KEY POINTS:
Blind Freddie could have seen the Vector bust-up coming once the controlling trust decided to get down and dirty (again) in the boardroom.
But last week's tumultuous events - which saw three of New Zealand's most prominent directors walk - is only the first episode in what threatens
to be one of this country's longest-running corporate soap operas. Unless, that is, the Government clears the way for the Auckland Energy Consumer Trust (the political snakepit that has a 75.1 per cent stake in Vector) to be disbanded and the company run in a way that befits New Zealand's largest line company.
Anyone who thinks the fact that three directors so publicly threw their rattles out of the cot is a victory for the politically appointed trust and Vector chairman Michael Stiassny should read on.
Sack Stiassny and crawl over broken glass to get Tony Gibbs, John Goulter and Greg Muir to come back as directors of Vector. That, in essence, is the message former Vector director Brian Plimmer has sent by email to Warren Kyd, the chairman of the trust.
"Stiassny should be asked to step aside in the best interests of the company," reads Plimmer's email. It is too important to the company's future for the status quo to remain. The trio should be reappointed smartly.
Other former directors are coming out of the woodwork.
"It's a complete insanity," says Wayne Brown, a former Vector chairman.
Others, speaking anonymously, are caustic about what is turning into a corporate governance debacle. Kyd professed astonishment at news that Gibbs, Goulter and Muir had walked. But Plimmer, who was "retired" from Vector after the trust decided to appoint two of its own members, Karen Sherry and Shale Chambers, as directors just months ago, believes the debacle should not have come as a surprise to him.
Plimmer disclosed that he and another former director, Don McLaren, had met Kyd to tell him the facts of life about working with Stiassny.
Plimmer was not surprised at the latest imbroglio. Lest his call be considered personal, it's important to state here that he was upfront about the $10,000 in fees Vector still owes him for due diligence work undertaken at the time of the NGC takeover. Stiassny isn't paying yet.
Kyd appears to be taking seriously the many messages he has received from commercial players such as NZX CEO Mark Weldon. He has asked another former director, Wayne Boyd, to advise him on the best governance relationships.
Boyd served under Stiassny but resigned his directorship when he took on Telecom's chairmanship. The former chairman of the year is in the camp that believes a new governance model needs to be designed, especially as further hybrid ownership scenarios will develop as the Government partially privatises state-owned enterprise subsidiaries.
The fracas is causing a lot of angst in Government circles and Energy Minister David Parker is coming in for criticism for not trying to dissuade the trust from appointing Sherry and Chambers after a ministerial inquiry report advised against such appointments.
The trust, which sought an NZX exemption, believes the appointments were necessary to get information flowing freely.
Gibbs is calling for the trust to be disbanded and the shares distributed to its beneficiaries. Stiassny, Chambers and Sherry will no doubt read that as proof that Gibbs, Goulter and Muir were all along intent upon full privatisation of the company.
But Gibbs is just one of many previous Vector directors who believe the trust's interference in the company's affairs constitutes a major commercial hazard, and control should be vested directly in the underlying owners.
Gibbs suggests the $1.9 billion stake could be broken up and distributed to the 290,000 "income" beneficiaries (electricity consumers in the old Auckland City Council, Manukau Council and Papakura District Council) who receive annual dividends from the trust, and the three councils that are the trusts' capital beneficiaries and which will inherit its assets when it expires after 75 years.
He says he has no particular preference as to whether consumers should be paid the value of their shares, which could be a $4000-$8000 one-off payment, or whether shares should be distributed.
Other former directors also believe Vector's particular boardroom combination of business people and politicians is unsustainable and have criticised Parker for giving his blessing to the appointment of Sherry and Chambers.
But investigations suggest the boardroom fracas does not begin and end with Stiassny's chairmanship.
The strong personalities of the departing trio - Gibbs (executive chairman of Guinness Peat Group), John Goulter (former Auckland Airport CEO and director of several Government-related entities) and Greg Muir (executive chairman of Pumpkin Patch) - should have been more than a match for Stiassny's self-proclaimed "black and white" style.
Normally they would be. But after Sherry's arrival they found themselves out of the loop on hot issues such as Vector's stoush with the Commerce Commission,.
Inquiries suggest Sherry was acting to protect what she saw as the trust's primary asset. The trust blamed the commercial directors and management for what it believes was an incipient disaster.
The departing trio believed Vector CEO Mark Franklin might take a stand, but when push came to shove he kept his head down. Wisely.
It is abundantly obvious that business and politics do not belong around the board table.
Many of the directors who have presided over Vector's fortunes for the past six years have been given the bum's rush by an ungrateful trust. Annual reports mention their retirements by rotation.
Kyd was circumspect after the boardroom debacle became public. But the long pause before he answered "yes" to a point-blank question on whether Stiassny would remain chairman spoke for itself. Stiassny, paid upwards of $250,000 in fees for his Vector-related directorships, will stay. But his reputation has taken a big hit.
Others expect he will not survive in the long-term. "He'll be let go at the next rotate," said one Vector director - a view that some former directors share.
Company doctor Brown, who was brought in to fix the company after the Mercury power crisis which left Auckland's CBD without electricity for six weeks in 1998, describes the governance arrangements as a complete insanity.
"They don't own the trust - they're elected as trustees not shareholder representatives," he said of Sherry and Chambers. "Far better to give everyone shares and make a company of it."
In fact Brown was so incensed at the trust's shenanigans during his chairmanship that he considered asking five big names - "people like Susan Devoy" - to stand for election to the trust, "so that we could take it over".
Brown was himself rotated out along with Doug Dell and John Wells after spending three years sorting out the Auckland power crisis mess.
"They'll be asking me back yet!" he says.
