Mainzeal collapse must be investigated | The Jackal

9 Feb 2013

Mainzeal collapse must be investigated

Today, the NZ Herald reported:

The Mainzeal receivership highlights once again the poor governance of the Richina Pacific group of companies, inadequate corporate disclosure and the vulnerability of unsecured creditors and subcontractors when a construction company goes bust.

It also shows that former politicians continue to make poor decisions when it comes to accepting board seats with former Prime Minister Dame Jenny Shipley now joining that infamous list.

Dame Jenny Shipley joins a long list of prominent politicians who have joined the boards of troubled or unsuccessful companies.

These include: Wyatt Creech and John Luxton at Blue Chip; Sir Roger Douglas, Fran Wilde and Philip Burdon at Brierley Investments; Don Brash and John Banks at Huljich Wealth Management; Sir Douglas Graham and Bill Jeffries at Lombard; Sir William Birch at Viking Pacific (now Vetilot) and Ruth Richardson at Dairy Brands and Syft Technologies.

The list goes on and on and the Mainzeal collapse is a timely reminder that retired politicians should be extremely careful about accepting board positions because most of them have little business experience and their appointment can temporarily embellish the reputation of a poorly run company.

I don't think that's the case with Jenny Shipley's appointment as chairwoman of Mainzeal... Because of her business associations, the former National Prime Minister obviously took an active roll in promoting investments into Chinese companies that were going down the gurgler, and that's one of the main reasons Mainzeal collapsed.

It's also interesting to note that Mainzeal has collapsed at about the exact same time the building industry they specialize in is meant to be booming. With the widespread destruction of Christchurch's infrastructure, you would think Mainzeal would have an overabundance of work and therefore revenue. The investments made under Jenny Shipley's watch must have been seriously bad indeed for them to negate that increased investment.

There was also an obvious conflict of interest with Shipley being a Mainzeal director and on the board of the Canterbury Earthquake Recovery Authority (CERA). That in my opinion is a serious conflict of interest that should be investigated, especially considering Mainzeal was a significant player seeking Christchurch rebuild CERA contracts.

The other point that should be made is that National ministers and particularly Gerry Brownlee have frequently claimed that the economy will improve when the Christchurch rebuild gets underway... However this doesn't appear to be the case and one can only assume (because the MSM is not reporting on it) that the rebuild, nearly two years after the first earthquake took place, is floundering.

Mainzeal's collapse is a clear indication that all is not well within the New Zealand construction industry and in my opinion that's a clear result of government incompetency. Without any proper governance our economy will continue to stagnate, and more companies are likely to go out of business as a result... Sometimes the end results of the right wings neoliberal agenda speak louder than words.