ING makes $398m payment to frozen fund investors
ING, yesterday, paid out $398 million to investors in the frozen Diversified Yield Fund and Regular Income Fund yesterday who accepted the fund manager's offer, and is sending out letters confirming the payment over the next few days.
Thursday, August 20th 2009, 10:57AM 
4 Comments
by Paul McBeth
Around 98.5% of investors accepted ING's offer in July of 60 cents in the dollar for the DYF and 62 cents in the RIF, and 85% took up the five-year option which will see the proceeds of those unit sales invested in an ANZ cash account for five years at a fixed interest rate of 8.30%.
Accepting the offer required investors to waive their right to legal action.
"We are pleased to have been able to meet our commitment to help investors affected by the global financial crisis, in an environment where many others have not had the same opportunity," said head of retail distribution Trisha Edmonds in a letter to financial advisers.
"This is the last step in what has been a long process and we are delighted to be able to make payment ahead of schedule."
The funds, which have around 14,000 investors, were frozen in March last year after they suffered heavy losses from their exposure to collateralised debt obligations. The offer from ING became the subject of political interference when MPs called for an extension to allow investors to lay complaints with the Banking Ombudsman over the marketing of the investment by ANZ Bank.
Edmonds said a large percentage of the 220 investors who didn't accept the offer live overseas or had been unable to be located to provide them with details of the offer.
The Commerce Commission is currently investigating the sale of the products to see whether they breached the Fair Trading Act, which it expects to complete near the end of the year.
Paul is a staff writer for Good Returns based in Wellington.
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Comments from our readers
The way both ING, like ANZ (its half owner), use language deprives it of any meaning at all. This comment reads as if the worldwide credit crunch was the cause of the DYF/RIF scandal.
The truth is that much of the cash was thrown into junk quality CDOs.
As much was admitted by ING fund manager David Jansen at a meeting with independent advisers in Auckland.
This is why both funds, marketed as safe, performed worse than speculative funds over a similar period, worse than the stock exchange and far worse than comparable conservative funds.
The “delight” Edmonds refers to has nothing to do with making any payments. It is ING expressing relief because it thinks the long publicity campaign against it is over. Well, it isn’t. DYF/RIF investors, of whom I am one, will continue to make life as uncomfortable as possible for both ING and ANZ. The aim remains to force a product recall.
ING fought tooth-and-nail to pay almost nothing to investors after misleading independent investors about the funds. ANZ mis-sold the funds after plundering the savings accounts and term deposits of financially naïve conservative investors.
It was only after a long campaign of sustained pressure that there has been a payout of any size at all.
In any other field of activity, the fraud squad would have been called in to question ING and ANZ executives. It hasn’t, because banks apparently have the freedom to throw around other people’s money as they want to.
The Securities Commission and the Commerce Commission have yet to make their findings public. This grubby episode in New Zealand fund management history still has some way to run.
I have a file of press statements, announcements from both banks, as well as emails from bank officials, going back over the past few years. The file is a dossier of lies, disinformation and obfuscation. It will make interesting reading one day. That day is not quite here, but it is coming.
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