Air war sidelines business knight

Sir Selwyn Cushing's plans for Air New Zealand are being tested, as CARROLL du CHATEAU reports.

Despite the bags under his eyes, Sir Selwyn Cushing looks like a little boy who has been sitting on a secret for a week.

Although, typically, he works patiently through the interview, his fingers play constantly with the folder lying on the oval walnut board table. "Now can we talk about the airline?" And in a burst of well-timed generosity, "I'm going to give you an exclusive."

He takes out two faxes. One from Air New Zealand confirms it has an offer from Qantas and that it has established an independent committee of directors to consider the proposal. A second statement, from Sir Selwyn, advises he has stepped aside from his chairmanships of Air New Zealand and Brierley Investments, but will remain a director.

Then he leans back in his crisp trademark white collar and cuffed shirt, fixing me with his gleaming eyes and waits for the reaction.

Even now, despite his obvious excitement, it is impossible to tell whether Sir Selwyn, who has husbanded Air New Zealand through the most difficult 12 months of its 13 years since privatisation, is reluctant to step aside or plain relieved to get out of the turbulence.

Nor, although he spends a considerable amount of time at BIL's head office in Singapore and enjoys boardroom gossip, will he talk about who put the deal together. Professional to the end, he refuses to comment.

"I normally enjoy this kind of contest, but because of the conflict of interest I have to abstain."

Many would say it was not a moment too soon. Since February 2000, when Air New Zealand, after vetoing a bid by Singapore Airlines to buy the second 50 per cent of Ansett Australia, took 100 per cent ownership itself, the airline has been losing power.

The Ansett acquisition, driven through for what Sir Selwyn insists were important strategic reasons, was expensive. Purchases always are when two bidders are involved, and News Corporation, headed by Rupert Murdoch, one of the world's toughest businessmen, drove a hard bargain.

Worse, the New Zealand and Australian dollars dropped steeply against the greenback, the jet fuel price went into a steep climb, and profits nosedived.

Says one analyst: "It was an ambitious plan and it didn't work because the environment couldn't have been worse.

"They simply didn't have enough equity. But then, hindsight's a wonderful thing. If it had gone the other way, he would've been a hero."

Counters Sir Selwyn with the kind of bite that has driven him to the highest pinnacle of New Zealand corporate life: "There are people who say the board shouldn't have done that.

"They're totally wrong. Market conditions in Australia are highly competitive, there's excess capacity - and one cannot disregard the enormous feeder traffic into the Air New Zealand transtasman and international network."

Spending too much for a strategic asset is unusual for Sir Selwyn. The boy from Hawkes Bay has a reputation for seeing problems well before most. His accountant's training gives a rare ability to flick his eye down a column of numbers and pinpoint problems.

Colleagues describe him as wily, with a social conscience and centre-right politics that never fitted with the Business Roundtable.

In 1998 he was judged Chairman of the Year in Management magazine's first Top 200 Awards.

The judges said: "[He] has the ability to grasp the essential points of complex issues, to cut to the point of a discussion, and to offer solutions that a board and senior management can work to."

Sir Selwyn's family, though not part of Hawkes Bay landed gentry, was highly respected in the Bay.

His father, Cyril, was general manager of Whakatu Freezing Works for 20 years. His son was a bright, intense boy, good at maths and in the top three in his class at Mahora primary school.

Paul Jones, who still lives in Hastings, remembers his highly disciplined classmate disappearing after classes to practise the violin. Both boys sang in the St Matthew's Anglican choir alongside Sir Selwyn's dad.

They were also interested in cricket, but he was better at batting. Mr Jones remembers the young Sir Selwyn playing for Whakatu Mahora and representing Hawkes Bay.

"Selwyn's a good batter. They could never get him out," he laughs. "But he didn't score a lot of runs either."

(As Sir Selwyn pointed out, when he was 47 and playing grade cricket, he got into rhythm and had a batting average of 166.5.)

Back in his boyhood came Hastings High and, at 16, a job with Stan Esam at his Hastings accountancy firm, Corbin and Esam.

In those days Hastings kids got their ACA accountancy exams at night school and through correspondence. And within three years, making him the youngest to qualify in the country, he not only had the ACA - he was also teaching those coming up behind him at night school.

At 23, he was a partner. In another seven the firm's name changed to Esam and Cushing.

"He was a bloody good accountant," says David Grieve, who worked with Sir Selwyn for four years. "The young guy responsible for driving the firm. He was a bloody good boss because he taught you to do the right thing only. The firm had a very good reputation; we never took any shortcuts."

He obviously knew a good deal when he saw one.

Depending on who is telling the story, back in the 70s Ron Brierley either asked Sir Selwyn's advice about taking over a Hawkes Bay asparagus company, or he singled it out and approached Mr Brierley. Either way, Mr Brierley liked his judgment and the pair became friends.

Sir Selwyn had two stints on the board of BIL. His first 18 years finished when he "retired" in 1993. But when the company ran into trouble in 1998, his old friend asked him to return as executive chairman.

Says Sir Ron, "On November 10th, I chaired the meeting when Roger Douglas was outgoing chairman and Sir Selwyn was incoming. He wasn't able to take responsibility for all that happened. The task fell to me."

Sir Selwyn, who was prevented from becoming chief executive because of his executive chairmanship of ECNZ - "which contracted me to the Government until March 1999"- remembers returning to a worldwide conglomerate with excessive debt from 26 banks.

"Reassembling the BIL balance sheet has been a tortuous process. It's taken longer than I would've hoped, but finally we appear to have achieved a sound balance sheet with very little debt."

Despite his humour, charm and ability to tell a story, he and the much quieter Sir Ron are very similar. Both enjoy poring over company balance sheets, love music and cricket and have a standing annual date for a New Zealand test match at Eden Park. They respect each other's talents.

"I had 40 years in BIL and he was one of a number of people who were special," says Sir Ron. "He's been a tremendous colleague. To have mutual admiration over these 30 years - not many people can claim that.

It has not been plain sailing personally either. In January 1999, 29 days after being awarded his knighthood in the New Year honours, Sir Selwyn was whipped into Mercy hospital for a heart bypass operation.

Many say that his long career, keeping him in Auckland, Australia and Singapore when he openly misses Hawkes Bay, is a result of a traumatic private life.

The death of his wife in 1986 was followed in 1995 by that of one of his sons. He has pushed aside his grief with balance sheets and his violin, which he still plays late at night.

Friends and colleagues who knew him when he was happily married and back in the Bay, mull over the same wistful question: "Why is he still out there, knocking himself out on two of the biggest, and most difficult, chairmanships in New Zealand at 64 years of age?"

Certainly his heart still lies in Hawkes Bay. The address on his CV is in Hastings. Although he has a long-term partner, Glennis Webber, his marital status is listed as "widower."

His company, Esam, Cushing and Co, Stockbrokers and Financial Advisers, is in the Hastings phone book and, with his 33-year-old investment banker son David, he owns 38 per cent of Hawkes Bay stock and station agency Williams and Kettle.

Says Sir Selwyn with satisfaction, the company - undoubtedly run on his tried and trusted formula - is highly profitable.

Not so for Air New Zealand, which under Sir Selwyn's chairmanship has fallen in value ("A" shares from $2.02 to $1.09, "B" shares from $2.52 to $1.51, though a major rights issue was made at $1.50 last year) during his three years at the helm.

Some BIL shareholders are critical too.

"Why, when he took over as chairman of BIL three years ago, did he immediately organise 15 million options for himself?" says one. "We all know how those Brierley guys took money out of the company. But [that move] just cost so much in shareholder value."

Not that the options have done Sir Selwyn much good. The NBR Rich List 2000, says he is worth $38 million - only $3 million more than in 1997, despite his huge efforts.

Today, convinced that his strategy for both companies was the best way to go and focused firmly on Air New Zealand, he is looking to the future. Right now I bet he's sitting up there in BIL's elegant 26th-floor office on Queen St, listening to the various permutations of the Qantas offer, eyes gleaming like a kid.

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