Jun 22, 2008

Political Interference In SOEs

There is a very disturbing article in today's Herald on Sunday by Fran O'Sullivan. She reports that Genesis Energy CEO Murray Jackson was forced out because the Government regarded him as "pro-thermal". This is disturbing at several levels. First, as Fran points out, if Minister Parker had been following Jackson's sensible advice he would not be in the pickle that he is right now. Second, we have a talent shortage in New Zealand and Jackson was a good operator. Third, if true, we have a breach of the Companies Act. The roll of the board is to act in the best interest of the company, not the shareholder, in this case the Government.

Fran compares the situation at Genesis with Air New Zealand and Solid Energy where the Chairman is John Palmer. Palmer is well prepared to stand by his CEOs in the face of strong political pressure.

Who is on the Genesis Board? There are some pretty good people there who should know their responsibilities as Directors well (one if the CEO of the Institute of Directors). But there is this fellow. Interesting that he is wearing his Green hat for the photo.