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Cronies off SOE boards

  • November 14th, 2008

The National Business Review seemed to get bored with its Crony Watch last year, just as Labour’s crony programme went into overdrive. Unsuitable people were appointed to countless bodies across the country. Murray McCully kept an eye on it, but his back newsletters seem not to be searchable.

The new government should reinstate and reinforce a convention that appointments are patently on merit. Connections will always be material, because attested knowledge reassures appointors. They know that all appointments are a gamble on the unknown, and previous experience reduces the gamble. But crony appointments should meet a higher standard of objective suitability than others, just to underscore the basic principle of merit selection through out New Zealand life.

"Who you know – not what you know" is corrosive of our egalitarianism, and is a soft form of corruption.

The new government could start with SOEs. A substantial spill now, with a commitment not to stack boards in 2011, would signal that the recent abuse will not be worthwhile for a future regime.

It may also be a quick start on upgrading our woeful productivity performance. Boards matter. A friend on an SOE board, sick of having to carry the passengers with which his board is now lumbered, has urged me to push some recommendations:

a) A letter to all SOE directors suggesting they offer their resignations, because unqualified or overtly political appointments will be asked to go. A director whose resignation is accepted would get 1 months severance fees for each year of his or her term to go.

b) If the shareholding Ministers have to remove them with shareholders resolutions they’ll get no severance compensation, plus more public attention.

c) independent experts evaluation of the contributions and qualifications of all appointees this year,  taking account of internal Board views of competencies.

d) filling the vacancies with obviously qualified people selected on merit, without regard to "diversity" or political mateship.
e) allowing Boards to vote for their chairpersons, so that they are led with the consent of the governed.
The last is inconsistent with current practice. To the extent current practice is reflected in SOE constitutions, ask the Boards to vote on and tell the Crown their preferred chairs. The Ministers can then take that vote into account when exercising appointment powers.

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