David Richwhite
Encyclopedia
David MacKellar Richwhite (born 1948) 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 during the late 1980s and early 1990s. During this period he had a significant and controversial role in the structural adjustment of the New Zealand economy undertaken by New Zealand's Fourth Labour Government.
Fay, Richwhite & Company was the prime focus of the "Winebox Inquiry
" which dealt with, among other things, tax-avoidance
arrangements in the Cook Islands
. The publicity surrounding the inquiry generated considerable public ill-feeling towards Fay and Richwhite.
Based in Geneva from 1998–2003, Richwhite now lives with his family in London.
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:
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 Ltd (EWS)
, the company ran 95% of British rail freight until it was sold in 2008.
Fay Richwhite was active throughout the 1980s and 1990s in other business activities including:
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.
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.
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.”
sailing trophy in 1987, 1988, 1992. They personally invested over $100 million toward the cause.
Following the 1988 “Big Boat” challenge they briefly won the cup, later losing it in the courts to the San Diego Yacht Squadron. From the foundation laid by Fay and Richwhite New Zealand went on to win the trophy in 1995.
In 1988 the pair led a team to San Francisco for the World One Ton Cup
which they won in Bruce Farr designed “Propaganda” (KZ 6161).
Fay and Richwhite also funded the Manu Samoa Rugby Team
for several years following the team running into financial difficulty. The ownership and control of the team has now been handed back to the Samoa Rugby Union.
, which lies eight kilometres off the east coast of the Coromandel Peninsula
. The island's northern half is primarily farmland which supports both sheep and beef farming operations. Its southern half has been re-vegetated with pine and native trees. Richwhite’s wife Libby has overseen the planting of over 600,000 native trees on the island as well as a conservation programme to preserve many of the island's rich historic and archaeologically significant Māori Pa
and heritage sites.
Groups helping children at risk are often invited to make use of the island’s facilities for their camps. Given the island's isolation, land has also made available for a team of scientists breeding a strain of bee immune to the destructive Varroa
mite infestation currently affecting the worldwide bee industry.
On 30 November 2009, Great Mercury Island hosted the first successful launch of Rocket Lab's
suborbital Atea-1 sounding rocket.
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...
with Sir Michael Fay
Michael Fay (banker)
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 ....
.
Educated at King's College, Auckland
King's College, Auckland
King's College is an independent secondary school in New Zealand. It was originally a boys-only school but now also admits girls in the sixth and seventh forms . The school has strong links to the Anglican church; the Anglican Bishop of Auckland, and the Dean of Auckland are permanent members of...
and the University of Otago
University of Otago
The University of Otago in Dunedin is New Zealand's oldest university with over 22,000 students enrolled during 2010.The university has New Zealand's highest average research quality and in New Zealand is second only to the University of Auckland in the number of A rated academic researchers it...
, where he graduated with a Bachelor of Commerce degree, Richwhite's personal wealth was largely acquired during the late 1980s and early 1990s. During this period he had a significant and controversial role in the structural adjustment of the New Zealand economy undertaken by New Zealand's Fourth Labour Government.
Fay, Richwhite & Company was the prime focus of the "Winebox Inquiry
Winebox Inquiry
The Winebox Inquiry was an inquiry undertaken in New Zealand to investigate claims of corruption and incompetence in the Serious Fraud Office and Inland Revenue Department ....
" which dealt with, among other things, tax-avoidance
Tax avoidance
Tax avoidance is the legal utilization of the tax regime to one's own advantage, to reduce the amount of tax that is payable by means that are within the law. The term tax mitigation is a synonym for tax avoidance. Its original use was by tax advisors as an alternative to the pejorative term tax...
arrangements in the Cook Islands
Cook Islands
The Cook Islands is a self-governing parliamentary democracy in the South Pacific Ocean in free association with New Zealand...
. The publicity surrounding the inquiry generated considerable public ill-feeling towards Fay and Richwhite.
Based in Geneva from 1998–2003, Richwhite now lives with his family in London.
Fay Richwhite
David Richwhite and Sir Michael FayMichael Fay (banker)
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 ....
formed 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...
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 ZealandBank of New ZealandBank 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...
in 1989, in which Fay Richwhite purchased a 32% share via their company Capital Markets - Telecom New ZealandTelecom New ZealandTelecom 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...
in 1991 for NZD$4.5 billion with AmeritechAmeritechAT&T Teleholdings, Inc., formerly known as Ameritech Corporation , was a U.S. telecommunications company that arose out of the 1984 AT&T divestiture. Ameritech was one of the seven Regional Bell Operating Companies that was created following the breakup of the Bell System... - Bell AtlanticVerizon CommunicationsVerizon Communications Inc. is a global broadband and telecommunications company and a component of the Dow Jones Industrial Average...
and Freightways - New Zealand RailTranz RailTranz 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 :...
in 1993 for NZD$410 million with Wisconsin Central and Berkshire PartnersBerkshire PartnersBerkshire Partners, the Boston-based private equity firm, has invested in leading mid-sized companies for over twenty-five years through eight investment funds with aggregate capital of $11 billion. Berkshire has developed specific industry experience in several areas including retailing, consumer...
.
Fay Richwhite went on to invest alongside Wisconsin Central, Berkshire Partners
Berkshire Partners
Berkshire Partners, the Boston-based private equity firm, has invested in leading mid-sized companies for over twenty-five years through eight investment funds with aggregate capital of $11 billion. Berkshire has developed specific industry experience in several areas including retailing, consumer...
and Goldman Sachs
Goldman Sachs
The Goldman Sachs Group, Inc. is an American multinational bulge bracket investment banking and securities firm that engages in global investment banking, securities, investment management, and other financial services primarily with institutional clients...
in the purchase of four of the five United Kingdom national rail companies being privatised in 1996. Forming English, Welsh & Scottish Railway Ltd (EWS)
DB Schenker Rail (UK)
DB Schenker Rail , before 2009 known as English, Welsh and Scottish Railway is a British rail freight company. EWS was established by a consortium led by Wisconsin Central Transportation Corporation in 1996 by acquisition of five of the six freight companies created by the privatisation of British...
, the company ran 95% of British rail freight until it was sold in 2008.
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
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....
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
Winston Peters
Winston Raymond Peters is a New Zealand politician and leader of New Zealand First, a political party he founded in 1993. Peters has had a turbulent political career since entering Parliament in 1978. He served as Minister of Maori Affairs in the Bolger National Party Government before being...
and is commonly referred to as the "Winebox Inquiry
Winebox Inquiry
The Winebox Inquiry was an inquiry undertaken in New Zealand to investigate claims of corruption and incompetence in the Serious Fraud Office and Inland Revenue Department ....
" 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 the New Zealand Securities Commission 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
Sir Michael Fay and David Richwhite backed and led the first three New Zealand challenges for the coveted 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...
sailing trophy in 1987, 1988, 1992. They personally invested over $100 million toward the cause.
Following the 1988 “Big Boat” challenge they briefly won the cup, later losing it in the courts to the San Diego Yacht Squadron. From the foundation laid by Fay and Richwhite New Zealand went on to win the trophy in 1995.
In 1988 the pair led a team to San Francisco for the World One Ton Cup
One Ton Cup
The One Ton Cup is a sailing trophy open to yachts that displace approximately one ton . It has been raced since 1899 and was awarded by Cercle de la Voile de Paris.From 1999 the Cup will be given to the Corel 45 Class World Championship....
which they won in Bruce Farr designed “Propaganda” (KZ 6161).
Fay and Richwhite also funded the Manu Samoa Rugby Team
Samoa 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...
for several years following the team running into financial difficulty. The ownership and control of the team has now been handed back to the Samoa Rugby Union.
Philanthropy
Richwhite has been active in his support for and participation in numerous not-for-profit, cultural and community initiatives, including:- Being a benefactor of the "Play it Strange" Trust for which the David Richwhite Lyric Award was created
- Sponsoring a new high-performance rowing centre at University of Otago
- Founding and sponsoring the Fay Richwhite Corporate triathlon series in New Zealand and Australia
- Patronising New Zealand's exhibition at the Venice Biennale in 2009
- Formerly acting as Chair of the Ellerslie Flower Show
- Gifting a KZ1 (yacht) to the Auckland Maritime Museum
- Donating to Women's Refuge, the Salvation Army, Starship Hospital and Westpac Rescue Helicopter.
Great Mercury Island
In 1978, Fay and Richwhite purchased Great Mercury IslandMercury 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....
, which lies eight kilometres off the east coast of 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...
. The island's northern half is primarily farmland which supports both sheep and beef farming operations. Its southern half has been re-vegetated with pine and native trees. Richwhite’s wife Libby has overseen the planting of over 600,000 native trees on the island as well as a conservation programme to preserve many of the island's rich historic and archaeologically significant Māori Pa
Pa (Maori)
The word pā can refer to any Māori village or settlement, but in traditional use it referred to hillforts fortified with palisades and defensive terraces and also to fortified villages. They first came into being about 1450. They are located mainly in the North Island north of lake Taupo...
and heritage sites.
Groups helping children at risk are often invited to make use of the island’s facilities for their camps. Given the island's isolation, land has also made available for a team of scientists breeding a strain of bee immune to the destructive Varroa
Varroa destructor
Varroa destructor is an external parasitic mite that attacks honey bees Apis cerana and Apis mellifera. The disease caused by the mites is called varroatosis....
mite infestation currently affecting the worldwide bee industry.
On 30 November 2009, Great Mercury Island hosted the first successful launch of Rocket Lab's
Rocket Lab
Rocket Lab Ltd. is a New Zealand firm that designs and fabricates sounding rockets and propulsion systems.The first launch of the Ātea-1 suborbital sounding rocket was scheduled for late 2009. The 6m long rocket weighing 60 kg is designed to carry a 2 kg payload to an altitude of...
suborbital Atea-1 sounding rocket.