www.mccully.co.nz - 7 April 2006

www.mccully.co.nz - 7 April 2006

A Weekly Report from the Keyboard of Murray McCully MP for East Coast Bays

Arrogant Culture of Unaccountability

This week’s decision of Parliament’s Privileges Committee to fine the Television New Zealand board $1,000 and require a formal written apology is an important milestone in the process of imposing proper accountability on SOEs and Crown companies.

The fine itself (the first in 103 years) is token in nature, especially for an organisation that turns over in excess of $400 million a year. But it serves to warn state enterprises that future offences will attract much more serious penalties. As Committee chair Simon Power told the House, the Privileges Committee has run out of wet bus tickets.

Parliamentary privilege exists to enable Parliament and its Committees to go about their tasks without undue interference. TVNZ’s offence could hardly have been plainer. Invited along to the select committee to give his version of the tumultuous events which had occurred within the state broadcaster, (culminating in his resignation), Ian Fraser was highly critical of the TVNZ board. The board promptly curtailed his agreed wind-out package, claiming misconduct in relation to his select committee evidence.

The Privileges Committee specifically made no finding as to the veracity of Fraser’s evidence, over that of his previous board chairman. But they had a very strong view about the right of the select committee to seek that evidence from Mr Fraser.

And the only interpretation possible of the actions of the TVNZ board was that they were designed to punish Fraser for giving his evidence, and thus deter him, or others, from speaking freely before a select committee in future. In that respect, the whole process by which Parliament holds state businesses to account on behalf of the nation’s taxpayers, was on the line.

For the Privileges Committee to have accepted the ritual (and in this case qualified) apology from TVNZ and delivered another sermon, would have undermined both itself and the Parliament. The pattern of poor behaviour by state entities (and TVNZ in particular) would have continued unchecked.

Back in 2002, NZ Post appeared before the Privileges (courtesy of the humble Member for East Coast Bays and the ACT Leader Mr Hide, in fact), for lying to a select committee. They got the wet bus ticket treatment. But at least the Privileges Committee on that occasion handed out a strong sermon, and a general warning about the obligations of state businesses to Parliament’s select committees. Having already taken that step, the TVNZ case required a line in the sand.

The amount of the TVNZ fine is incidental. Even a $50,000 fine would have been relatively inconsequential to the board of such a large organisation. It is the ignominy of being the first, in over 100 years, to receive such a fine that counts. And, having received the warning shot, it follows that future transgressions will lead to meaningful penalties – presumably in the case of TVNZ running into telephone number proportions.

Our Parliament is full of politicians who are quick to defend the need for the government, on behalf of the public, to continue to own key businesses like TVNZ.

But if state entities are able to easily thwart the process of accounting to the owners’ representatives, what is the point in state ownership? (That badly behaved and unaccountable businesses putting taxpayers’capital at risk should be so strongly preferred over badly behaved and unaccountable businesses risking private sector capital has always been a source of some puzzlement here at the worldwide headquarters of mccully.co).

In recent years, the Parliament has seriously dropped the ball in terms of the levels of accountability required of taxpayer-owned businesses. The Privileges Committee report this week is a welcome first step towards reversing that regrettable trend.

A Warning For……

Several key parties in particular should be absorbing the Privileges Committee warning. Obviously boards, and particularly chairs of state entities, now need to reflect upon not just the quality of their compliance with the select committee process, but the underlying culture of the organisation in relation to their obligations to Parliament (for it is TVNZ’s arrogant culture of unaccountability that has finally unstuck them here).

As has been previously noted, Craig Boyce, the retiring TVNZ chair, has been an unqualified disaster in this regard. Every pore of his body has strobed resentment as he has appeared for questioning before select committees. And on more than one occasion he has been found to be wanting in the frankness and candour department. A poor choice, indeed, to head the large and sometimes controversial beast that is the nation’s state broadcaster.

The Privileges Report identifies for special mention, TVNZ’s general counsel, Noel Vautier. Not stated in the report is that Vautier has been a key player in the adversarial tactics employed by TVNZ in previous select committee brushes. And it is he who has run interference in relation to routine Official Information Act requests.

All of which has given the impression that TVNZ always has something to hide – when often such is not the case. His naming in the appendices to the Privileges report is more than warranted on the facts of this particular case. His many previous acts of disservice to his employer deserve more serious scrutiny.

TVNZ’s law firm, Bell Gully, are also mentioned unfavourably in the appendices to the report. It is arguable that more serious criticism of their actions was due. Major law firms and accounting firms have been quick to identify the lucrative fees available from state businesses as a highly profitable component in their business base.

Sadly, their commitment to securing and retaining the business has not been matched by a determination to understand the nature and obligations of their clients. In their different ways major law firms and accounting firms have allowed themselves to be used by Crown businesses as a shield against the elected representatives of the owners (hence some of the shonky special audits which the Auditor-General, under some pressure from the worldwide headquarters, has now put a stop to), rather than a source of professional advice on how best to meet their obligations to the Parliament and its committees.

In this case, Bell Gully was asked for advice on the TVNZ letter to Fraser. The letter made clear, in the first paragraph, that it was evidence provided to a select committee of Parliament which was at issue. Both Vautier and Bell Gully assert that they turned their minds only to the employment law issues at hand, not the possibility that their client was heading into a full frontal contempt of Parliament.

If that is true, it says a great deal for the culture of disdain, if not contempt which exists amongst Crown companies and their legal advisers for their most basic obligations to the owners of the business, and the Parliamentary representatives they elect.

The Real Villains

Lost in the flurry of media commentary and select committee enquiry has been a very simple question: where on earth are the shareholding Ministers of TVNZ and how do they account for their own performance?

The fact that TVNZ has been slowly disintegrating is far from secret. The series of scandals that culminated in a Ministerial press conference to humiliate the chair was merely the public surface. Beneath the public gaze, it has been war in the boardroom (as Fraser’s evidence to the select committee confirmed). A key player in the process has been former Labour Party Minister Dame Ann Hercus, who jumped ship on the very day she was expected to appear before the select committee.

Cabinet appointed Boyce as chairman on the recommendation of shareholding Ministers Maharey and Cullen. It was their decision to retain Boyce, because it suited their own political agenda, when it was clear that his chairmanship was doomed to further failure. And both have been missing in action at the very time that some strong Ministerial leadership has been required.

But to find the real villain of the piece we need to look back further. The arrogant culture of unaccountability at TVNZ didn’t just happen overnight. The seeding and generous fertilisation of the process commenced over five years ago under the chairmanship of Dr Ross Armstrong.

And it is no coincidence that the other visitor to the Privileges Committee in recent years, NZ Post, also fell foul of Parliament’s standing orders on Armstrong’s watch as chairman. For that appointment, we can scarcely blame Ministers Maharey and Cullen. No, the person who stands guilty of masterminding this delightful episode in our constitutional history is one Helen Elizabeth Clark.

Thank You Mr Peters

The worldwide headquarters of mccully.co may, on the odd occasion, have voiced a word of criticism of the nation’s Minister of Foreign Affairs – the outside Cabinet, outside the Government, Mr Peters. But today there is one very fine aspect of Mr Peters performance for which we must pay him due credit: he sure does read a quality publication every Friday.

Stung by criticism in last week’s mccully.co of his announcement of a $500 000 grant to the Palestinian Authority after the election of a Hamas government, Mr Peters swung his army of officials into action. And the retribution was ….. well, not very swift actually.

Six days later a press release appeared, attacking everything from the intellect to the parentage of the humble Member from East Coast Bays. But in his explanation of events Mr Peters made a truly interesting revelation.

Last week we merely accused him of sending confusing signals by announcing the $500 000 grant after the election of a Hamas government – we assumed the money had been handed over last November.

But Mr Peters’ release makes it clear that last November was when the funds were transferred to the World Bank. He personally actually authorised the release of the funds to the Palestinian Authority on March 3 when he made his press statement.

So we need to revise last week’s modest criticism of Mr Peters for sending confusing signals. Given that a Hamas government was elected by the time he released the cash, the very least we would have expected would have been a suspension of the payment pending some conciliatory movement from Hamas. Mr Peters is therefore due much more serious criticism for failing in his duty to use our aid to send an important message. And for pointing that out to us, we are truly grateful to him.

Soft on Terrorism

From the SIS’ annual report to Parliament….

“The Service devotes significant time and resources to monitoring the situation here and developments overseas that could impact on the level of threat. There are individuals in New Zealand who are sympathetic to Al Qaida, have strongly anti-western views and have links to extremists living overseas. There are individuals who have participated in jihad in places like Bosnia. The Service has also found that here, as in other countries, there is a complex and symbiotic relationship between criminals and Islamic extremists.

It takes a great deal of work to try to determine if a particular individual is a criminal, an extremist or both. The Service works closely with other relevant New Zealand agencies and overseas partners in these investigations.”

All of which raises the truly excellent question (see mccully.co of 2 December 2005, #232) as to why our Prime Minister has yet to list a single terrorist or terrorist organisation under the Terrorism Suppression Act 2002 when Australia has listed over 80, and Canada over 50.

ENDS