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Home / Business / Companies / Freight and logistics

Feuding and politics plague port

NZ Herald
27 Mar, 2011 04:30 PM5 mins to read

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Auckland needs to move containers more quickly, and earn more for the job. Photo / Kenny Rodger

Auckland needs to move containers more quickly, and earn more for the job. Photo / Kenny Rodger

Departure of past directors points to trouble in the boardroom.

If the past is a foreign country, then Ports of Auckland's history makes it the equivalent of post-war Italy, which has coped with more than 60 governments since 1945.

As Stephen Selwood, chief executive of the Council for Infrastructure Development, notes: "Every three years the management of the port takes
a Right or Left [wing] turn and you can't run a long term business on that basis.

"It was the very clear view of the previous board," Selwood continues, "that there was far too much political interference in the commercial operation."

Turnover was high. Last year saw the departure of directors Emmet Hobbs, Peter Hubscher and Jens Madsen (also chief executive). In 2009, Susan Paterson, Roger Gower and Gary Judd (also chairman) left. Robert Challinor, Geoff Vazey (another chief executive), Tom McDonald and Rosanne Meo shuffled off in 2007, following the departure of Neville Darrow (chairman), Hugh Fletcher and Peter Coote in 2006.

A baker's dozen of ex-directors, including two chairs and two chief executives, within five years supports the contention that dysfunctional and destructive relationships were a major part of the problem.

People who witnessed some of the drama tell a sorry tale of squabbling directors and management, the latter hamstrung by the political infighting.

One witness offers vivid details of personal disagreements involving port management, its board and shareholder, Auckland Regional Holdings. This person details the political influence which culminated in the departures of former chief executive Geoff Vazey and chairman Neville Darrow, and his replacement with Gary Judd, who was in turn removed by the port company's then-owner, Auckland Regional Holdings.

Another stakeholder bemoans management's fate: "Poor Jens [Madsen, chief executive] was messed about," says this person. "The politics somewhere tripped him up and he couldn't do things and that's regrettable."

A third source, close to the former chief executive, confirms that it is a commonly held view that Madsen was "shafted". But "I don't believe that he was [forced out]," this person contends. "Certainly he was worn out by the end but he also at the same time had a genuine desire for a lifestyle change."

Who wouldn't want a change of pace given goings-on at the ports? But the fact that a fourth source refers to Madsen as "the Danish prick" shows how hostile relationships at the port company had become.

Such invective also exasperates those who are trying to encourage a collaborative "New Zealand Inc" approach to port management: "You have to separate political pressure and business pressure," says the second source. "The exigencies of business and politics are different and it's impossible to put people in positions where they have the politicians breathing down their necks on the one hand and commercial imperatives on the other."

Selwood agrees: "There was far too much political interference in the commercial operation."

It is far from clear that the infighting that has crippled governance of one of Auckland's critical pieces of infrastructure is over. Some people spoke to the Herald on the record, with off the record additions. Others spoke purely off the record.

In their totality, their remarks suggest a continuing Left-Right divide, exacerbated by personal enmity. Belittling remarks about present and former key port figures are ubiquitous.

For instance, there is plainly no love lost between Mike Lee, a councillor for the new super city, and Simon Allen, chairman of the CCO which now owns the port.

Lee, the former Auckland Regional Council chairman, may no longer wield the political power he once did, but he holds a mandate from Auckland voters who delivered a Left-leaning council.

For Lee, public ownership is non-negotiable and he criticises the standard of port governance by "the accountants and lawyers from Remuera".

Allen, the Remuera-based architect of Contact Energy's privatisation, is more guarded in his public remarks but he clearly represents a constituency that favours private-sector ownership.

The port now has the mandate to operate as a purely commercial entity, Allen says, and there is a clear line of separation between the ports company and its political owners.

For Selwood and others, Lee's and Allen's divergent views represent the greatest impediment to the implementation of a coherent growth strategy for the jewel in Auckland's crown.

In other words, they want the Left and Right to stop bickering, work with what they have got and get on with the business of improving Auckland's and New Zealand's lot.

If there is hope for Ports of Auckland, the malnourished meat in this political sandwich, it is in the common ground that Lee and Allen occupy.

Both men agree that new investment is not needed in the near term and the low per-container price paid by shipping companies is the biggest obstacle to profitability.

Crucially, the pair praise new chief executive Tony Gibson and also concur on the make-up of the present board, now chaired by John Lindsay.

"It seems to me," says Lee, "whether by good luck or wise decisions, that there are good people there now."

He points to directors such as Peter Dunlop, "a hard-bitten capitalist" and former shipping company owner, as one who brings the necessary seafaring experience to the job. Allen name-checks new director Richard Pearson as a reason for optimism. Pearson was former managing director for the European arm of Hutchison Port Holdings, the world's largest port operator. Liz Coutts, another director, has significant experience in industrial relations, he says, which will assist in the ports' dealings with the Maritime Union of New Zealand.

"The Ports of Auckland is probably in the best shape it's ever been," Lee adds.

Discover more

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<i>Project Auckland:</i> Getting Auckland's port area right is vital for new council

14 Sep 12:00 AM
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<i>Brian Rudman:</i> Memo to would-be mayors: The port company is not your plaything

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New head for port company

23 Dec 04:30 PM
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27 Mar 04:30 PM
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