Shipley faces director difficulties
Dame Jenny Shipley’s career as a director serving on New Zealand businesses’ boards now faces major hurdles, an academic says.
The former prime minister announced on Monday that she had told China Construction Bank New Zealand (CCBNZ) it was in the company’s best interests that she retire as chairwoman, and from the board itself. She will step down on March 31.
She remains chairwoman of Oravida New Zealand, a board member of the Boao Forum for Asia, and an executive board member of the New Zealand China Council.
Rod McNaughton, deputy dean of the University of Auckland’s business school, said the Mainzeal judgment had not barred Shipley from serving as a director in future.
‘‘Directors have a duty to act in the best interest of the company. I think Shipley discharged this duty in stepping down as chair of the CCBNZ board,’’ McNaughton said.
‘‘While she was not legally required to do so, the facts of the Mainzeal case and the publicity around it were likely to cause shareholders and other stakeholders to question her abilities as a director.
‘‘This would be especially important in the financial sector, and in a publicly listed company. The blow to [her] reputation could have translated into negative consequences for CCBNZ.’’
He believed she might resign from other high-profile directorships for the same reason.
‘‘However, boards and stakeholders of smaller and privately held firms, and of non-profits, may be less sensitive to the fallout of the Mainzeal case.’’
A bigger problem could be insurance. Although Shipley was covered in this case by her insurance policy, McNaughton thought it could be hard for her to obtain directors’ and officers’ insurance in future.
This could mean taking on a directorship is too risky because if she was ever found liable again in future, she would have to pay penalties from her own money.
Last week, Shipley and three other Mainzeal directors were ordered by the High Court at Auckland to pay a combined $36 million in damages for breaching their legal duties and allowing the company to trade while it was insolvent.
Mainzeal was put into liquidation in 2013, owing creditors, including many smaller New Zealand building companies, more than $110m.
Asked about Shipley’s role on the New Zealand China Council, Prime Minister Jacinda Ardern said it was not an appointment that the Government controlled.
The NZ China Council’s chairman, Sir Don McKinnon, said its board membership was regularly reviewed.