Huljich's resignation not end of matter

OPINION: THE RESIGNATION of Peter Huljich, announced by Don Brash on Thursday, is a welcome development for KiwiSaver investors. But it shouldn't end there.

Although fund management looks like easy money it's no picnic persuading investors to back your skills with their hard-earned cash, and plenty of able fund managers have failed at this hurdle.

Success requires demonstrable investment skill and probity. Huljich could acquire the latter by association with Brash, but he had no track record of managing public money.

Huljich clearly recognised the need to show investment skill and marketed his funds heavily on their early performance. As we now know, that performance was artificially enhanced by injections of Huljich's own money.

In the fund management business, such deals between fund and manager are taboo – and rightly so.

So who knew? Brash has said he and fellow director John Banks were not told of the transactions and they were thus forced to demand Huljich's resignation. I believe him.

But it is also clear that the trustee, Trustees Executors, knew exactly what was going on. It says it was working "behind the scenes". In fact, Trustees Executors had ample time to insist on disclosure and did not. It could have told the Huljich board, and did not. It could have told the Securities Commission, and did not. When will trustees learn that a quiet word in private is not good enough?

Similarly, it seems likely that Huljich's firm broke the law so, despite Huljich's resignation, regulators must investigate and prosecute as required.

Commerce Minister Simon Power has apparently asked officials to look at speeding up reforms "to ensure the integrity of KiwiSaver is maintained".

Let's hope lessons are learned from this.

- © Fairfax NZ News