Serious questions need to be asked about how the New Zealand Superannuation Fund (the Fund) lost $200 million of taxpayers’ money from a high risk investment in a Portuguese bank.
The Fund invested US$150 million through a Goldman Sachs investment vehicle into the Portuguese bank Banco Espirito Santo (BES). The loan reportedly generated a return of up to 3.5 percent yet the risk was assessed by ratings agency Moody's as being “speculative and a high credit risk”. Less than a month after the loan was made, BES was put in liquidation and the Guardians now face a long legal battle to try and recover their investment.
“The Super Fund has done a good job of managing a diverse portfolio of investments. We accept that there will be inevitable losses in individual investments. However, the Fund is a long term investor, so questions need to be asked about why it invested such a large amount of money into a financial product that Moody’s called speculative,” said Green Party Co-leader Dr Russel Norman.
“Such a large and unusual loss deserves a closer look.
“Taking these high-risk investments with our money is probably not appropriate.
“Finance Minister Bill English needs to reassure the New Zealand public of the on-going suitability of investment decisions made by the Guardians of our $27.5 billion retirement savings.
“It’s fair to ask how much more exposure the fund has to European banks in countries turned upside down by the global financial crisis?
“Will the Fund also review similar investments once considered rock solid due to credit insurance?”