Shiny post-politics career tarnished

The High Court judgment against Dame Jenny Shipley and three other Mainzeal directors could hardly have come at a worse time for the former prime minister. Her successful post-political career as a senior director in the corporate world will be forever tarnished by the collapse of construction giant Mainzeal, put into liquidation in 2013, owing subcontractors and creditors more than

$110 million. Justice Francis Cooke said in his judgment that the company traded while insolvent for eight years.

Shipley and directors Richard Yan, Peter Gomm and Clive Tilby have been found liable for $36m in damages after a case was brought by liquidators. While Yan pays half, due to his greater role in the collapse, Shipley’s personal share is $6m. It is likely to be covered by liability insurance.

The cost was borne by the ordinary, hardworking New Zealanders politicians like Shipley usually champion. The judge noted ‘‘a company of this size would not normally be able to trade without capital. Mainzeal was only able to do so because it used money owing to sub-contractors as its working capital’’.

Mainzeal’s parent company, Rahina Pacific, pulled money out of it to buy valuable assets in China, including the Shanghai Leather Company, now worth more than US$700m (NZ$1 billion). In essence, New Zealand contractors paid for those assets. The directors reportedly had assurances from Yan that Rahina Pacific would pay Mainzeal back, but these proved unreliable.

While Yan bore much of the responsibility for the collapse, public attention naturally focused on Shipley, whom he personally shoulder-tapped for the board. Her mana was important. Former prime ministers and presidents live in a strange postpolitical twilight and Shipley’s specialisation has been political and business connections to China.

As the Mainzeal case was civil, Shipley is not automatically barred from other directorships, but questions are being asked about whether she can continue as chair of the China Construction Bank (New Zealand) Ltd and executive board member of the New Zealand China Council. The bank is a wholly-owned subsidiary of one of China’s big four banks but New Zealand-registered. Asked if Shipley is a suitable person to be chair, a Reserve Bank spokesman said the judgment would be ‘‘read with interest’’.

The council was set up by government in 2012 and receives two-thirds of its funding from the Ministry of Foreign Affairs and Trade. Chaired by former deputy prime minister Sir Don McKinnon, it uses ‘‘key players’’ whose influence and networks can support ‘‘deeper, stronger and more resilient links between New Zealand and China’’.

Recent tensions in the NZ-China relationship have tested those links and put Shipley under greater scrutiny. Chinese government news website People’s Daily published an opinion piece by Shipley praising China’s controversial Belt and Road initiative as ‘‘one of the greatest ideas we’ve ever heard globally’’. It was revealed it was not written by Shipley, but constructed from interview quotes. The Chinese government was clearly using a former New Zealand prime minister as a propaganda mouthpiece.

When that is considered alongside the Mainzeal judgment, it is not at all surprising to hear, as RNZ has reported, that senior Cabinet ministers are discussing how much longer Shipley she can stay in the two influential positions.

‘‘The cost was borne by the ... hard-working New Zealanders politicians like Shipley usually champion.’’