Sometimes when I’m reading the news I feel like I’m in a Bob Dylan song. Especially this week when there have been some interesting stories about the justice system. And how justice doesn’t always seem to be blind.
In New Zealand since 2006, 66 finance companies have failed. Down here, finance companies are places where people put their money to invest, so when a finance company fails, you lose your money. The reason that most of them have failed is the economy, coupled with the stuff that usually happens when people get their hands on other peoples’ money and have no restrictions or accountability on what they do with it. It’s sort of like the US savings and loan industry in the 1980s.
As a result of these failures, a lot of the locals—including a sizeable number of mom and pop investors–have lost about NZ $8.7 billion which is about US $7 billion.
To date–and probably forever–a grand total of five executives, all from one company, have been charged and found guilty (five from another company have been charged but not tried). Those ten guys account for over a billion of the total loss. Of the five executives found guilty, three got jail with the maximum sentence being 6 and half years. The other two got home detention. The main reason that sentences were handed out at all was because of what appears to be a lack of any remorse on the part of the executives.
For one thing, other than being in jail or home detention, they don’t have a lot to be sorry about. Their assets are all in trusts so they are not available to the people who got ripped off. And speaking of rip offs, the ringleader actually applied to the courts for legal aid on the grounds that because his assets were in a trust he didn’t have the money to defend himself. The judge said no.
And speaking of remorse and punishment, one of the guys on home detention is doing his time in his mansion while appealing the harshness of his sentence. Last week when the appeal was being heard, the judge asked where the guy was. It turned out that due to a loophole in the bail laws, the guy got to keep his passport and is currently in Europe at his daughter’s wedding.
This rather broad definition of home detention is upsetting to the people down here. Especially the 14,500 former clients of his company who are out an average of $34,000.
The chairman of another finance company that went bust got off scott free. He is building a $30 million mansion in Auckland (with a 12 car garage) in spite of protests by neighbours who say the house is so big it will block everyone’s view. When he was asked about whether he was concerned about an elderly couple who had lost $80,000 when his Ponzi scheme collapsed, his arrogant reply was, “I’ve lost more.”
What makes all this even more interesting is what happens when a non white collar type runs afoul of the law, as in the case of the so-called “Runaway Millionaires.”
In 2009, a struggling small business owner applied to the bank for an overdraft of $100,000. The bank said yes, but then, as a result of a “clerical error,” actually gave him $10,000,000. It just appeared in his account.
I’m not sure what you would do if that happened to you but this guy, who, unlike the jailed finance company directors, now admits that he was wrong, took the money and his partner and went to China. They didn’t leave an audit trail.
You can guess the rest of the story. Law enforcement isn’t all that interested in pursuing the guys who stole $8.7 billion from a bunch of small investors. But keep ten million from a bank whose profits are up 13% this year and who charge you $50 if you accidentally transfer money into a wrong account and want them to reverse it, and you’ve got Interpol all over you.
They found the fugitive instant millionaire, and most but not all of the money—he’d visited some casinos in Macau–and yesterday he got four years in jail. Oh. And the bank fired the clerk who made the mistake.
The press is hailing this triumph of the justice system. “The pair have cost taxpayers tens of thousands of dollars,” as if we should be happy that they have been brought to justice.
I’m not saying that the guy should get a medal or anything, but if you look at the big picture, four years for what he did seems a little out of proportion to the punishments being doled out for hurting thousands of people through reckless decisions driven by greed.
I think the public would be much happier if justice were a little more blind and the guys who have cost us hundreds of millions paid a more reasonable price.