19 Aug 2019

Brownlee denies knowledge of Southern Response deception

From Checkpoint, 5:16 pm on 19 August 2019

Former EQC Minister Gerry Brownlee says he was unaware of any deceptive behaviour by Southern Response.

On Friday, a precedent-setting High Court ruling found the state insurer had engaged in misleading conduct when it deliberately withheld information - leaving one couple almost $250,000 out of pocket.

Mr Brownlee would not comment on the case, but said he didn't think there was any deception from Southern Response's senior management.

Friday's judgment could affect more than 3000 customers and cost taxpayers at least another $300 million dollars to rectify.

Mr Brownlee told Checkpoint he learned of Southern Response's two-quote assessment system when he heard about the High Court judgement.

"I've read the headlines from the judgment, from both the defence and the prosecution point of view, and I can see some points in both directions so I'd rather not make a comment about something that was essentially very operational.

"It's not for me to criticise the judgment or defend Southern Response, or mount any sort of suggestion that the judgment was an error."

He said Southern Response was expected to complete the cases quickly and to be fair and honest in dealing with claimants.

"I don't believe either the board or the senior managers who were part of the board reporting to the government were being deliberately dishonest."

In discussing the problems around onsold Canterbury homes with improper quake repairs, Mr Brownlee said the term "botch-up" annoyed him.

"It was a Labour Party construction, whilst in Opposition."

The issue of the two different repair assessments was the subject of a class action led by Christchurch lawyer Grant Cameron.

He told Checkpoint he was surprised Mr Brownlee did not know of Southern Response's actions before Friday's judgement.

"Nevertheless if Gerry is saying he didn't know, we have to accept that. But the question has to be, how could that possibly be when as minister in an arrangement where the Crown has entered into a Crown support deed to provide cash to AMI, and very stringent processes for reporting on liabilities were put into place at the beginning, how ministers couldn't know these things."

He said provisions in the Crown support deed meant that Treasury could have observers at every board meeting and executive management meeting.

"Whether they did or didn't attend, we don't know. But one would expect that they were all over this very closely.

"There was an unknown liability for the taxpayer, and it was extremely important to know as this whole thing unfolded what the ongoing liabilities would be.

"So undoubtedly Treasury received all the information that was supplied to shareholders, rating agencies, bankers, auditors, senior management, and more particularly the board itself.

"So it's very hard to see how this wasn't extensively flagged as things went along."