O'Sullivan: Battle for survival in NZ Post boardroom

By FRAN O'SULLIVAN

New Zealand Post chairman Ross Armstrong and his deputy, Syd Bradley, are locked in a war in which there can be only one clear survivor.

Armstrong - already suffering flak for his intemperate chairmanship of fellow state-owned enterprise Television New Zealand - last week took the extraordinary step of requesting the head of his deputy at NZ Post.

Ostensibly the Armstrong/Bradley battle is about allegations that the NZ Post deputy has been undermining the commercial future of the South African operations.

But a wider philosophical argument is boiling over NZ Post's commercial raison d'etre - whether it should go all out for profit (the view of Armstrong and NZ Post chief executive Elmar Toime) or give regard to wider social issues, as Bradley has argued.

But what is clear is that if Armstrong cannot produce evidence to back his claims that his deputy has acted unethically, the Government will be under pressure to demand the NZ Post chairman's resignation.

Prime Minister Helen Clark must already be rueing the day she took Armstrong on her recent Cretan jaunt. Clark's failure to put some distance between herself and the man who chairs two powerful state-owned enterprises has blown up in her face.

Since 2001 began Armstrong has been a political liability.

First, there were his allegations of "fiscal treason" against Opposition leader Jenny Shipley. Then his legal action against Act Leader Richard Prebble for leaking details on the People's Bank.

Then his intemperate comments against former Television New Zealand news and current affairs head Paul Cutler.

But all this is mere grist to the political mill compared to the field day the Opposition will have in Parliament this week over Armstrong's latest allegations.

Already the distancing has begun.

This time round, Clark has not come to Armstrong's public rescue.

For a man already in the maelstrom of allegations of inappropriate behaviour at TVNZ over his comments on the departing Cutler, Armstrong's latest high-handed actions either demonstrate cast-iron confidence in his position - or hubris.

Look over the facts.

Armstrong wrote to State Owned Enterprises Minister Mark Burton alleging that Bradley had been the source of leaks undermining NZ Post's South African operations.

But he did not raise the allegations with his deputy before sending a written complaint to the Government. Nor did he take his board into his confidence before putting pen to paper with his suspicions.

When the Armstrong letter landed on his desk last Monday, Burton called his officials in before determining his response.

He told Armstrong that, based on the supporting material he had provided, there was no conclusive evidence that Bradley had acted against the best interests of NZ Post - either deliberately or inadvertently.

As shareholding minister, Burton's direct powers were limited to the appointment and removal of directors - nor could he decide whether a board member should attend a meeting.

Tellingly, Burton said he saw no basis to consider direct action at that time, particularly as the director had not had an opportunity to respond to the chairman about the actions concerned.

The minister directed Armstrong to urgently meet his officials before the NZ Post board meeting to get an appropriate course of action for resolving the issue. Burton advised that he would step in only if the process failed.

Armstrong's complaint alleged that Bradley's communications with a senior South African Post Office official, Leon Dippenaar, had undermined the operations of Transend - Post's international subsidiary.

He further claimed that Bradley was alleged to have told Dippenaar that the NZ Post board did not support Transend continuing its contract with the South African Post Office.

Bradley denies the allegations. He says he was appointed by the board this year to act as an intermediary with staff dealing with a number of anonymous allegations. He had advised Dippenaar to raise his concerns with his own chief executive. E-mails copied to him on this matter had been passed directly to the NZ Post chairman.

Bradley had one other contact with Dippenaar, whom he had met in South Africa years ago when he was managing the first links between NZ Post and the South African postal service.

He had, however, asked for further details over the strategy behind the Transend contract in South Africa, as had other new directors on the NZ Post board such as Ken Douglas.

Bradley was not informed about the Armstrong allegations until just before last week's board meeting. Armstrong arrived with officals and lawyers and raised the allegations.

An independent inquiry would be set up into Armstrong's allegations. In the meantime, Bradley agreed to stay outside the board meeting while the South African issues were discussed

No state owned enterprises chairman can make claims of such weight against his deputy - without first putting them to him - and hope to survive an all-clear finding.

NZ Post directors have sat back for months now while embarrassing episodes were played out in public. But they were this week shocked at the allegations against a man of Bradley's calibre.

Bradley is not a directorial babe in the woods. As a former chairman of the Health Funding Authority, he presided over $4 billion of public funds.

The Government clearly had sufficient confidence in his directorial abilities to appoint him to the NZ Post board as deputy chairman last November with the expectation that he would ultimately fill Armstrong's shoes.

Bradley is battling to try and ensure that the "chairman's inquiry" into the allegations made against him does not turn into a Star Chamber.

He at least has fellow director Douglas as his ally. Douglas has taken the battle public where other less confident directors would shelter behind the boardroom doors.

Terms of reference for the so-called chairman's inquiry have yet to be agreed and published to the board.

Whoever put the skids under Armstrong by the deliberate leak of documents outlining the allegations against Bradley is in good company.

The tactics simply mirror those Armstrong has employed to maintain his autocratic rule of two powerful state-owned enterprises.

But while Armstrong deserves a bollocking on corporate governance issues, he may be on stronger ground on the underlying commercial strategic issues.

That basic issue will get lost in the public battle this week.