David Richwhite and
Sir Michael Fay formed
Fay Richwhite in 1973 which grew to become one of the leading merchant banks in Australasia during the 1980s and 1990s, with offices in New Zealand, Australia and London. Whilst their business encompassed the full range of investment banking and trading services across many sectors, Fay Richwhite became most well known for its role in the privatisation of State Owned Enterprises (SOEs) in New Zealand. During the late 1980s, Fay Richwhite advised the New Zealand government on a number of asset sales and ultimately organised and co-invested in consortia which purchased some of these assets including: • The
Bank of New Zealand in 1989, in which Fay Richwhite purchased a 32% share via their company Capital Markets •
Telecom New Zealand in 1991 for NZD$4.5 billion with
Ameritech •
Bell Atlantic and Freightways •
New Zealand Rail in 1993 for NZD$410 million with
Wisconsin Central and
Berkshire Partners. Fay Richwhite went on to invest alongside
Wisconsin Central,
Berkshire Partners and
Goldman Sachs in the purchase of four of the five United Kingdom national rail companies being privatised in 1996. Forming
English, Welsh & Scottish Railway, the company ran 95% of British rail freight until it was sold to
Deutsche Bahn in 2007. Fay Richwhite was active throughout the 1980s and 1990s in other business activities including: • Early-stage financing of the New Zealand film industry • Oil exploration off the Taranaki coast (floating Cultus Petroleum) • Early-stage financing of New Zealand's kiwifruit, apricot and deer farming industries • Pioneering of the Eurokiwi bond market • Acting as government advisor on forestry assets, the
Tourist Hotel Corporation, the Government Printing Office, and Housing Corporation assets. Richwhite personally chaired a steering committee which advised the New Zealand government on the sale of the state-owned Post Bank and was Deputy Chairman of the New Zealand Business Round Table from 1990 to 1997. In the late 1990s, Fay Richwhite was sold to various partners. Throughout the 1990s Richwhite was consistently listed as one of New Zealand's wealthiest businessmen with an estimated personal wealth of NZD$660 million. He now co-owns
Great Mercury Island with business partner Sir Michael Fay.
The Winebox Inquiry: Commission of Inquiry into Certain Matters relating to Taxation In 1994, a Commission of Inquiry was undertaken in New Zealand to investigate claims of corruption and incompetence in two government entities: the Serious Fraud Office (SFO) and Inland Revenue Department (IRD). The inquiry centred on a transaction carried out between a subsidiary of European Pacific Investments (EPI), a company directed by Richwhite and three others, and the Cook Islands Government. In September 1986, European Pacific Investments was incorporated. One of its directors, David Lloyd, was responsible for convincing the Cook Islands Government to establish a tax haven. EPI's subsidiary company, Magnum, paid the Cook Islands Government NZD$2 million and received a tax certificate which was presented to the tax office in New Zealand. Once presented, EPI received a rebate of the same amount (NZD$2 million). The net effect of the transaction was that the EPI group effectively paid the Cook Islands Government NZD$50,000 but received a New Zealand tax credit of NZD$2 million. The transaction at the centre of the inquiry was named the "Magnum" transaction after the EPI company involved. The subsequent inquiry was spearheaded by politician
Winston Peters and is commonly referred to as the "
Winebox Inquiry" in reference to Winston Peters' delivery of the documents central to the allegations to Parliament in a winebox. Although the Commission concluded that there was no fraud or incompetence, controversy surrounded the ruling. Changes to the New Zealand tax laws relating to the claiming of foreign tax credits were made and new rules relating to disclosure to the Inland Revenue Department and penalties for non-compliance were introduced.
Securities Commission case In June 2007, Richwhite and Midavia Rail Investments, a company he co-owned with Michael Fay, were investigated by
Securities Commission of New Zealand for accusations of insider trading relating to Tranz Rail. Richwhite and Fay settled with the Commission out of court for NZD$20million without admission of liability. Their joint statement read: "While they consider the settlement amount does not properly reflect the lack of merit in the Commission’s proceedings, the settlement payment is only a little over half the amount claimed by the Commission, including interests and costs. It is less than 1/5 of the Commission’s maximum claim at the time it commenced proceedings. It is also at a proportionately lower level than the settlements the Commission reached with all the other defendants. Importantly, it is also reached without any admission of liability. The fact that the Commission was prepared to settle for substantially less than the full claim and without any admission of liability no doubt reflects the Commission’s recognition that it faced a risk of losing if the claim went to trial". ==America’s Cup and other sporting interests==