Professor Robert MacCulloch: The Abject Failure of NZ Ministers who became company directors after leaving Parliament and a reason why (its who you know in the zoo).

Synlait Ltd, the milk producer, is experiencing a collapsing share-price. Who has been one of its Directors for the past 10 years? Former Finance Minister, Ruth Richardson. As for former PM, Dame Jenny Shipley, the construction company of which she was a Director, Mainzeal, bankrupted. She was found guilty in court, along with her fellow directors, "of allowing Mainzeal to trade in a way which created a serious risk of substantial loss to creditors, which would have been apparent to them if they had acted with reasonable skill & diligence". Meanwhile, former Minister of Treaty of Waitangi Negotiations & MP for Epsom Sir Doug Graham, became a "disgraced former finance company boss, being among four Lombard Finance directors convicted of making false statements in a company prospectus".

What do these cases, and similar ones, tell us about why many former Ministers are getting into these kinds of troubles (with apologies to Richard Prebble who seems to be doing a fine job as a Director of Mainfreight)? Probably that they are being given Directorships not because they are amazing experts on the industries in which the companies that have put them on their boards are doing business, but because they are politically well connected, and give the firm the appearance of respectability and of government-approved authority. But why should you need to be politically well-connected to get a top job? Is it for the same reason that former Finance Minister, Grant Robertson, was made Vice Chancellor of Otago University? Because he knew people in Wellington who could help the University? This should be a country where it is not who you know in the zoo that determines whether or not you get the top job. Can't it simply go to the best person - the one who knows the most about the company & its industry - the one who knows the most about how it can create more wealth - not just the one who knows how to shuffle money around different pockets?

Sources:
https://businessdesk.co.nz/article/primary-sector/ruth-richardson-out-as-synlait-director
https://www.nzherald.co.nz/business/mainzeal-supreme-court-judgment-directors-of-failed-firm-including-former-pm-jenny-shipley-to-pay-nearly-40m-plus-interest/NX5Y5JG5PJHWZDDRWVBWKHYUNE/
https://www.nzherald.co.nz/kahu/sir-douglas-graham-retains-knighthood/M3RA3CQQCFWVKX54O5CSS6KIOI/

Professor Robert MacCulloch holds the Matthew S. Abel Chair of Macroeconomics at Auckland University. He has previously worked at the Reserve Bank, Oxford University, and the London School of Economics. He runs the blog Down to Earth Kiwi from where this article was sourced.