Shearer must release his foreign bank statements

OPENING SALVO

New Zealand has two senior political leaders interested in foreign exchange.

Prime Minister John Key is reported to have made NZ$50 million in the industry.  Now we learn Labour Leader David Shearer has lost at least NZ$15,000 dabbling in forex.

These numbers are of course absolute minimums.

Believing Mr Key is worth only NZ$50 million requires believing he would put nearly half his wealth into personal residential property.  That’s hardly credible for any NBR Rich Lister.

Similarly, believing Mr Shearer lost only NZ$15,000 through his undeclared New York bank account requires believing it now holds the absolute minimum demanding parliamentary disclosure, NZ$50,000.  On the balance of probabilities, his losses are surely much more.

Chase, ASB & Westpac
Mr Shearer says he should have declared his allegedly untouched Chase Bank account when he became an MP in 2009 and every year since.

His comments indicate the account held at least NZ$50,000 on January 31, 2013, or US$41,967.  When he became an MP in 2009, a US$41,967 account was worth over NZ$65,000.

That means poor old Mr Shearer has lost nearly 25% just in foreign exchange movements (see table).  His actual losses are even greater, given interest rate differentials between the US and New Zealand.

We also know that Mr Shearer has another deposit account of over $NZ50,000 with ASB.  He also has a mortgage with Westpac over one or both of his Pt Chevalier and Avondale homes, or his jointly owned property in beautiful Whananaki.

This is why the story is so strange.

Mr Shearer knew bank deposits over NZ$50,000 had to be declared because he first disclosed his NZ$50,000+ ASB account in 2010. 

Even stranger is the financial judgement his disclosures reveal.

Why hold NZ$50,000+ on deposit with ASB, earning taxable interest of say 4.5%, another NZ$50,000+ with Chase earning taxable interest of say 2.5%, but still be paying, from after-tax income, around 5.75% interest on a Westpac mortgage?

Further, why keep so much money in the US while warning that the Reserve Bank Act and Policy Targets Agreement would inevitably inflate the kiwi dollar?

It is immaterial that, since becoming Labour leader, he may have been too busy to worry about his personal finances.  His disclosure of his NZ$50,000+ with ASB and non-disclosure of his NZ$50,000+ with Chase go back to when he was the humblest backbencher.

Forgetfulness
Labour says its leader simply overlooked the New York account.  That suggests a worrying financial laxity given Mr Shearer may soon be prime minister leading a challenging Labour/Green/Harawira coalition.

Nevertheless, forgetfulness is probably plausible enough to satisfy most people, while some may even be impressed that Mr Shearer has managed to accumulate enough wealth that a NZ$50,000+ foreign account might slip his mind.

Still, the affair creates political risks.

The first is on Mr Shearer’s left with the still-grumpy David Cunliffe faction in Auckland.

Left-wing columnist Chris Trotter has been leading the charge suggesting Mr Shearer may be unduly influenced by foreign mercenaries, such as the UK’s Defence Systems Ltd, South Africa’s Executive Outcomes and Blackwater in the US.

Mr Trotter even hints darkly at possible links between Mr Shearer and MI6 given his role as a researcher for London’s International Institute of Strategic Studies.

News of secret offshore bank accounts, with no information about who has paid into them, when or how much, can only fuel such conspiracy theories.

Mr Shearer’s second problem is that oppositions can make much of forgetfulness by government MPs, like Phil Heatley and his bottle of wine.  As long as forgetful Mr Shearer is leader, such attacks are no longer available to Labour.

The prime minister knows all this: he disingenuously exonerated Mr Shearer, meaning Labour is neutered next time a National MP “forgets” something.

Mr Shearer has only one option to avoid this, by proving his New York account is not stashed with ill-gotten millions and that it really was a case of him putting some money away for his retirement and forgetting about it.

He must release all his Chase bank statements going back to 2009.