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Home / Business

Reformer gets the cold shoulder

NZ Herald
1 Dec, 2011 06:00 PM6 mins to read

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Among other concerns, Robert Sintes says premiums are too high for older Southern Cross members. Photo / Greg Bowker

Among other concerns, Robert Sintes says premiums are too high for older Southern Cross members. Photo / Greg Bowker

Robert Sintes wants to join the Southern Cross board. So far, he can't even get on the ballot paper.

Retired Kerikeri businessman Robert Sintes has been told by Southern Cross he is not a "fit and proper person" to be a director of the organisation.

Under the society's rules, the board is not required to justify its decision, although it has told him it is because he does not have the skills or experience required. He doesn't accept that, but is forbidden by the society's rules from seeking a judicial review.

Last year Sintes put himself up for election as a director and garnered almost 40 per cent of the vote. But it wasn't enough to earn him a seat on the board.

This year his attempt to stand again has not only been rebuffed, but according to him Southern Cross has refused to allow him to advertise in the society's magazine, or to give him a list of members' contact details so he can communicate with them directly.

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It also refused to accept three out of four resolutions he proposed for discussion at next week's AGM.

Auckland real estate agent Michael Pinkney has also been rejected as a potential director on "fit and proper" grounds.

Sintes accepts organisations need "fit and proper" tests to exclude, for example, someone with a criminal conviction.

"But if you take the 'fit and proper' test beyond making sure someone's not just been let out of jail or something, then that's stripping them of their rights," he believes. "If you applied the same test to MPs, who regularly spend billions of dollars, you would have to evacuate Parliament."

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Sintes also believes it is unfair that it is the people he would be competing with for votes who get to judge his fitness as a candidate.

"They have argued and blocked me at every turn. They have vigorously and actively discouraged me, and I have no legal redress at all."

Sintes wanted to become a director because he believes premiums for older members are too high. He is unconvinced its affiliated provider programme will be effective in keeping down costs, and believes there is a conflict between the aims of the society and the Southern Cross Health Trust, which owns health facilities.

He also believes the society is not tough enough when negotiating contracts with providers, and has not properly considered the possibility of allowing members to seek overseas treatment if it would be cheaper than a local option.

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He has laid a complaint with the Registrar of Friendly Societies about his experience but has been told by the Companies Office the registrar does not have the power to intervene in election processes.

In frustration he has set up a website - southerncrossmembers.org.nz - to explain his views.

The society has been down this road before. Christchurch woman Jane Arnott made three attempts to join the board in the late 90s, but was unsuccessful. Arnott, who was the country manager of a British audit and assessment company, complained at the time that the board actively promoted its favoured candidates, including on the voting and proxy form, which she described as "irregular".

While she acknowledged the board's actions reflected the approach of public companies, Southern Cross was different as it was a "friendly society", she argued.

Sintes agrees and can't understand why the board does not trust members to make up their own minds. "We're a society - that's what we are. If we don't want to talk to each other, well then, form a company."

Speaking of which, it was while he was researching the society's rules that Sintes discovered that under the Insurance (Prudential Supervision) Act 2010, Southern Cross members would not get a share of the society's reserves if it were ever dissolved. He describes the new law as "one of the most pernicious acts you will ever see".

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"Do you know how much of the reserves of the society you would share in if it was demutualised? Zero. The reserves, which are now more than $300 million - you would get nothing at all. The only way in law you could retain your part of the resources that have been retained over the years - because there's a new act now that's effectively nationalised those resources - is if it was turned into a company."

Finance Minister Bill English has defended the new law, saying the act provides "appropriate limits on the rights of both members and shareholders in order to protect the long-term interest of all policyholders and ensure a sound and efficient insurance sector".

Southern Cross chairman Graeme Hawkins is also keen to play down any controversy. He disagrees that the society's "fit and proper" test for potential directors is any different to the one that the Reserve Bank now requires insurers to adopt.

Hawkins also points out that the society has good mechanisms for keeping in touch with its members' views, through panels involving up to 5000 people giving regular feedback.

He dismisses Sintes' claims that the society has deliberately avoided considering treatment options in Australia as "silly", and insists that the issue of what would happen to its reserves if it were ever dissolved is largely academic.

The reserves are effectively working capital, he notes.

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"So if we're here for another 50 years - which we aim to be, because we think it's a worthwhile organisation and we think it's an important organisation in the New Zealand context in terms of what we deliver to a lot of New Zealanders - then the debate is totally irrelevant. We'll still need reserves and it won't matter who they're owned by, because we won't be dissolving."

But if the board is hoping Sintes will eventually go away, it may be mistaken. In 2009 he won a seven-year legal battle with the Church of Jesus Christ of Latter-day Saints over the use of the words "family search".

The Mormons decided to sue Sintes after he launched a family contact service, familysearch.co.nz, in 2000, prompted by his own experience of tracking down long-lost family members. The church operates a similar website at familysearch.org.

The Court of Appeal eventually ruled in his favour.

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