The mayor and a challenger have traded haymaker blows over the running of the New Plymouth council's $215.77 million investment fund.
Councillor Andrew Judd has labelled the fund's $152m worth of Tasmanian dairy farms the "worst deal in council history" and called for an independent investigation to find out "how bad it is".
Mayor Harry Duynhoven has rubbished the claims as nothing more than a "cheap shot to gain political points".
The squabble comes one day after a report that Chinese investors were looking at buying into the Van Diemen's Land Company farms and possibly taking them off the council's hands. In the Taranaki Daily News yesterday, finance journalist Tim Hunter also questioned the wisdom of the council investment.
The farms and stock have a book value of $152m and controversially make up a majority of the council's perpetual investment fund which is run by the independent Taranaki Investment Management Ltd, TIML.
Mr Duynhoven was steadfast in defending the investment yesterday. "The farms have been one of the few investments that has held its value when lots of other things have come down and many people lost their entire investments during the global financial crisis.
"We didn't and that shows just how wise TIML were originally to diversify their funds, and to have some in land and animals."
The mayor said Mr Judd's comments could cost New Plymouth ratepayers because potential investors would look to use the controversy as leverage to get a lower price.
But Mr Judd, who as a councillor has signed a confidentiality agreement preventing him talking about anything to do with the potential deal, has brushed off any responsibility for the state of the fund. "We can play tit for tat as much as you want.
"What we need is an urgent independent investigation.
"How bad is it? Harry, you have had three years to sort this out," Mr Judd said.
For the past decade the fund has contributed about $20m a year to council coffers. With VDL yet to pay a dividend, the release payments have come from the liquidation of other investments and have even eaten into the fund's capital. Worth $259m when established, the fund's half-year report to December 31, 2012, puts its value at $215.77m.
As Mr Duynhoven sees it, he has moved to rebuild the fund by overseeing reductions to the release payments taken by council. Mr Judd said this reduction in payments was clear evidence the fund was not performing as it should.
The district's two other mayoral candidates, Chris Wilkes and Craig Piercy, have mixed feelings about the investment fund and the Tasmanian farms.
"If we can actually sell the farms without losing too much, that would be great. But I have a feeling if they think we are desperate to get rid of them, we might not get the best deal," Mr Wilkes said.
Were the farms sold, he said the money should be used to clear council debt which currently sits at $110.3m, down from a peak of $119.9m in 2010 but well up from the $49.8m it was when the investment fund was created in 2004.
Mr Piercy said the public did not know what was happening with the farms and whether they were a good deal or bad.
"My view would be to investigate that, find out the truth and present that to the community, so they can make an informed decision," he said.
- © Fairfax NZ News
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