Serious Fraud Office
News wire    

   A Vector insider today revealed that an internal assessment determined that the purchase of NGC, a
natural gas company, by Vector last year was predicted at the time to add a mere $7.9 Million to the
acquisition through likely synergies resulting from the merger.  Despite this, Vector Chairman Michael
Stiassny actively promoted the value to Vector to be astronomically higher, quoting a figure of a half billion
dollars to various groups, including an Institute of Directors forum in Auckland on 19 October 2005.  
  A promotional flier from the breakfast forum, where Stiassny was the featured speaker, claimed that Vector,
an electricity line company, had grown from a $1 Billion company to a $5 Billion company in 3 years.  This
claim was echoed by Stiassny when he took the podium.   
  In addition to defying internal assessments, Stiassny's claim of a half billion dollar gain on the purchase of
NGC factored heavily into the $5 Billion valuation he attributed to the company.  The forum address was also
noteworthy for Stiassny's admission that he had attempted to hype the market price of Vector ahead of the
24.9% IPO float (in August 2005) by promoting future business opportunities across the Tasman and share
options to "grandmother beneficiaries", this as he constricted share supply through two outlets.
   In June of last year Direct Broking was censored for advertising a preferential offering of Vector shares to a
client list acquired from the liquidator of Access Brokerage a month earlier.  The Access Brokerage liquidator
was Michael Stiassny.  The advertisement was deemed to be improper because it made the offer in advance
of the release of the prospectus and included the Vector logo on the letterhead.  At the October forum,
Stiassny, a Chartered Accountant, used a Power Point presentation to show how he took the share price at
the height of the limited 24.9% float and extrapolated this value to help arrive at a valuation of $5 Billion for
the entire company.  He threw another $200 million into the valuation for good measure.  The debt that had
skyrocketed from $400 million to $3.1 Billion was not mentioned beyond the acknowledgment that he had
achieved what many considered to be the unachievable in orchestrating an innovative financial "bridge" loan
through the United States on the NGC purchase.
  Vector completed its $1.3 Billion acquisition of NGC in June 2005 at a price that some independent analysts
viewed as 4 to 5% above the market valuation at the time.  If the $7.9 million assessment is accurate, the
Vector board of directors approved an acquisition that was expected to create a mere 0.6% in value.  Some
have speculated that Stiassny had a personal financial interest in the acquisition that made little business
sense when the inherent costs and risks of such an acquisition are fully considered.  The limited public share
offering on the New Zealand share exchange in August 2005 was made in part to reduce the massive debt
incurred by Vector to complete the acquisition of NGC.  Vector is still wrestling with how to maximize the
synergies from these significantly different businesses.  
    Stiassny in the past has been under fire by 3 of the 5 Auckland Energy Consumer Trust Trustees
representing the Trust beneficiaries that make up the 75.1% share-holding.  In 2005 Stiassny prompted court
action to prevent AECT trustee John Collinge from voting in a Trust move to remove Stiassny from the Vector
board. Karen Sherry, another trustee with a close personal relationship to Stiassny, then convinced trust
chair Warren Kyd to lend his support in a last minute move that saved Stiassny.  In July, Sherry was
appointed to the Vector board herself, including the $70,000 annual stipend that comes with the title.  She still
retains her trustee position.    
    All five trustees are up for re-election in October. #
               THE FLEECING OF VECTOR ENERGY         (updated)

Michael Stiassny
is current Chairman of Vector Energy.  Last year he was re-elected on a minority vote of
the trustees of the Auckland Energy Consumer Trust (which owned 100% of Vector at the time).  

Did Michael Stiassny accomplish this appointment on skill?  No.  He simply bullied his way waging legal
battles against those who opposed him.  The bottom line at Vector Energy is he was re-elected on the vote of
only two of the five trustees - this only after he pushed a Court action to have trustee John Collinge prevented
from voting (obviously Collinge was against Stiassny).   Stiassny's legal action against Collinge followed a
threatened defamation suit by Stiassny against former trustee Coralie Van Camp who was vocally opposed to
the unscrupulous manner in which Stiassny conducted himself.  Trustees Shale Chambers and Mike
Buczowski also voted against Stiassny.

Only Trustees Karen Sherry, with her school girl infatuation of Stiassny, and the enigmatic Warren Kyd voted
for Stiassny.  Because Kyd had the casting vote as rotating chair, and with Collinge's position prevented from
voting, Stiassny got his prize.  Perhaps Kyd felt voting for Stiassny was easier than defending a legal suit.  
Certainly the fact that Stiassny had initiated costly legal actions against two of his colleagues was not lost on
Kyd.  As for Kyd, he isn't talking.

Mr. Stiassny has a lackluster record as a manager of businesses.  It is doubtful this fact escaped even Karen
Sherry.  He made his fortune as a corporate undertaker, plundering the assets of companies he was
appointed receiver and/or liquidator of by his mates at BNZ Bank.  He now looks to parlay his unseemly gains
into a more respectable image through public utilities.  After manipulating his way into not only Vector, but
also Metrowater, Stiassny has taken to the circuit promoting his vision of these monopoly providers of basic
services.  But before we get into Mr. Stiassny's vision of our electricity future -
hold onto your wallets - a few
keys facts must be noted before the lights go out.

Under Stiassny's stewardship:

1)   Vector posted a 30% decline in annual profit (2005) compared to last year.
2)   A further 11% decline in half year profit figures was announced in February 2006.
3)   These profit declines were despite an exceptionally buoyant economy, higher electricity
selling prices and infrastructure changes at Vector.
4)   Over the same period, Vector incurred tremendous debt by acquiring NGC (of which Stiassny
was reported to have a substantial personal holding in prior to the acquisition).
5)   Over the same period, Vector CEO Mark Franklin claims electricity maintenance costs
increased a whopping 35% annually.
6)   In July 2005,
Standard and Poors put Vector on a "negative ratings watch", stating "the potential
negative outlook reflects the likely deterioration in financial metrics over the short to medium term".
7)   Interests rates have risen and the Reserve Board has indicated that this trend is likely to
continue (which means substantial financial pressures are coming to bear on Vector's enormous
debt brought on by Stiassny).

So what would you do if you were Chairman of such a mess?  We know what Stiassny did -- he threw a party!  
raised dividends to the Auckland Energy Consumer Trust beneficiary owners after almost doubling
his salary over 3 years, and then announced to the public what a wonderful job he did.

You see, monopolies are a wonderful thing!  And Vector is a great example of how special it can be as
Chairman of a monopoly where everyone must use your product.  There is little risk of business failure when
the consumer simply has no choice.  No matter how much debt you incur and how poorly you manage the
business, the hapless ratepayer is forced to pick up the tab (this is the point where you print this page and
tuck it into the back of next year's daytimer as a reminder you heard it here first).

But Mr. Stiassny has a problem.  And he hates this problem.  It is those damn, pesky regulators.  Time for him
to hit the lecture circuit and tell people how unnecessary the regulators are!

WEDNESDAY, 19th OCTOBER 2005  The Northern Club, Auckland
 Michael Stiassny, BCom, LLB, CA  
"From a one Billion dollar to a five Billion dollar business in three years - the evolution of Vector"

Mr. Stiassny begins the presentation by announcing to the audience that he is in the process of "bankrupting
the (half dozen) protesters" protesting against him outside the building, proving even in this charm offensive it
is difficult for him to shed the bully mantle.  From there he quickly moved on to bragging about how big the
company has become under his leadership (no talk of the tremendous debt), how he raised dividends at
Vector (no talk of the falling profits) and how
he was responsible for Vector achieving a HALF BILLION
DOLLAR unrealized CAPITAL GAIN through the purchase of NGC alone
(what the ?)!   And when you actually
hear and watch him make such audacious claims, you can easily see why people are fooled by con men.  For
a moment you suspect HE might even believe what he is saying.  But then you realise that is impossible.  No
doubt his accounting that would purport to show how he made the HALF BILLION DOLLARS capital gain
would make the Enron executives - and even David Copperfield - proud.  But today, like a novice magician
still learning the slight of hand necessary to truly excel at three card Monti, Stiassny quite clumsily sidesteps
the questions that expose his con.  There is always tomorrow, but today he must stay one step ahead of the



25 October 2005  

The Honourable Mr. David Parker
Minister of Energy
Parliament Building

Dear Mr. Parker

On 19 October 2005, Michael Stiassny  gave a presentation at an Institute of Directors meeting at the
Northern Club in Auckland titled
“How to turn a one Billion dollar business into a five Billion dollar business in three years – the evolution of

As an energy consumer and ratepayer, I was extremely troubled by several aspects of Mr. Stiassny’s
presentation.  These were:

1)        Chairman Stiassny claimed to have increased the value of Vector a HALF BILLION DOLLARS solely
through his orchestration of the recent NGC buyout by Vector.

2)        Under his tutelage Vector shareholders have enjoyed increased dividends.

3)        While accepting regulation of monopoly enterprises is here to stay, Stiassny suggested the
shareholders and particularly those in attendance could appeal, as voters, to their politicians for less intrusive
regulations – regulations that tend to stymie growth.

The intrepid manner in which Mr. Stiassny bragged to the directors in attendance of adding a Half-Billion
dollars to the value of Vector through the NGC purchase alone was as frightening as it was unsound.   
Minimally Mr. Stiassny confused the investor “honeymoon” after the recent float, combined with the market
hype that accompanied this launch, with intrinsic value.  In point of fact, Vector has recently struggled, with a
30% annual profit decline over the last year, and NGC had been independently valued at substantially less
than Stiassny’s claim – yet neither garnered a mention by him.  Additionally, Standard and Poor’s in July put
Vector on a negative ratings watch, saying “the potential negative outlook is a result of an expected decline in
financial metrics over the short to medium term”.  

Perhaps most alarming is the fact that all these dour developments have occurred within Vector despite a
buoyant economy, increased selling prices and infrastructure changes at Vector.  

That Mr. Stiassny raised dividends - and brags about this move - at a time of substantially declining profits, is
reminiscent of Nero fiddling as Rome burned.  Whether any argument can be made for increasing dividends
at a time of drastically declining profits, it is not difficult to deduce the motivation for such a payout in these

Vector blamed the recent poor financial performance on substantially increased transmission and
maintenance costs under Stiassny’s stewardship.  Not only does this speak poorly of Mr. Stiassny’s fiscal
management – or lack thereof – but it has profound and far-reaching implications to the consumers in
particular and the economy in general.  This is because, unlike other businesses and industries where the
consumer has a choice and can avoid an inefficient and poorly run business that does not provide value for
the money, Vector provides an essential service in a monopoly environment.  While the consumer and
ratepayers are not compelled to foot the financial bill for inefficiencies and poor performance in typical
businesses (they simply choose another supplier of the good or service) this cannot be said about Vector.  In
fact, any poor management performance by Mr. Stiassny must invariably be financially underwritten by the
unsuspecting and captive consumer and ratepayer beneficiaries.   

As a monopoly enterprise, this is particularly true if Mr. Stiassny is able to increase prices to offset poor
management of such a vital industry.  In this scenario, the economy at large is directly and negatively
impacted through inordinate cost pressures on the productive sector and pressures upon inflation in general.  
Hence, Mr. Stiassny’s mantra that regulation might be softened through the collective voice of the voters was
most disturbing.  

I was deeply troubled by Mr. Stiassny’s presentation and posed the question to him at the conclusion of his
talk – a question made all the more relevant by my observation that such contrived and inaccurate financial
outlooks are typical of businesses under Mr. Stiassny’s stewardship that I have examined – to “name two
companies where your stewardship resulted in a tangible benefit to shareholders?”.  In response, Mr.
Stiassny claimed that Vector was one such company – evidenced, he said, by the increased share value after
the IPO launch.  I responded that this was a result of market hype – as he himself had conceded – and had
nothing to do with fundamentals such as return on investment.  At this, Mr. Stiassny went silent and the
moderator called an end to the questions and the presentation.  Mr. Stiassny was unable or unwilling to name
one other company.  

As an interesting anecdote, Mr. Stiassny devoted the first five minutes of his presentation attempting to
explain away the half dozen protesters carrying placards outside the meeting, with messages such as
‘Stiassny the Corporate Thug’ and ‘Dump Stiassny’, as people who were not paying their water bills – “not
because they couldn’t afford to but because they didn’t want to”.  He went on to say slyly that this is why we
have people around “called lawyers” to deal with these people and that he was in the process of bankrupting
these protesters!  His vitriolic rant at the protesters was not only an unwelcome concession to the
effectiveness of their peaceful demonstration but made many people in the room quite uncomfortable.

Few omens present themselves with such clarity.  In my honest, informed and considered opinion Mr. Stiassny’
s presentation to the Institute of Directors breakfast meeting on 19 October 2005 portends an ominous threat
to the energy sector, as well as the economy in general.  As such, it would be prudent for you to obtain a
copy of Mr. Stiassny’s presentation so that you might judge this for yourself.  With all due respect, like the
canary in the coalmine, we can ill-afford to ignore the warnings.

One final note: Do not expect the Auckland Energy Consumer Trustees to provide a safeguard against Mr.
Stiassny.  Tellingly, Mr. Stiassny was re-elected Chairman of Vector despite the fact that only two of the five
trustees voted for him.  Mr. Stiassny had taken legal action against one of the trustees at the time of this vote
and had previously engaged lawyers to threaten suit against another trustee for defamation after she spoke
out against him.  In this environment, it is also not difficult to see how two of the five might vote for him. (In the
interests of full disclosure, I will tell you that Mr. Sitassny has also filed a million dollar defamation lawsuit
against my company and me.)  Moreover, it is my understanding today that Mr. Stiassny has all of the existing
trustees currently tied up by a confidentiality agreement that provides him legal recourse against them if they
speak out against him.  If this is indeed the case, it is unreasonable to expect any of them to blow the whistle
until after this ship is well and truly sunk.  


Vince Siemer, MBA
27 Clansman Terrace
Gulf Harbour

                           Mr. Mark Weldon
Cc:      The Hon. Harry Duynhoven                 New Zealand Share Exchange
Associate Minister, Energy                 PO Box 2959
Parliament                                      WELLINGTON
                 AECT Trustees (Shale Chambers, M.
Mr. Bruce Sheppard                        Buczkowski, John Collinge, W. Kyd, K.
NZ Shareholders Association                Sherry)
P.O. Box 6310                                Faxed to 09 978 7516
Wellesley Station
AUCKLAND                                The Hon. Dr. Michael Cullen
                 Deputy Prime Minister
Mr. Tim Hunter                        Parliament
Editor, Sunday Star-Times                WELLINGTON
P.O. Box 1409

Mr. Michael Stiassny
Vector Energy
Faxed: 09 978 7799

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

14 November 2005  

Ms. Paula Rebstock
Commerce Commission
P.O. Box 2351

RE: VECTOR and Michael Stiassny

Dear Ms. Rebstock,

From my informed position, I see all the telltale signs that the Commerce Commission is being set up for
concerted attack and criticism over the regulation of Vector Energy.

In support, I am providing you a copy of a recent letter I sent to the Energy Minister recounting aspects of a
speech Mr. Stiassny gave at the Northern Club in Auckland on 19 October 2005, titled From a one billion
dollar business to five billion in three years – the evolution of Vector.

During his presentation, Mr. Stiassny took considerable delight in telling those in attendance that he ensured
there would be considerable demand (read run up of the share price) for the Vector share float by personally
hyping the float and restricting channels for purchase of shares.

Mr. Stiassny is Chairman of Vector.  As such, the claims and suggestions he makes are extremely significant
and I submit the comments he made at the Northern Club offer a disturbing insight into the current psychology
he imposes upon the organization – and seeks to impose upon the public.

I also attended the Auckland Energy Consumer Trust AGM on 2 November 2005, where extraordinary hoopla
was given to the recent increase in annual dividends by Vector to trust beneficiaries.  Although I arrived late, I
heard no mention of the 30% decline in Vector profit over the same period.  

It is no secret that Vector has incurred substantial debt in the last year, as well as suffered a substantial
decline in annual profit.  Given these facts, what possibly could Mr. Stiassny and the rest of the Vector board
hope to achieve by raising dividends in this troubling environment if not to improperly endear themselves to
the shareholders and raise earnings expectations?  

When Mr. Stiassny and Warren Kyd (Chairman of the Auckland Energy Consumer Trust) are travelling the
circuit telling everyone that the annualised return, including asset appreciation, on Vector prior to regulation
is a whopping 23%, and that regulators can be influenced through politicians, two things have occurred:

1)        They have substantially misled the public regarding Vector’s current financial position.

2)        They make it obvious they intend to put pressure on the regulators to conform to their rosy

In addition – in what would be a clear conflict of interest and breach of the public trust if true – I have been
informed by reliable sources over the last two weeks that Mr. Stiassny owned a substantial holding of NGC
shares prior to the buyout of NGC which he orchestrated as Vector chair AND that he personally made money
off the Vector public share offering.


Yours faithfully,

Vince Siemer, MBA
Managing Director


Cc: Mr. Tim Hunter
The Sunday Star-Times


(Do not miss letters to
Energy Minister and
Commerce Commission
at bottom of page)