Home > The Body Politic > Mighty River Power, Members of Parliament, and Conflicts of Interest

Mighty River Power, Members of Parliament, and Conflicts of Interest

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On 27 June last year,  on the last episode of TVNZ7’s ‘Backbenches’, Minister for Courts, Associate Minister of Justice, and Associate Minister for Social Development, Chester Borrows, admitted his intention to  buy shares in partially-privatised state owned enterprises.

In an  exchange between ‘Backbenches’ Host Wallace Chapman and Chester Burrows,

CHAPMAN:  “Will you be buying shares in Mighty River Power?”

BORROWS:  “Yes, probably.”

CHAPMAN:  “Ok.”

BORROWS:  “I’m a mum and dad investor, well I’m half of a mum and investor partnership.”

CHAPMAN:  “So you will be.”

BORROWS:  “Yep.”

On 2 July, when I blogged this issue (see: Conflicts of Interest?), I asked three questions,

  • Is this a vested interest in partial-privatisation?
  • Is this a conflict of interest?
  • Is this verging on self-serving corruption?

It will be interesting to find (if at all possible to uncover), how many National/ACT/United Future members of Parliament will end up owning shares in Mighty River Power, and other part-privatised SOEs?

A recent Sunday Star Times story told readers that members of Parliament and government ministers would follow a self-imposed “moratorium” on not buying any shares in SOEs for 90 days,

Cabinet ministers have agreed to a voluntary “moratorium” preventing the purchase of shares by all ministers, and some of their staff, until 90 days after the initial sale.

Finance Minister Bill English’s office said: “Cabinet also agreed that ministers and the staff in those offices . . . should use their best endeavours to ensure that their partners and dependent children adhere to the same moratorium.”

Acknowledgment: Fairfax Media – Call to ban ministers from share float

That is simply not good enough. A politician could easily instruct a solicitor to buy shares on his/her behalf. Or purchase shares via a ‘shell-company‘. There are as many ways to dodge scrutiny as the human mind can imagine.

The implications of government MPs and Ministers owning shares in state assets which they themselves have decided to privatise is a serious matter.

The only three ways to avoid such a spectacular conflict of interest is,

  1. Pass legislation banning MPs or their spouses from ever owning shares in SOEs (not very practical)
  2. Make the Pecuniary Interests register a permanent feature for all politicians to fill out for the rest of their lives. (possible – though a real pain in the arse)
  3. Scrap the asset sales programme. (Much easier.)

If politicians such as Borrows purchase shares in SOEs, it will further lower their reputations in the eyes of the public. “They’re in it for themselves” will become a reality in the minds of people, rather than just a vague suspicion.

We’re treading on thin ice here and the prospect of real political corruption takes one step closer to reality.

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Additional References

Call to ban ministers from share float (24 March 2013)

Previous related blogposts

Conflicts of Interest?

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= fs =

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  1. PS
    26 March 2013 at 9:59 pm

    Madness

  2. pollywog
    26 March 2013 at 10:10 pm
    • 26 March 2013 at 10:49 pm

      Interesting, Pollywog. Thanks for that “heads up”.

      If true,

      * Chester Borrows wasn’t aware of that,

      * Bill English isn’t aware of it, “Cabinet also agreed that ministers and the staff in those offices . . . should use their best endeavours to ensure that their partners and dependent children adhere to the same moratorium.”

      * Farrar refers to Ministers being banned from taking part in the share FLOAT. But he doesn’t mention buying shares after the float.

      * A quick check of the Pecuniary Interests Registry (http://www.parliament.nz/NR/rdonlyres/DFA6C21E-69A8-433F-8BA9-956431281F7F/222223/register2012_3.pdf) doesn’t show shares – only Trusts. I’m that any shares would be ‘buried’ within those Trusts.

      At any rate, this certainly merits a closer look.

  3. MQC
    26 March 2013 at 10:45 pm

    I think you mean “further into” Frank 😉

  4. Matt
    26 March 2013 at 10:47 pm

    The Russian oligarchs all got in early and stole their bit.

    Argentina privatised all its state owned assets in a fire sale when their economy got distressed.

    As far as I can tell NZ is doing the same because the economy has tanked under National, and with diminishing tax take and profligate spending then they’ve basically run out of money and are selling the silver off. Mismanagement is the only cause of this firesale. Mismanagement is also the reason DOC has been guttted. Yet they still are prepared to piss money up the wall on the RoNS.

    2014 can’t come soon enough.

  5. Ariana
    26 March 2013 at 11:08 pm

    Great blog Frank!

  6. 26 March 2013 at 11:51 pm

    Interesting link to Farrars’ blog. I noticed his statement;

    “In fact the conflict of interest obligations are taken so seriously that when Contact Energy was sold in the late 1990s, I was one of those banned from buying shares when it floated as I worked in the PM’s Office. Now I had zero involvement in the float, saw no papers about it, but still was banned.”

    I wonder how a private individual, who is not a Minister bound by the Ministerial Manual or whatever the fuck they call it, can be “banned” from pursuing purely legal financial activities, ie, buying shares?? He’s free to buy or sell whatever he damn well wants, as long as it’s legal.

    He should’ve told whoever it was that told him he was “banned”, to go take a flying leap.

    That doesn’t make any sense, unless it was in his contract? And I’ve never seen any contract like that. Smells fishy.

  7. 27 March 2013 at 10:51 am

    Corruption NZ-style. Corruption nonetheless. NZ-style because this rort is wide open, like the corruption of so much National-initiated policy, and yet ….

    “Go back to your Cricket NZ, nothing to see here, go BACK to the cricket…”

    And the masses … obey

  8. 27 March 2013 at 11:47 am

    I think number 1 is doable also. Given the fact that these people, PLUS their families, can get free travel and other perks for the rest of their lives after they leave parliament.

    I prefer NO asset sales though!

    • 30 March 2013 at 4:47 pm

      Actually, Allyson, having a re-think on #1 – you’re right, it IS doable. I don’t see why not…

  9. Denny Weisz
    28 March 2013 at 8:33 am

    Haha! What else would you expect from an ex-cop? No moral compass, he can’t think for himself so he just goes along with what his kind do …… concede to greed & dodgy dogma…… How did the GFC happen again?Haha!

  10. Theodore
    28 March 2013 at 8:42 pm

    The Nats are lying bastards as well as corrupt. Today it was anounced that the pricks have permitted prospecting in our conservation parks. It was only three years ago that they promised to keep their stinking paws of Schedule 4 conservation land and now here they are secretly letting prospecting to go ahead.

    The whole bloody lot of them should be jailed for corruption.

  1. 28 May 2013 at 7:17 pm

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