John Key – Born Again Good Guy Or Still A Bankster?

JOHN KEY FILE

John Key And US Federal Reserve

From his own parliamentary Biographies

“John launched his investment banking career in New Zealand in the mid 80s. After 10 years in the New Zealand market he headed offshore, working in Singapore, London and Sydney for US investment banking giant Merrill Lynch. During that time he was in charge of a number of business units including global foreign exchange and European bond and derivative trading. In 1999 John was invited to join the Foreign Exchange Committee of the Federal Reserve Bank of NY and on two occasions undertook management studies at Harvard University in Boston.”
In 2001, he headed back to New Zealand to fulfill a long held ambition to stand for Parliament for the National Party. He won the Helensville seat in 2002 with a majority of 1589. John has risen through the ranks since then, becoming deputy finance spokesman and then finance spokesman, rising to number 7 prior to the 2005 election. At the 2005 election he again won the Helensville seat, this time with a majority of 12,778. He continued to be the Party’s finance spokesman and and was ranked at number 4 before being elected Leader on 27 November 2006.
In the November General Election 2008, John secured his position as MP for Helensville with a 18,562 vote majority.

http://www.beehive.govt.nz/minister/john+key?bio=1

How The Doors Were Opened-

Ambush in the West

3:00PM Saturday Jul 26, 2008
By Eugene Bingham
For all his tens of millions, John Key’s initial steps on the New Zealand political stage were humble ones. His first campaign manager was a West Auckland nurse and their headquarters was her dining room table.
Ambition had driven him to enter politics but having made the decision to leave his corporate career, he faced the grind of earning a seat in Parliament. So impressed by his credentials were National Party officials that Key could have pressed for a list spot. But he was more shrewd than that.
In the 2002 election, the tide was definitely going out on National and there were no guarantees anyone on the list would make it. And, besides, think how it would have looked: a multi-millionaire swoops back into the country from overseas and swans into Parliament. He was smarter than that.
He was prepared to fight. And what a fight he had. The battle to win the National candidacy for the Helensville electorate has gone down as one of the messiest scraps in the party’s history. In the process, long-serving MP Brian Neeson was cast aside, loyal party members felt they were ridden over roughshod, and there were accusations of rule-breaking.
What really happened when Key won the West?
By late 2001, Key had made his decision to run for Parliament; it was just a question of how. He was still working at investment bank Merrill Lynch, but had been talking to National officials about wanting to have a serious tilt at entering Parliament in the 2002 elections.
One of the people he had regularly spoken to was northern regional chairman Scott Simpson, whom Key would ring to talk through his options. “He’d ring on the cellphone and say, ‘Hi, it’s John here. I just want to run something past you,’ and then he would talk non-stop for the next 10 or 15 minutes and just be going through every possible permutation that existed,” says Simpson.
“It wasn’t until the second or third call I realised, ‘He doesn’t actually want any input from me; I was just a sounding board’.”
Key ruled out taking a list position – a wise decision, given what happened: Allan Peachey and Guy Salmon were among the high-profile list hopefuls who didn’t make it in 2002 – and so turned to what seat he might contest.
Simpson says he briefly considered looking outside of Auckland but for family reasons decided against that. Among the seats Key looked at was Tamaki, held by sitting MP Clem Simich. Party officials convinced him it wasn’t a wise move because Simich had a strong electorate network.
In October 2001, Key flew into Auckland from Sydney for a meeting which would determine his path. Simpson had suggested to Beverley Revell, a registered nurse who was the deputy regional chair and Neeson’s former electorate chairwoman, that she meet Key.
The Helensville electorate had been created through boundary changes to the adjacent Waitakere seat, where Neeson was MP. The new seat was a more blue-ribbon patch. Revell had been Neeson’s electorate chairwoman, but the pair had fallen out several months earlier over internal party matters.
Revell and Key met at a cafe in an Orakei garden centre.
“We had a bit of a discussion and he expressed his desire to become involved in politics and to return to New Zealand,” recalls Revell. She had seen Key speak at a party conference before but this was her first face-to-face meeting with him. She left impressed with what she believed was his sincerity and down-to-earth approach.
He certainly can’t have tried to overwhelm her with his wealth at the meeting: Revell came home and told her husband she thought Key worked in advertising. It wasn’t until she said that he worked for Merrill Lynch that her husband told her how much Key was probably worth.
Revell went straight from the meeting to the party’s northern regional office and told them that if there was going to be a challenge in Helensville, she wanted Key to run. “I really thought, ‘If we are going to make changes’ – and there had already been discussions around candidates – ‘I really like John Key’.
“It’s not easy setting up a challenge against a sitting MP. There has to be an awful lot of planning, there’s a lot of politics involved. But I knew that there was a push from higher up [in the party] to have some changes. I knew West Auckland was likely.
“If there was, I didn’t really want to be involved in something that was going to go through the motions. I wanted it to be a serious challenge with a serious contender.”
In Key, Revell believed she had found her contender.
She took control of running his campaign, delaying confirmation of his candidacy until the last minute to keep Neeson guessing. If nothing else, it was going to be a tactical fight.
For Key’s part, this was the realisation of four years of effort. He had first made contact with National in 1998, thanks to his sister, Liz Cave. She worked as a receptionist at Christchurch firm Lane Walker Rudkin, where then-National Party president John Slater used to make sales calls for his textile business. One day, Cave mentioned to Slater that her brother was interested in returning to New Zealand. Slater gave her his number and told her to get Key to ring, which he duly did.
Slater invited Key to a traditional New Year’s brunch he held at his Pauanui holiday home in the first days of 1999. Key made an immediate impression, arriving with a bottle of Stonyridge Larose (recommended price $200). Slater still has the bottle: “I think we might crack it open on election night,” he says.
About 30 party people were there, including officials and some MPs, Maurice Williamson, Katherine O’Regan and Warren Kyd among them. Slater was immediately impressed with him, admiring his personality, and his lack of airs and graces, and finding him easy to get along with.
Slater enrolled Key in the Epsom electorate (because he owned a property in St Stephens Ave, Parnell) after Key contributed $1000 as a membership sub to
the branch. “And the rest is history,” says Slater.
The party was keen on him running in 1999 to fill stocks depleted by the retirements of several finance heavyweights, including Birch.
“What I was doing was setting the scene for this guy to emerge and it was disappointing he didn’t feature in 1999,” says Slater. Key told the party he was unable to unshackle himself from his commitments to Merrill Lynch, a point which Slater admired. “He was a man prepared to stick to his word.”
With 1999 not working out, the party was still keen to court this young talent. A meeting was arranged with former Prime Minister Jenny Shipley, and Key visited the Opposition office in Parliament Buildings that he would one day occupy himself.
In May 2001, Key made his first speech on the political stage, addressing a regional conference at Auckland’s Waipuna Lodge before a crowd of about 250 people. Slater liked the content (Key spoke about New Zealand’s place in the international scene), but felt the delivery was unpolished. “His really true character didn’t come through,” says Slater.
At this point, Slater himself got the shove, losing a ding-dong internal party presidential battle to the PR consultant Michelle Boag, who made it her mission to clean out the “dead-wood”.
One of her targets was Neeson. Over the years, Neeson has declined to talk about being dumped by his own party, but he did agree to speak for this project. He has preferred to move on in his life and says he is not bitter about what happened. He says he holds nothing personally against Key and wishes him well. But he believes he was targeted by the party hierarchy and Key was a pawn in a much larger game.
Neeson became aware that some people from within his electorate had turned against him and that he was being lined up to be bowled. The boundary changes meant Helensville would be a very “blue blood” seat and people inside the party whom Neeson didn’t see eye-to-eye with were keen that he not get his hands on it.
“They were saying, ‘This is a blue seat; this isn’t a Neeson seat,” he says.
Anticipating the ambush, he and his wife Vanessa worked hard to build up the membership to secure as many delegates as they could from the electorate. Under party rules, 60 delegates were to be chosen to select the candidate. If an electorate had 900 members on its books eligible to be delegates, the 60 delegates would all be chosen from the electorate’s ranks. If it had less than 900, it was only entitled to a proportion of the delegates.
In Helensville’s case, the Neesons’ efforts meant the electorate was entitled to 42 delegates.
Under those circumstances, the regional chairperson was responsible for arranging “top-ups”. Neeson’s supporters claim they were told that the party was hand-picking the “top-ups”, allegedly a breach of party rules at the time which stated: “Such additional appointees shall be party members within the electorate concerned where possible but may be drawn from outside the electorate.”
Of the “top-ups” six came from within the electorate, and 12 were from outside.
The selection of the delegates was not the only bit of skulduggery alleged by Neeson’s supporters. On the day of the candidate selection meeting on March 17, 2002, it is alleged that the start of the meeting was delayed by more than 20 minutes so that a delegate known to be supportive of Key could make it for the vote; normally, the doors to the meeting were locked after 10 minutes.
Simpson has never publicly dealt with the allegations, but when interviewed for this project answered them.
As to the charge that he hand-picked the top-ups, he said: “They were chosen by me personally and they were people I felt had the interests of the party at heart. I recall inviting a number of electorate chairs from neighbouring electorates, party officers from around the region. Those types of people and that’s not uncommon.”
So they were hand-picked? “Well, that’s what the rule required me to do actually. The rule doesn’t provide for any other process.”
Regarding the door being left open, he said: “I recall that there was one delegate who had phoned 10 or 15 minutes before arrival and said they had been delayed and would be late and was that a problem. We got around that by delaying the meeting’s start by five minutes, then I did an introduction, then I saw the delegate arrive and then proceeded in the normal way.”
In the event, Key won the ballot by 32-28. He had secured the support of not only the “hand-picked” delegates but had turned enough of the existing delegates too.
Revell says Key achieved this through sheer hard work, contacting every one of the delegates and meeting all of those who were interested in seeing him. Some he saw more than once. “We didn’t have cottage meetings,” says Revell. “He met each and every one of them individually.”
Key’s approach even impressed the man Neeson had asked to replace Revell as his electorate chairperson. Mate Milich, who had recently sold his business and had a long association with the party, came in to help out Neeson. He remains deeply unimpressed with some of the tactics used by party hierarchy to try to engineer the process. Party rules were breached through the selection process, he says, and he often fought to make sure the book was followed.
Sometimes, though, he deferred because it was not worth the argument. The late start to the selection meeting was an example. “The meeting was supposed to kick-off at 7.30 or 8 o’clock and it was held open,” says Milich.
“He was held up for some reason and he was a town ring-i
n. I could have turned around and said, ‘He wasn’t present. Too bad’, and that would have caused an argument. At that point, though, it would have been very embarrassing for a lot of people to fight over it – you have 60 delegates there, plus MPs, plus dignitaries. It wouldn’t have been a good look.”
Milich remains impressed by Key. “Any guy who has come from a state house, has educated himself and made money has got to have a brain. John is a very clever man and has the memory of an elephant.”
After winning the candidacy, Key asked Milich to stay on as chairman, an invitation he turned down because he and his wife were heading off overseas for an extended holiday. But before Milich left, he told Key he would help him out any way he could.
“You don’t know where to get billboards from, do you?” Key asked.
“Yeah, we’ll make them. Come around,” said Milich.
For a man who, by his own admission, doesn’t have a handyman bone in his body, it was a galling proposition for Key.
Nevertheless, Key turned up with his son Max and spent the day with Milich, hammering and nailing together billboard frames.
“I had a lot of respect for him after that day,” says Milich.
http://www.nzherald.co.nz/john-key-the-unauthorised-biography/news/article.cfm?c_id=1502247&objectid=10523287&pnum=0

John Key – The Unauthorised Biography

Weekend Herald Sat July 19 2008

Into the big time
It was 1995. Again Key blasted through the ranks. His confidence was legendary. London-based senior executive Steve Bellotti visited, and when he asked what the new recruit thought of the company’s FX performance, he was direct. “It sucks!”
Bellotti, a fast-talking Australian from Gympie, near Noosa, said: “If you’re so clever I’ll send you up to head office in London, and if you don’t make it in 12 months, I’ll sack you.”
Key shot back: “If I don’t make it in 11 months, I’ll quit.”
Bellotti made him global head of foreign exchange and he revolutionised the “blue blood” investment banking sector. “There was this massive opportunity to cross-sell the firm,” says Key.
“We’d go to these fund managers and we’d talk to them about equities, but we wouldn’t necessarily leverage foreign exchange – and when we did, they’d say our capability wasn’t that good.
“So I wandered up to London and said, ‘we’re going to go interbank FX – make prices to the other banks’. Morgan Stanley, Goldman Sachs and Merrill Lynch, the blue-blood investment banks, didn’t do that,” he explains. “We actually took on the big banks, Citibank, Chase, then we went and hired their staff and went to their clients and told them ‘look, we’ve got all those same capabilities as Citibank in FX and options. Plus we had this beautiful thing going because we were the first to supply margin trading to big hedge funds. We had the capability to cross-sell them several products using one bit of margin.”
Remembers Bellotti: “I brought him to London and he shot the lights out there too. Within three to four years Merrill Lynch, London, was regarded as one of the premier businesses.”
Key explains: “I had a whole lot of people working for me who were at the cutting edge of delivering quite complex and new and innovative products. They tended to either be a new product or into a new market, usually the emerging markets, Russia, Brazil, Argentina. I wasn’t the guy sitting there dreaming it all up, but I was the guy who was responsible for those people.” Did he foresee the problems which resulted in the sub-prime crisis? “Was it hard to predict? Not really.”
The products which underpinned the sub-prime boom – then bust – were hatched in 2004-2005, long after Key had left Merrill. Indeed, he says when he went back to London in 2007 he was “horrified” at the level of risk Merrill was running. “It was enormous and I just didn’t think that enough had changed to warrant that level of risk.”
Back in the late 1990s Key was in his element, working at the centre of the universe for FX. He presided over around 140 dealers trading billions of dollars a day. The Asian markets came in in the morning and New York in the afternoon. “Within two years we went from being 43 in euromoney to number three,” Key says.
“He never mucked up,” says Bellotti. “Although they lost money, as you do, he never panicked, never stressed out, just did his job.”
Geoff Massam, a New Zealander then running the IT part of Merrill Lynch’s FX business, now with Deutsche Bank in Connecticut, remembers how Key would be on the phone to the Governor of the Reserve Bank, Don Brash: “Though he wouldn’t do it in a name-dropping way – he was talking to people like that all the time.”
Massam believes Key’s knowledge of the global economy would give him a “huge advantage” in running the country.
Although a “great client person” responsible for serving the people who ran the world’s biggest pension funds, Key, who worked 12-14 hour days, did not subscribe to the lap-dancing, carousing, money trader stereotype. “We didn’t do that, condone that,” says Bellotti. “It was all just good clean fun. Sure we’d go out drinking with clients, go on trips with them, skiing to Verbier and St Moritz – but apart from that it wasn’t our thing.”…………….Bellotti, like many other middle-aged former traders, now travels the world investing his money – in his case in luxury resort complexes. He considers Key a world-beater.
“His career’s a good lesson in life when it comes to risk management. Most people don’t know what risk versus reward – or return – is about. John does. One weighs up the odds, balances the situation, measures the people, balances the evidence. John Key totally understands his environment and the outcomes. He transcends the market, geography and people. This guy is going to put New Zealand on the world stage.”
Bellotti remembers back to one winter’s day, standing in the rain outside the office in the 3pm gloom of Ropemaker St, near Liverpool Street Station, and talking to Key: “There must be more to life than this?”
By 2001 Key was homesick. It was time for the next step of the plan: He flew to New York to see their ultimate boss, G. Kelly Martin, and resigned. “Clearly John you’re having a mid-life crisis, let’s talk this through for God’s sakes,” said Martin, who has extricated himself from a business dinner in San Francisco to talk about his former employee. “John faced off some of the biggest clients in the world, including governments,” he says. “He worked with the Government of Singapore, the Central Bank of China, some of the big Middle Eastern pension funds, Shell and US Fidelity and Capital. He had a very good handle on a variety of financial products: one of the most senior client people we had.”

But Key was adamant. “No, I want to go. That’s what I want to do.”
“Was I upset to lose him? Oh no,” says Martin. “Talented people want to do interesting things and it’s kind of hard to hold them back.”
But why send him to manage debt markets in Australia? Was he fired?
“No, no, no,” says Martin. “He was specifically asked by me to go down to Sydney and give Merrill Lynch another year and a half and help me find out what the strategy in Australia should be. He came up with some very good insights, helped us focus on certain areas, the right clients, and set up in a way that made a lot of sense.”
“We joke with each other, we don’t know what training we got at Merrill Lynch but we seem able to adapt to make an impact in other areas. But I think if you bring the basics: risk/reward; investment/return you can take those skills to other activities.”
That same group at Merrill Lynch are now scattered over the world. One is an assistant secretary of defence in Asia, 25 are CEOs of different industries. Martin himself, now 49, is CEO and president of Dublin-based Elan, the largest biotech company in Europe developing drugs to fight multiple sclerosis and Alzheimers.
“And then there’s John who’s a very special and unique guy,” says Martin.
“A lot of people have plans but very few execute them. John did.”

Key chases luck o’ the Irish 4:59AM Wednesday Jul 20, 2005
By Fran O’Sullivan National MP John Key gets a gleam in his eye when he starts talking about New Zealand becoming the “Jersey of the South Pacific”. “Why not have an offshore banking industry based here?” he asks.
“In the right conditions you could attract 200 banks to register here – each with a CEO and staff. You could attract insurance companies. Bring back lots of Kiwi accountants and lawyers. Single out clusters – such as high-class yachts – or other special sectors as the Irish did.”
Key is clearly on a roll as he lists the options New Zealand could explore if it decided to abandon outdated ideology and take a more pragmatic approach to growing the economy.
The former investment banker knows what he is talking about.
As head of global foreign exchange for investment giant Merrill Lynch he shifted a considerable amount of his business to Ireland in the mid-1990s to take advantage of a 10 per cent tax rate for foreign investors.
The investment was a runaway success.
“We transferred across the aircraft leasing business, the complex interest rates derivatives business, the entire back office for global foreign exchange and a huge chunk of private clients’ business,” says Key.
By the time he left Europe to head home and stand for the 2001 election as a National candidate, Merrill Lynch had more than 400 staff in Dublin. It now has 700.
It was also paying the equivalent of about $250 million a year to the Irish exchequer for tax and indirectly propping up a swag of top-class Dublin restaurants and bars as its young money-men lived the life of Reilly.
The Merrill Lynch story was writ large across the economy by a raft of other big-name financial investors, and US computer and pharmaceutical firms, which ploughed investment into Ireland.
The example of how the Irish transformed their economy into one of Europe’s pre-eminent investment destinations and lifted per capita GDP has stayed in Key’s mind.
But as a former money-man, he is also interested in how Jersey built its economy on the back of offshore trusts.
And how Taiwan poured money into its existing industries through increased research and development, singling out particular sectors, such as nanotechnology or cellphone technology, to differentiate its economy.
Key believes too much of New Zealand’s foreign investment has been based on investment in existing businesses – not on completely new ventures.
“From New Zealand’s perspective there is the opportunity, if we wish to consider it, of saying how can we explore and grow new industries.”
If National wins the election Key will be Minister of Finance. Already he is planning a feasibility study to see if some of Ireland’s measures can be adopted here to fuel an economic transformation.
“Why not look at the success lessons from other small island economies?” he asks.
The Irish model is perhaps more easily understood here than the Jersey model, with its whiff of tax-haven activities. In post-Winebox days, this might get up the nose of New Zealand First Leader Winston Peters – a potential National coalition partner. Clearly Key’s proposals are well ahead the ideas of many in his party who are still locked into the 1980s ideology of neutral tax regimes.
Or even those of his own leader, Don Brash, who retains a decidedly Presbyterian approach to meddling with the economic levers. His is basically an agnostic approach when it comes to playing with the country’s balance sheet to obtain particular outcomes.
Key’s point is that all options should at least be explored.
He claims the current Government is acting as an obstacle to business and needs to be more user-friendly.
Again drawing on the Irish model, he tells how the Industrial Development Agency “guys” used to attend Merrill board meetings and talk through issues affecting the business. The agency would come up with ideas and adjust rules to help the company – “as long as it was not intended to thwart the opposition”.
“It was the complete opposite to the way we operate in New Zealand at moment,” he says.
“The government sector was much more interactive, much more user-friendly, much more industry-based and less focused on grants.”
He dismisses claims that Ireland’s success was based on the republic’s ready access to European structural subsidies (“they occurred well before Ireland took off”).
The corporate tax rate and the huge investment in educational achievement were major factors, he says.
On top of that, Ireland’s investment in a national broadband service to aid technical investment was a standout factor.
“If you get the framework of the economy right the market will sort it out.”
Key will soon get a chance to test his ideas as the election gets past the phony stage. National will release its tax cuts package early on in the campaign. Debate will inevitably focus on the size and affordability of the package. But the initial tax cuts will not be radical.
Key has no plans to increase GST to 15 per cent (although he can quickly parrot off the numbers) to offset major personal tax cuts as Labour did in the 1980s. That would also involve adjusting benefit rates to offset the increased cost of consumption.
But it is apparent that Key believes there is plenty of room for a series of cuts, given the size of the Labour Government’s spending pledges over the next three years.
Prime Minister Helen Clark and Finance Minister Michael Cullen will soon put their record in front of voters and campaign for a third term in Government based on their experienced handling of the economy.
“Clark and Cullen” – as the Prime Minister often says – have presided over a golden growth period.
But opinion polls indicate voter disenchantment with Labour’s old firm. Debate is bound to get nasty as Cullen, in particular, tries to portray Key as an inexperienced politician who is prepared to buy off voters with tax cuts that a contracting economy cannot afford.
In political terms both Key and Brash are relative novices. They have been in Parliament for a mere term, compared with the Labour firm’s eight terms.
But voters should be able to look past their relative political inexperience to their huge “real-world” experiences, as Merrill Lynch operative and a former New Zealand Reserve Bank governor.
In Key’s case he can also point to the invitation he received in 1999 to join the Foreign Exchange Committee of the Federal Reserve Bank of New York as further evidence of his economic management credentials.
Game on.

John Key Says He Should Be Held To Account For Global Debt Crisis
Willy Jackson and John Tamahere interveiwed John Key on afternoon of 5 Nov 2008. Here is an answer given by John Key re what caused the credit crisis. It should be remembered that at about this time in the election campaign he was batting away questions from Labour in regard to his career at Merril Lynch 7 years ago as being that long ago there is no way he could be tied to having any contribution to the current Credit Crisis;
Caller Matty asked John Key what he thought got the world into this position(Credit Crisis) John Key replied;
“Relatively quickly, you had a massive expansion of credit over the last decade or two, so basically the banks have gone and leant miles of money engaged in very risky behaviour, they have done it to to much of an extreme and whats happened is that eventually the chickens have come home to roost and its all imploded and yup, you know Wall St its got to take rensponsibility for its own excesses and its got it wrong, the good news is from New Zealands point of view is our banks haven’t really engaged in that kind of behaviour and dont have exposure to the kind of counter parties that fell over, but unfortunately Mum and Dad owe a lot of money, not the government, the governments not at all indebted really, but Mum and Dad are and whats happened is that liquidity to fund their borrowing is drying up”.
John Tamahere asks;
“Ok, oh, exposure to the Australian banks”.
John Key replied;
“Yeh, look I tell you the thing with the Australian banks is, it, um we need to, ah in one sense weve got a bit of strength funnily enough, I know people, I mean I support KiwiBank, we are not selling it, we never going to sell it, but, but I do support the fact that because the Australian banks have quite a big part of our market, because they a bigger, theyre just bigger organisations thay can actually weather these storms a little bit, theres some upsides, I know a lot of people dont like them, but there are some upsides to having them in our economy. Secondly, we just got to make sure that, that wholesale guarantee which allows the New Zealand subsidiaries in their own name to be able to raise capital to be able to operate and weve got work with, not because we are trying bailout the banks, no one should be under that illusion, but if they cant borrow they cant lend and our economy is going into depression if that is the case.”