Serious Fraud Office
POSTED 28/8/06
IN A FULL PAGE ARTICLE IN THE NEW ZEALAND HERALD, REPORTER ANNE GIBSON WAXED POETIC ABOUT HOW
IMPORTANT MICHAEL STIASSNY'S VISION IS FOR THE COUNTRY.  THE ARTICLE WAS PROMPTED BY STIASSNY'S
WISH TO BE INTERVIEWED NOW THAT THE COMMERCE COMMISSION HAS SIGNALED IT MAY TAKE OVER
VECTOR ENERGY (OF WHICH STIASSNY IS CHAIRMAN) AS A RESULT OF OVERCHARGING TO CONSUMERS.  
IT SHOULD BE OBVIOUS FROM THE SHORT RESPONSE BELOW WHAT THE ARTICLE WAS EXACTLY ABOUT AND
WHY IT WAS WRITTEN.

To: Anne Gibson
New Zealand Herald  25/8/06

Dear Ms. Gibson,

Your article on Stiassny (19 –8 –06) reminded me of Saddam Hussein’s staged photo-op just prior to the war where he held a young boy
on his lap in an effort to show his love and compassion.  You fell right into it.

You say: This ‘king of business with a conscience’ is concerned for all of us that the pendulum of regulation has swung too far.

The reality is, before regulation – and under Stiassny’s stewardship:
1)        Maintenance costs at Vector had increased 35% per year, electricity prices to consumers had increased, company debt soared,
and yet Stiassny (no doubt showing what a champion he is of the investors)
raised dividends.
2)        Stiassny’s creative – and flatly erroneous – accounting showed he made a whopping $500,000,000 unrealised gain on the
purchase of NGC when the independent valuers were evenly split on whether Vector actually had overpaid.
3)        Stiassnys base compensation doubled to $180,000 per year (for this part time position).

You say:
“If Vector (i.e. Stiassny) loses confidence in the regulatory framework and stops investing, the country could face
blackouts.”

The REALITY is this is exactly what ENRON threatened, and later artificially created in California – the only U.S. State that did NOT
regulate electrical utilities!

You say:
“Stiassny himself takes credit for championing (minority shareholder) rights” and you accept it as gospel without question,
even showing him as the martyr who is trying desperately to cut the red tape.

The REALITY is shareholders almost always suffer significantly and unnecessarily in companies that Stiassny targets.  I suggest you
enquire of the Institute of Chartered Accountants as to how many shareholders have complained about losing their investments as a
result of alleged suspect accounting and overcharging by Stiassny, only to become frustrated by Stiassny hiding behind “confidentiality
agreements” he claimed to have with the noteholders as the reason he will not provide financial disclosure.

You say:
“(Stiassny) played a key role in Air New Zealand’s dispute with its engineers when he was called in as a troubleshooter last
year.”

The REALITY is Stiassny injected himself into the situation for the purpose of gaining some much needed PR to clean up his tarnished
image – resulting from years he raided employee entitlements, as he did in the N Z Stevedoring debacle he ultimately lost in Court.

You say:
“(Stiassny’s) economic anxieties are the country’s concerns.”

Yeah, right!

I am sad for you putting your name on this public disservice.  But I am sadder still for the disservice to your children and grandchildren,
for it is they who will likely suffer for your failures here.  By then, Stiassny will likely have taken his family and ill-gotten gains to exile in
Israel or Switzerland.

Sincerely,


Vince Siemer, MBA
Gulf Harbour
The Smartest Guys in
the Room  

The Enron comparison
in New Zealand
scale down page for
table
  Similarities are uncanny
-- check this out!
   
   
KENNETH LAY (ENRON)
MICHAEL STIASSNY (Vector Energy)
1
Postiion
Chairman
Chairman
2
Industry
Energy company (basic commodity)
Energy company (basic commodity)
3
Claim to fame    
(Not to be confused with reality)
quadrupled value of company in 5 years
more than quadrupled value of company in 3 years
4
Education
Business economist
Business accountant / law degree
5
Influence
friend of President Bush
friend of High Court judges
6
Personal reputation
Hired Skilling and Fastow to do the dirty
work: famous for his powerful friends who
protected him
Hired Fardell and Garrett to do his dirty work:
famous for his powerful friends who protected him
7
Business Philosophy
Vocal advocate of deregulation of energy
Vocal advocate of deregulation of energy
8
Vision for company
Revolutionize the industry through broad
challenges to the status quo.  Growth
through acquisitions will establish
company as dominant force and its   
methods as leading edge.
Revolutionize the industry through broad
challenges to the status quo.  Growth             
through acquisitions will establish               
company as dominant force and its               
methods as leading edge.
9
Personal approach to accounts
Manipulate accounting.  Hide debt off the
books and bribe auditors to help cover the
scam.
Manipulate accounting.  Claimed he created a
HALF BILLION dollar unrealized CAPITAL GAIN
from the purchase of NGC alone (just months
earlier).
10
Sought brokerage alliances to
promote 'buy' recommendations
of their company shares
Worked with Merrill Lynch to hide debt and
make 'buy' solicitations to prospective
sharebuyers. (Four Merrill Lynch
executives later convicted)
Worked with Direct Broking (a co. with previous
connections to Stiassny) to make 'buy' solicitations
to prospective shareholders before prospectus
was released.
11
Personal approach to the
financial markets
Sought to increase share value by actively
hyping esoteric valuation and abstract
excuses through the media and public
forums.
Sought to increase share value by actively hyping
esoteric valuation and abstract market  
opportunities through the media and public forums.
12
Favoured growth strategy
Overvaluation of company assets & hiding
debt.
Overvaluation of company assets & taking on huge
debt.
13
Tactic used when the house of
cards started to collapse
Ran rolling power blackouts throughout
Callifornia to create artificial power
shortage that increased power costs as
much as 4,000 percent short term.
Increased dividends to beneficiaries despite  
greatly falling profits in successful attempt to      
boost sharemarket reception of IPO float.
(29.5% profit decline announced after float)
14
Benefit to Chairman
Lay cashed in US$26 Million in stock.
Stiassny's official compensation doubled.  No word
yet on how many shares he sold or options he
exercised.
15
Benefit to Company
Profit of $2 Billion dollars kept them
temporarily afloat
Warm reception by sharebrokers to IPO despite the
poor financial performance
16
Cost to Public
$30 Billion dollars to the State of
California.  Price of electricity increased
15%.
Massive $3.2 Billion debt remains.  Sharp profit fall
despite price of electricity increasing to consumers.
17
Cost to Employees
Pensioners lost $2 Billion.  20,000
employees lost $1.2 Billion in their profit
sharing accounts
DON'T KNOW YET
18
Favorite catch phrase
"Ask why."
"Get over it."
19
Fall Guy (and chief facilitator)
Andy Fastow, CFO
Alan Garrett, Stiassny's 'Manager' or Mark Franklin
CEO (odds on favourites).  Peter Fredricsen, CFO
or Warren Kyd, Chairman of AECT (possible)
20
How far will he go to protect the
charade?
Perjury.  Claimed allegations of his
corporate deception were an attempt by
others to defame and unfairly discredit
him.  Later, when the truth was exposed,
he claimed ignorance of what was
happening at the company on his watch.
Perjury.  Claimed allegations of his corporate
deception are an attempt by others to defame and
unfairly discredit him.  Has engaged high-priced
legal counsel to impose judicial delays to court
actions alleging perjury (not the actions one would
expect from an innocent man).
21
Defining moment
He and CEO Jeffrey Skilling were cashing
in Hundreds of Millions of dollars in
shares while they simultaneously
advocated in October 2001 that their
employees invest more of their
hard-earned income in their ENRON
profitsharing accounts (that became
worthless two months later).
In an Institute of Directors presentation 19 October
2005, Stiassny bragged of how he hyped the
shares to "beneficiary grandmothers" and profit
opportunities across the Tasman to the media at
the same time he contrived a restriction of outlets
for sale of IPO shares  - this in order to ensure a
successful and profitable float in August 2005 of
the shares on the NZX.
22
Talent
Never blinked.  Could sell ice to evacuees
of the Titanic (and essentially did) as he
bled the company and blamed others.
Utterly ruthless. Is able to tell the most horrific lies
with a straight face, but is clever enough to
normally get others to do his bidding.  At the same
time he could convince whales that Japan only
wanted them for research.  
23
Most alarming traits
Self-absorbed and largely unaccountable,
running the company as if it was his
private bank account.  Yet he claims today
to be in the dark regarding the debacle.  
His approach allowed tragic failure of epic
proportions to ensue over many years.
Highly secretive in business affairs, self-absorbed
and largely unaccountable.   Invokes numerous
'confidentiality agreements' to prevent transparency
and claims outlandish personal accomplishments
that have little semblance to reality..  In short, a
walking disaster.