Fran O'Sullivan on business

Business analysis and comment from Herald columnist Fran O'Sullivan

Fran O'Sullivan: An accident just waiting to happen

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John Judge has overseen a rapid rebuild of the corporation's balance sheet. Photo / Mark Mitchell
John Judge has overseen a rapid rebuild of the corporation's balance sheet. Photo / Mark Mitchell

ACC whistle-blower Bronwyn Pullar has claimed another scalp with the precipitant resignation of respected businessman John Judge as the corporation's chairman.

When Judge took on the top role he would not have expected to be brought down by a rogue ACC claimant who had sufficient pull with then ACC Minister Nick Smith to persuade him (against all political commonsense) to write letters on ministerial letterhead on her behalf.

Nor would Judge have expected that the ACC claimant would also have had sufficient clout to persuade another fellow director - John McCliskie - to organise a "face-to-face" meeting between herself and ACC management to sort out her long-standing issues with the corporation.

Nor would Judge have expected that an ACC claimant would roll up to the meeting accompanied by a former National Party president.

Nor would Judge have expected that the advocate would open the meeting by dumping a political bombshell that "an email had been sent to Bronwyn ...

and it contained thousands of elements of highly sensitive information". Nor would Judge have expected the claimant to pump the email to friendly journalists, tape his officials ... and so forth.

This is not what Judge would have expected when he took on the ACC role three years ago. But it is exactly what happens when business people and politicians forget their positions in the corporate governance tree.

Sit for a moment in the seats of the two ACC officials who were deputed to meet Pullar last December. When Boag opened the meeting by dropping her bombshell, of course it would be seen as an implicit threat. Why do it otherwise?

The ACC managers should have stopped the meeting at that point and immediately informed CEO Ralph Stewart of the massive privacy breach. That they didn't do this attests to obvious pressure they must have been feeling when they knew a board member was the catalyst for the meeting. But it's too late for the "what might have beens".

Along with four other ACC directors, Judge had been living on borrowed time since his three-year board appointment expired on March 31. The others - McCliskie (who is deputy chairman) Rob Campbell, Murray Hilder and Jane Huria have yet to learn whether ACC Minister Judith Collins will renew their appointments.

Collins had been holding off on making any decisions on ACC reappointments until the conclusion of two other outstanding inquiries into privacy breaches. But it is possible she may move earlier to introduce some new blood to ensure the culture change she urgently wants imposed at the corporation and defuse the "Bronwyn Pullar affair".

In 2009, Smith selected Judge to get ACC's finances back on to a sustainable track. Judge is a hard-nosed - critics say ruthless - businessman who is clearly held in sufficiently high standing by the business community to be selected as the next chair of ANZ-National Bank.

Under Judge's watch, ACC's balance sheet has rapidly been rebuilt. The corporation is legally obligated to ensure the ACC scheme is "fully funded" by 2019 ( holding enough assets to meet its liabilities). As Judge reported to Collins earlier this year, a comprehensive, five-year change programme was agreed to address the financial challenges.

"This change has set ACC on a positive path and led to a significant turnaround in financial performance. Prudent planning and solvency targets have been introduced, and the future of the scheme is looking much more assured than it was two years ago," Judge said.

Judge pointed out the results delivered by the change programme to date have exceeded expectation. The initial actuarial release target, set for 2011, was actually achieved within 12 months. In 2010/11, ACC recorded an operating surplus of $3.5 billion, which enabled the net deficit to be reduced from $10.3 billion to $6.7 billion.

Collins acknowledged Judge's financial contribution yesterday.

But the scandal over the privacy breaches has yet to be lanced.

It won't be long before McCliskie - who is one of Pullar's former bosses, also comes under pressure to leave the ACC board. McCliskie was the ACC director who she asked to intervene on her behalf.

He should never have agreed to meet her. That Collins appointed Paula Rebstock as interim chair - rather than McCliskie - speaks volumes.

ACC CEO Ralph Stewart should not join the corporate scalps. Stewart's only been in the top job for six months and ran a good ship at Axa where he was also highly regarded by his staff.

ACC bosses will be wishing that they had just written Pullar a hefty cheque years ago in full and final settlement of her claim, and got her off their books for good.

But Boag's intervention makes that impossible.

As John Key said, it is impossible to know whether Pullar's tape was in full or edited. What we do know from Boag herself is this.

These extracts from her own email to Collins earlier this year still warrant a full inquiry: "Addressing the issue of the major privacy breach - I am sending you under separate cover an email from Bronwyn enclosing the details of the meeting held in December, at which I was present, where, after years of extensive mishandling of Bronwyn's claim and after she had approached a board member, senior management (Phil Murch and Hans Verbene) met with us to attempt to come to a reasonable settlement on the way forward.

The documents in the email I am forwarding to you represent the objectives Bronwyn had for the meeting, which included recognition that she was unable to work a full time week, but allowed her some space (two years) to get on with trying to re-establish her consultancy business. Bronwyn also asked for the privacy breach to be investigated.

"At that meeting in December Bronwyn advised the ACC managers that a serious breach of privacy had occurred. As she says in her email which follows, it was verbally agreed in that meeting that on agreement on the way forward, Bronwyn would return that document. We walked away from that meeting thinking we had an agreement which Mr Murch would put in writing. When it was received eight days later, it did not reflect our discussions, including the fact that it only allowed her one year to re-establish her business rather than two years, which she did not regard as sufficient.

"You will see in the correspondence attached to the email I am forwarding that while Mr Murch asked for the return of the data, he did not acknowledge that this would be contingent on reaching an agreement acceptable to both parties, which was our understanding."

Pity TV3 did not focus on Boag's written account, which would have added weight to the corporation's own allegations.

- NZ Herald

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