The New Zealand Superannuation Fund (NZS) has claimed a small victory in its battle to recover the approximately $200 million lost in a soured loan deal with a now-defunct Portuguese bank.
Along with 11 other investors – including several Caribbean-based investment funds, Luxembourg-domiciled entities, an Andorran bank and a Danish pension fund – NZS sued in February 2015 to recover its share of an almost US$800 million loan issued to now-bankrupt Banco Espírito Santo (BES) via Oak Finance, a Goldman Sachs-engineered vehicle.
The joint litigants argued the Portuguese central bank illegally transferred the Oak debt to the BES ‘bad bank’ mop-up entity rather than to the successor Novo Banco, which took on responsibility for the BES liabilities.
Under the debt reshuffle, the Oak loan was pushed back down the BES creditor queue to the never-never end.
In a series of preliminary legal skirmishes the score was locked at one-all with NZS et al winning initial court backing to have the case heard in the UK – a decision that was later overturned in the UK Court of Appeal in favour of Novo Banco’s claim for the proceedings to unfurl only in Portugal.
Last week, however, the NZS party won the right to counter-appeal.
“We have now received leave to appeal to the English Supreme Court and are coordinating with the other Oak Finance investors in this regard,” an NZS spokesperson said. “A date for the hearing has not yet been set, but we do not expect it to be before the first quarter of 2018.
“We are also continuing to pursue our related legal actions in Portugal.”
At the time of original court action, Adrian Orr, NZS chief, said the now $34.6 billion fund had not entered “these legal proceedings lightly and have made the decision only after exhausting all other options”.
“While bond failures are not uncommon in the investment world, the circumstances of this case are highly unusual,” Orr said in the February 2015 statement. “First, we have been treated unequally and unlawfully. Second, our default insurance appears to have been inadvertently rendered ineffective due to the retrospective decision. We have a very strong legal case and a high level of confidence of success.”
Last week the budget also confirmed the government was on track to resume contributions to the NZS, more than 10 years after stopping funds flow in the wake of the global financial crisis.
Treasury also released revised New Zealand Superannuation pension liability projections following the budget incorporating “NZS Fund capital contributions based upon the policy to increase the age of eligibility for NZS to 67 years, with contributions resuming in 2020/21”.