Further shake-ups for boards

Dave Cull
Dave Cull
The Dunedin City Council's stable of companies is set for another injection of fresh blood as part of major restructuring prompted by a dividend shortfall last year and the political storm that followed.

The changes will affect the boards of Delta Utility Services and Aurora Energy - governed by the same directors - and City Forests. Two directors from each are to be replaced by two new recruits, with fresh talent and skills.

In addition, the board of Dunedin City Treasury Ltd (DCTL) will be completely replaced by the recently appointed directors of the council's holding company, Dunedin City Holdings Ltd.

The changes were outlined in a report by DCHL chairman Denham Shale and will be considered at an extraordinary council meeting on Monday.

The new structure will be discussed in public, but only after the appointments themselves, and directors' fees for the next year, are agreed in private.

Dunedin Mayor Dave Cull said he was "more than happy" with the new directors, but their identities, and exactly who from the existing boards was staying and going, would not be made public until after Monday's meeting.

The changes were the latest results to come from the Larsen report, which recommended changes in the wake of last year's multimillion-dollar shortfall in DCHL dividends and the political stoush that followed.

The report recommended changes included an end to directors serving on more than one subsidiary board, or on both DCHL and subsidiary boards.

Mr Cull said the latest changes targeted "perhaps not ideal" governance structures across the DCHL group, and would mean a more effective and accountable system that gave DCHL more control over its subsidiary companies.

However, Mr Cull did not expect the new structure to herald further major changes beyond those already signalled, such as an end to DCHL's old habit of borrowing money to pay for dividend payments to the council.

Mr Shale and director Bill Baylis had constituted DCHL's new board until joined in August this year by newly appointed directors Kathy Grant, the Otago Polytechnic Council chairwoman, and Polson Higgs chief executive Graham Crombie.

Mr Shale said at the time attention was to turn to the subsidiary companies, and a search for new directors was already under way, although "some continuity" was desired.

"There's no way we're going to chuck everybody out of every position."

Mr Shale's report to next week's meeting said the appointment of new directors would mean the DCHL board would "largely have achieved" the restructure of subsidiary companies suggested by the Larsen report.

Each company would have two existing and two new directors, while DCTL would be governed by the directors of the DCHL board.

DCTL was responsible for the council's Waipori Fund investments, and was the "organiser and obtainer" of borrowed funds for the council and its companies, he said.

"For that reason, and so as to maintain a good overview of monies borrowed by its subsidiaries, DCHL believes it should have the governance responsibilities for the activities of DCTL."

The incumbent DCTL board comprises chairman Ross Liddell, the chief executives of each company within the group and council finance and resources general manager Athol Stephens.

Those directors would retire from their posts, although Mr Liddell would remain the chairman of City Forests and DCTL chief executive John Knight would report to the company's new directors, Mr Shale's report said.

Monday's meeting will consider the appointment of directors - and directors' fees to September 30 next year - in non-public, before moving back into public session to discuss the new governance structure.

- chris.morris@odt.co.nz

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