a result of the situation, PMG had established a hardship policy, but it was unclear whether Mr A would qualify. This was all perfectly legal and PMG was within its rights to refuse withdrawals, the column said.

However, this “nasty situation” illustrated that “the PMG fund is a rubbish product” and there were investors like Mr A, who did not realise this.

The column set out the background to the PMG Generation Fund, its portfolio, debt levels, and fees paid to the manager. Like many property funds, it had suffered a decline in value recently.

“As it stands, there is no ability for investors to realise their investment in the PMG fund unless they can find a buyer for their stock through PMG’s facilitation service – and these are few and far between.”

It also looked at the marketing of the fund. Mr A claimed he was assured he would be able to sell easily on the secondary market.

This was a grey area, the story said. “Did PMG provide misleading information about its sale facility? Or did Mr A misunderstand the information he was given?”

The lead photo in ‘Rubbish real estate funds a hard habit to break’.

Fair analysis 

PMG claimed the article’s comparison of unlisted property funds to “cancer sticks” and “rubbish” reflected Hunter’s personal opinion of the sector presented as fact.

NBR pointed out the Hunter’s Corner column had been run for eight years, representing Hunter’s views and was clearly marked as analysis. “The characterisation of the PMG fund as rubbish was an accurate reflection of Mr Hunter’s rigorous analysis on it, backed by research, and was supported in the column by comment on its lack of liquidity.”

PMG said the article overlooked the fundamental difference between listed and unlisted property funds, but NBR countered that the story mentioned the PDS statements on its long-term nature and lack of liquidity. The column’s purpose was to analyse and comment on an issue that affects investors and this is what the article did.

NBR responded to the complaint, and stood by the article as fair, balanced, correct, and did not mislead readers. The subject was a matter of public interest, and PMG Funds’ request to remove the article was an attempt to curtail the media’s freedom of expression.

Council agrees 

The Council agreed, saying it could find no factual inaccuracies and believed the column had presented several pieces of information that were actually favourable to the complainant – for example, the fact that its illiquidity is fully set out in the PDS documents, and that the company had made attempts to assist Mr A, even though, as the story pointed out, they were quite within their rights to refuse withdrawals.

“The column was forthright, but that is its purpose ... It is in the public interest that commentators can write robustly on important topics, such as personal investment, and point out pitfalls as they see them.”

The Council considered the article was clearly a column, with the requirements to indicate this met, including being marked as analysis.

“This allows the robust expression of opinion, although as Principle (5) states: “requirements for a foundation of truth pertain. Principle (5) also states that balance is not required for columns, but in this case the columnist made the extra effort of contacting PMG Funds for comment, adding facts that showed PMG Funds in a more positive light. While balance is not required in opinion pieces, in this case, it made the column stronger and fairer.”

It is in the public interest that commentators can write robustly on important topics, such as personal investment, and point out pitfalls as they see them.

The complaint was not upheld under any of the five Media Council principles cited by PMG as breached.

Council members considering the complaint included former Court of Appeal judge Raynor Asher KC, Ministry of Business principal advisor Alison Thom, University of Otago property law lecturer Ben France-Hudson, Electoral Commission chair Marie Shroff, AUT programme leader Richard Pamatatau, and journalist Rosemary Barraclough.