‘I had done all I could’: Shipley stands by record
Former prime minister Dame Jenny Shipley has rejected claims that Mainzeal, a construction company she chaired, was insolvent as early as 2008.
Mainzeal was put into receivership in early February 2013, but liquidators Andrew Bethell and Brian MayoSmith of BDO allege the company traded while insolvent, and are suing some of its former directors, including Shipley, for up to $75 million in damages to repay creditors.
Shipley, testifying for a second day in the High Court at Auckland, betrayed no nerves while giving evidence of her involvement with Mainzeal between 2004 and early 2013, a period in which it suffered big losses on several major construction projects and faced multiple leakybuilding claims.
She read from a script for about three hours, stressing that she carried out her directors’ duties conscientiously, and had relied on pledges of financial support for Mainzeal from the Chinese-owned Richina Pacific investment group of which Mainzeal was a part.
Demonstrations of that support included transfers of cash.
‘‘I was well aware that, as directors, we were responsible for ensuring that the company was solvent while it traded. We took this obligation seriously,’’ Shipley told the court.
‘‘The directors of Mainzeal . . . did not consider that Mainzeal’s solvency depended entirely on its own balance sheet. It was part of an investment group as it had always been.
‘‘It received support from that group. The group had substantial assets.’’
The liquidators allege creditors would have been better off if Mainzeal had been put into receivership either in 2008, or in early 2011.
Defendants include Shipley, Richina Pacific chief executive Richard Yan (who is based in China), former Mainzeal chief executive Peter Gomm, Clive Tilby, Sir Paul Collins (who became a director in 2012), Siew Kwan, Richina Global Real Estate and Isola Vineyards.
Shipley tried to resign from the board in mid-2011, but she said this was due to her commitments at Genesis Energy, not Mainzeal’s troubles, which included leaky building claims and a $20m loss on the Vector Arena in Auckland.
‘‘I decided to resign because I was anticipating a particularly busy period in the coming six months, relating to the partial privatisation of Genesis,’’ she told the court.
‘‘I definitely did not make my decision because of any concern about whether the company should continue trading, or whether it enjoyed the full support of the Richina group.
‘‘There was no reason why I should have had such concerns.’’
In late January 2013, a plan to save Mainzeal hit trouble after Yan became concerned at Bank of New Zealand’s demand for a personal guarantee from his family trust.
On January 29 he sent Shipley a letter asking ‘‘for a board meeting to consider asking the bank to appoint receivers’’.
Shipley said the letter, which she discovered did not represent the position of the Richina Pacific board, undermined BNZ’s confidence.
With the ‘‘greatest regret’’ Shipley resigned as a director of Mainzeal on February 5, 2013.
‘‘I had done all I could to work in the best interests of all shareholders, creditors and staff of Mainzeal,’’ she said. Mainzeal was put into receivership the same day.
Shipley will be cross-examined on her evidence next week.
Dame Jenny Shipley gave evidence yesterday in the High Court at Auckland about her role during the collapse of Mainzeal.