NZ's most notorious white collar crime
Equiticorp and the infamous "H fee" money transfer scheme ranks as New Zealand's most notorious white collar crime.
The saga is from the height of the 1980s excesses in New Zealand, involving $327million in money exchanged through complex business transactions designed to hide what was going on.
When it unravelled it saw high flying businessman and Equiticorp boss Allan Hawkins fall from grace and jailed and lead to severe criticism of the Labour government of the day - which was found to be involved in the money go round.
The Labour Party is alleging National leader John Key is somehow tainted by association to the "H fee" - Key was a foreign exchange dealer for Elders Merchant Finance in Wellington at the time. Elders and its parent company Elders IXL Australia were involved in the deal.
The H fee involved two sham foreign exchange transactions through an arrangement devised by Equiticorp for receiving money from Elders IXL in Australia.
The H fee payments - the letter ‘H' was widely thought to have stood for Hawkins or his nickname Harold - were in two parcels, one involving A$39.5 million and another of A$27m, sent to NZ from Australia in January and September of 1988 respectively.
Last year, mindful of Labour brewing up a scandal over his employment at Elders - the company involved in forex dealings when the money was shuffled across the Tasman - Key went public saying he had left the firm in 1987 before the fee was devised..
It would now appear he left in June 1988 to work for Bankers Trust.
However, even if Key has his date of departure from Elders NZ office wrong and he was in fact still working at Elders when the fee scheme was devised, he would appear unlikely to have any knowledge of it - this was a top level scheme at Elders.
Elders IXL's finance director Ken Jarrett, the whistleblower who revealed the fee transaction told the court back in 1994 that Elders IXL boss John Elliot, and executive Peter Scanlon knew of the sham transaction.
Two other executives Ken Biggins and Peter Camm were also were also summoned to stand trial over the transactions but in the end it was only Jarrett in Australia and Hawkins in New Zealand who went to jail over the scheme.
The H fee structure was set up by Equiticorp deputy chairman Grant Adams for Hawkins, supposedly as an undetectable means of getting money out of Elders IXL coffers into Hawkins companies
The whole transaction revolved around Equiticorp buying NZ Steel from the New Zealand government. NZ Steel was a white elephant, not making money. The government flicked the company to Equiticorp for $327m of Equiticorp shares.
At the time those shares were valued at $3.25, but in disastrous timing, it was the eve of the 1987 sharemarket crash, and Equiticorp shares plummeted to $1.
But the government had been canny enough to have a clause requiring Equiticorp to buy back its own shares at the original price.
In the criminal trial which sent Hawkins to jail, Equiticorp was found to have used its own funds to buy back its own shares - an illegal act at the time.
The Elders transaction, or H Fee went towards this purchase of the shares in a convoluted and complex funnelling through a nominee company.
In the end the government was also criticised for benefitting at the expense of Equiticorp creditors and shareholders by turning a blind eye to the H fee transaction.
The government was ordered by the courts to pay $268m as its share of liability for the sale of NZ Steel.
The judge at the time said the government "unjustly enriched" itself through the shonky deal.
At the time it was the most expensive commercial legal settlement in New Zealand history and cost the equivalent of $73 for every man, woman and child in the country.