SOE boards too political, say directors

Trevor Mallard

Directors of the country's largest state-owned enterprises are worried that appointments to boards are politically influenced and too heavily weighted towards political correctness.

One director said good people could miss out on being appointed simply because they had upset someone in the Labour Party caucus.

The directors' anonymous comments were part of a survey conducted by Victoria University senior lecturer Richard Norman.

The disclosure threatens to embarrass the Government, which this month unveiled a policy shift for SOEs. The change, which was made despite Treasury and Ministry of Economic Development doubts, will see SOEs encouraged to spread their commercial wings and expand into areas close to their existing businesses.

National has called on the Government to avoid appointing "cronies" to boards and instead concentrate on ability.

Obvious targets for cronyism claims include Labour Party president Mike Williams (Genesis board) and veteran unionist Ken Douglas (New Zealand Post board).

The Government has flatly dismissed claims of cronyism, but yesterday's survey scored a direct hit.

Directors of the country's nine largest SOEs were asked to take part - 28 of the 62 responded. Dr Norman's report said two-thirds of them thought the process for appointing board members was too politically influenced.

The same majority thought that boards, and particularly chairpersons, should be responsible for recruiting and selecting new directors, with the minister having a right of veto.

One director said there was a tendency to appoint too many people on the "diversity ticket".

State Owned Enterprises Minister Trevor Mallard yesterday strongly defended his record on appointments. He said he had probably selected more board members closer to opposition parties than to Labour.

Mr Mallard said the Crown Company Monitoring Advisory Unit (CCMau) had a database of people who might be suitable for SOE roles.

Once the needs of a particular board were identified, a shortlist of people was developed and the chairperson of the SOE board worked with CCMau to come up with recommendations for the minister.

Mr Mallard said he could remember three occasions when he had had "pretty intensive" discussions with chairpersons who had ruled two people out.

On one occasion he decided not to appoint someone because the person's views suggested he wouldn't be able to positively contribute to the SOE.

"He was someone who was totally committed to selling them [SOEs] all off, and I was not prepared to appoint him."

Mr Mallard pointed to positive comments in the research, which included views that Labour's policy of not selling SOEs had helped boards feel they were in control of strategic decisions. But he also said he would take the directors' concerns about the length of the appointment process on board and "try to tighten it up".

APPOINTMENTS TO STATE FIRMS

* The Crown Company Monitoring Advisory Unit (CCMau) has a specialised team to manage selections.

* It has a database of people suitable for SOEs, and the specifications for positions are also put on the unit's website.

* The unit draws up a shortlist, tests candidates and identifies potential conflicts of interest.

* The unit consults the chairpersons of the boards candidates are being considered for to arrive at recommendations for the relevant ministers.

* A Cabinet committee examines the proposed appointments and, if the nominees are acceptable, confirms them.