Michael Fay (banker)
Encyclopedia
Sir Michael Fay is a New Zealand
merchant banker and partner in the merchant bank
Fay Richwhite
. He was educated at St Peter's College, Auckland
, St Patrick's College, Silverstream and Victoria University of Wellington
(LL.B - 1972).
He is one of the ten richest men in New Zealand. His personal wealth was largely acquired during the late 1980s and early 1990s, which included the period in which he had a significant role in the structural adjustment of the New Zealand economy undertaken by New Zealand's Fourth Labour Government
. He is thought to be worth in excess of $700 million.
are best known for gaining wealth in a series of loosely regulated privatization and asset swapping transactions that occurred between 1986 and 1993 - involving their companies European Pacific, Capital Markets and Fay Richwhite
and the former state owned operations Bank of New Zealand
, Tranz Rail
and Telecom New Zealand
, and the pension accounts associated to them.
Deals were done in which Fay and Richwhite personally gained over half a billion dollars (2.2% of NZ's 1985 GDP) from a country on the verge of bankruptcy, while their minority shareholders lost $277 million, by in part imitating the offshore financial practices outlawed in Europe and America 30 years prior.
One notable transaction among these actions was their role as advisors to the government on the sale of New Zealand Rail Limited
to overseas interests; a deal in which Fay and Richwhite later brought 31.8 per cent of the shares, and were subsequently investigated for insider trading by NZ authorities.
While taxpayers in New Zealand had no legal redress on these funds due to the lax regulatory environment and the ability and skill of Fay and Richwhite to undertake ground breaking deals without legislative guidance, the pair promptly re-domiciled to Switzerland following Fay's knighthood, awarded for services to sport (see below).
accused Richwhite and Midavia Rail Investments, a company owned by Richwhite and Fay, of insider trading
. Richwhite was alleged to have tipped off Midavia to sell $63 million worth of Tranz Rail shares, whilst knowing Tranz Rail faced financial problems undisclosed to the public. In June 2007, Midavia paid $20 million to settle insider trading proceedings relating to Tranz Rail. The commission stated that the payments had been made "without any admission of liability". The settlement is the largest of its kind ever seen in Australasia.
campaign in 1987, which won through to the challenger's final
before losing to a US entry from San Diego.
In 1988 Fay backed a challenge to the San Diego Yacht Club
, who had just won the America's Cup
. Rather than wait three to four years and join a general international challenge as had been the custom for thirty-five years, he had his legal team review the original Deed of Gift. The Deed of Gift was the document drawn up by the owners of the 100 Guineas Cup, won by the yacht America, to offer the cup for international competition. The deed did not specify a time delay between challenges, nor were competitors limited to compete in a particular class of boat, nor did boats have to be the same size or class. Fay financed the creation of KZ 1, a large single-hull yacht
which complied with the original Deed of Gift but was much larger and hence faster than the 12-metre class
boats which had been used for America's Cup
competition for many years. Dennis Conner
, skipper of the American defender, responded by building the multihull Stars & Stripes
(US-1). Court actions followed which decided that both boats complied with the original Deed of Gift. The Stars & Stripes catamaran easily won. The bad press generated by Fay's heavily litigious approach to yacht racing heralded an era of better management and agreement for future challenges.
Michael Fay was knight
ed in 1990, for services to sport, something which remains controversial.
Sir Michael Fay was inducted into the America's Cup Hall of Fame
in 2002.
.
Fay now resides in New Zealand and owns Great Mercury Island
, situated off the Coromandel Peninsula
.
New Zealand
New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...
merchant banker and partner in the merchant bank
Merchant bank
A merchant bank is a financial institution which provides capital to companies in the form of share ownership instead of loans. A merchant bank also provides advisory on corporate matters to the firms they lend to....
Fay Richwhite
Fay Richwhite
Fay, Richwhite & Company is the investment vehicle of Switzerland-based New Zealand merchant bankers Sir Michael Fay and David Richwhite.The firm was the prime focus of the "Winebox Inquiry" which dealt with, among other things, tax-avoidance arrangements in the Cook Islands...
. He was educated at St Peter's College, Auckland
St Peter's College, Auckland
St Peter's College is a Catholic college for year 7 to 13 boys . The school, located in Auckland, is one of the largest Catholic schools in New Zealand and is an integrated school under an integration agreement entered into by the Catholic Bishop of Auckland and the Government of New Zealand in...
, St Patrick's College, Silverstream and Victoria University of Wellington
Victoria University of Wellington
Victoria University of Wellington was established in 1897 by Act of Parliament, and was a former constituent college of the University of New Zealand. It is particularly well known for its programmes in law, the humanities, and some scientific disciplines, but offers a broad range of other courses...
(LL.B - 1972).
He is one of the ten richest men in New Zealand. His personal wealth was largely acquired during the late 1980s and early 1990s, which included the period in which he had a significant role in the structural adjustment of the New Zealand economy undertaken by New Zealand's Fourth Labour Government
Fourth Labour Government of New Zealand
The Fourth Labour Government of New Zealand was the government of New Zealand from 26 July 1984 to 2 November 1990. It enacted major social and economic reforms, including reformation of the tax system. The economic reforms were known as Rogernomics after Finance Minister Roger Douglas...
. He is thought to be worth in excess of $700 million.
Fay Richwhite
Michael Fay and David RichwhiteDavid Richwhite
David MacKellar Richwhite is a New Zealand investment banker and was a partner in Fay, Richwhite & Company with Sir Michael Fay.Educated at King's College, Auckland and the University of Otago, where he graduated with a Bachelor of Commerce degree, Richwhite's personal wealth was largely acquired...
are best known for gaining wealth in a series of loosely regulated privatization and asset swapping transactions that occurred between 1986 and 1993 - involving their companies European Pacific, Capital Markets and Fay Richwhite
Fay Richwhite
Fay, Richwhite & Company is the investment vehicle of Switzerland-based New Zealand merchant bankers Sir Michael Fay and David Richwhite.The firm was the prime focus of the "Winebox Inquiry" which dealt with, among other things, tax-avoidance arrangements in the Cook Islands...
and the former state owned operations Bank of New Zealand
Bank of New Zealand
Bank of New Zealand is one of New Zealand’s largest banks and has been operating continuously in the country since the first office was opened in Auckland in October 1861 followed shortly after by the first branch in Dunedin in December 1861...
, Tranz Rail
Tranz Rail
Tranz Rail, formally Tranz Rail Holdings Ltd , was the main rail operator in New Zealand from 1991 until it was purchased by Toll Holdings in 2003.- Formation :...
and Telecom New Zealand
Telecom New Zealand
Telecom New Zealand is a New Zealand-wide communications service provider , providing fixed line telephone services, a mobile network, an internet service provider , a major ICT provider to NZ businesses , and a wholesale network infrastructure provider to other NZ CSPs...
, and the pension accounts associated to them.
Deals were done in which Fay and Richwhite personally gained over half a billion dollars (2.2% of NZ's 1985 GDP) from a country on the verge of bankruptcy, while their minority shareholders lost $277 million, by in part imitating the offshore financial practices outlawed in Europe and America 30 years prior.
One notable transaction among these actions was their role as advisors to the government on the sale of New Zealand Rail Limited
Tranz Rail
Tranz Rail, formally Tranz Rail Holdings Ltd , was the main rail operator in New Zealand from 1991 until it was purchased by Toll Holdings in 2003.- Formation :...
to overseas interests; a deal in which Fay and Richwhite later brought 31.8 per cent of the shares, and were subsequently investigated for insider trading by NZ authorities.
While taxpayers in New Zealand had no legal redress on these funds due to the lax regulatory environment and the ability and skill of Fay and Richwhite to undertake ground breaking deals without legislative guidance, the pair promptly re-domiciled to Switzerland following Fay's knighthood, awarded for services to sport (see below).
Securities Commission case
In October 2004 the New Zealand Securities CommissionSecurities Commission of New Zealand
The Securities Commission was an independent Crown Entity of the government of New Zealand and the main regulator of investments. It was replaced on the 1 May 2011 by the Financial Markets Authority ....
accused Richwhite and Midavia Rail Investments, a company owned by Richwhite and Fay, of insider trading
Insider trading
Insider trading is the trading of a corporation's stock or other securities by individuals with potential access to non-public information about the company...
. Richwhite was alleged to have tipped off Midavia to sell $63 million worth of Tranz Rail shares, whilst knowing Tranz Rail faced financial problems undisclosed to the public. In June 2007, Midavia paid $20 million to settle insider trading proceedings relating to Tranz Rail. The commission stated that the payments had been made "without any admission of liability". The settlement is the largest of its kind ever seen in Australasia.
America's Cup
Fay backed New Zealand's first America's CupAmerica's Cup
The America’s Cup is a trophy awarded to the winner of the America's Cup match races between two yachts. One yacht, known as the defender, represents the yacht club that currently holds the America's Cup and the second yacht, known as the challenger, represents the yacht club that is challenging...
campaign in 1987, which won through to the challenger's final
1987 Louis Vuitton Cup
The 2nd Louis Vuitton Cup was held in Fremantle, Australia in 1987. The winner, Stars & Stripes, went on to challenge for and win the 1987 America's Cup.-The teams:...
before losing to a US entry from San Diego.
In 1988 Fay backed a challenge to the San Diego Yacht Club
San Diego Yacht Club
San Diego Yacht Club is a yacht club located in San Diego Bay. Its address is 1011 Anchorage Lane, San Diego, CA 92106. It is located in Point Loma across from a spit of land known as Shelter Island.- Facilities :...
, who had just won the America's Cup
1987 America's Cup
The 1987 America's Cup was the twenty-seventh challenge for the America's Cup and the first time for 132 years that it had not been defended by the New York Yacht Club....
. Rather than wait three to four years and join a general international challenge as had been the custom for thirty-five years, he had his legal team review the original Deed of Gift. The Deed of Gift was the document drawn up by the owners of the 100 Guineas Cup, won by the yacht America, to offer the cup for international competition. The deed did not specify a time delay between challenges, nor were competitors limited to compete in a particular class of boat, nor did boats have to be the same size or class. Fay financed the creation of KZ 1, a large single-hull yacht
Yacht
A yacht is a recreational boat or ship. The term originated from the Dutch Jacht meaning "hunt". It was originally defined as a light fast sailing vessel used by the Dutch navy to pursue pirates and other transgressors around and into the shallow waters of the Low Countries...
which complied with the original Deed of Gift but was much larger and hence faster than the 12-metre class
12-metre class
The 12 Metre Class is a rating class for racing boats designed to the International rule. It enables fair competition between boats that rate in the class whilst retaining the freedom to experiment with the details of their designs. The first 12 Metres were built in 1907. The 12 Metre Class was...
boats which had been used for America's Cup
America's Cup
The America’s Cup is a trophy awarded to the winner of the America's Cup match races between two yachts. One yacht, known as the defender, represents the yacht club that currently holds the America's Cup and the second yacht, known as the challenger, represents the yacht club that is challenging...
competition for many years. Dennis Conner
Dennis Conner
Dennis Conner is an American yachtsman, noted for winning the bronze medal at the 1976 Olympics, two Star World Championships, and four wins in the America's Cup.-America's Cup:...
, skipper of the American defender, responded by building the multihull Stars & Stripes
Stars & Stripes (yacht)
Stars & Stripes is the name of a series of racing yachts operated by Dennis Conner to compete in the America's Cup. The name "Stars & Stripes" refers to the nickname often used for the flag of the United States.- 12-metre class yachts :1987 America's Cup...
(US-1). Court actions followed which decided that both boats complied with the original Deed of Gift. The Stars & Stripes catamaran easily won. The bad press generated by Fay's heavily litigious approach to yacht racing heralded an era of better management and agreement for future challenges.
Michael Fay was knight
Knight
A knight was a member of a class of lower nobility in the High Middle Ages.By the Late Middle Ages, the rank had become associated with the ideals of chivalry, a code of conduct for the perfect courtly Christian warrior....
ed in 1990, for services to sport, something which remains controversial.
Sir Michael Fay was inducted into the America's Cup Hall of Fame
America's Cup Hall of Fame
The America's Cup Hall of Fame, located at the Herreshoff Marine Museum of Bristol, Rhode Island, USA, honors individuals for outstanding achievement in the America's Cup sailing competition...
in 2002.
Sport and Domicile
Fay is also the chairman of and was the financial backer of the Samoa national rugby union teamSamoa national rugby union team
The Manu Samoa is the men's representative side of the Samoa Rugby Union in both the 15's and the 7's for international competitions. The Samoa Rugby Union is owned by the affiliated rugby unions of Samoa. In Samoa, Manu Samoa is in honour of a famous Samoan warrior. From 1924 to 1997 Samoa was...
.
Fay now resides in New Zealand and owns Great Mercury Island
Mercury Islands
The Mercury Islands lie off the northeast coast of New Zealand's North Island. They are located off the coast of the Coromandel Peninsula, and northeast of the town of Whitianga....
, situated off the Coromandel Peninsula
Coromandel Peninsula
The Coromandel Peninsula lies in the North Island of New Zealand. It is part of the Waikato Region and Thames-Coromandel District and extends 85 kilometres north from the western end of the Bay of Plenty, forming a natural barrier to protect the Hauraki Gulf and the Firth of Thames in the west...
.
See also
- For some more biographical details: List of alumni of St Peter's College, Auckland