Treasury mum on advice on fiduciary duties of directors of sold-down SOEs
By Paul McBeth
Feb. 29 (BusinessDesk) – The Treasury is keeping mum on its advice over the fiduciary duties of government-appointed
directors for the state-owned enterprises to maximise returns for minority shareholders.
Secretary Gabriel Makhlouf told the parliament’s finance and expenditure select committee he wouldn’t be drawn on the
department’s advice to ministers over whether government-appointed directors in partially-privatised energy companies
would have to operate in a strictly commercial basis.
Makhlouf told the committee directors of the partially-privatised companies will continue to have fiduciary duties
already covered by existing law, but anything specific to these entities will rely on the legislation being written to
allow the sales.
“I think we’re jumping now to decisions the government may or may not make and the legislation that parliament may pass
which will set the framework within which these companies will operate,” Makhlouf said. “I’m not going to get drawn on
what precisely on what advice we’re giving and on what particular issue.”
That was in response to Green Party co-leader Russel Norman, who questioned whether the model would open up conflicts
for directors to recommend the sale of companies’ individual assets if the right offer was put forward.
Makhlouf said the companies will “operate within the framework of the legislation that will be introduced to put this
change into effect.”
“So within that context and whatever constraints in the legislation, we would expect them to operate commercially,” he
The prospect of tinkering with the directors’ duties adds another layer of complexity to the legislation, which has
already seen the government at loggerheads with its support partner, the Maori Party, over existing Treaty of Waitangi
obligations for SOEs.
Last week, SOE Minister Tony Ryall said the government will include the concepts of Section 9 in the SOE Act in the new
legislation after a round of meetings with Maori tribal leaders.
At last year’s elections, the government successfully campaigned on selling minority stakes in four energy companies and
reducing its holding in Air New Zealand, in a bid to free as much as $7 billion for new capital investment.