You are not permitted to download, save or email this image. Visit image gallery to purchase the image.
The Companies Act 1993 imposes a number of obligations on companies and their directors. How a company operates is also determined by its constitution — if it has one. A constitution sets out the rights, powers and duties of the company, the board, each director and each shareholder.
A director of a company must not act, or agree to the company acting, in a manner that contravenes the Act or the constitution of the company.
The Act says directors are responsible for managing the company’s day-to-day business. Directors must act honestly, in what they believe to be the best interests of the company, and with such care as may reasonably be expected of them in all the circumstances.
Directors must not carry on the business in a manner likely to create a substantial risk of serious loss to the company’s creditors — reckless trading.
Exactly what this involves will vary from company to company and for Dunedin City Council-controlled Delta, Aurora and Dunedin City Holdings, now is the time to investigate exactly how the duties of a director impact on the current situation in which this city finds itself. Through ongoing investigations by the Otago Daily Times, it has been revealed the state of the Delta and Aurora businesses are not what ratepayers have been led to believe.
Maintenance of power poles has not happened as it should and people — elected and appointed — have been ducking for cover. But this problem has not emerged overnight. It has been decades in the making. In the 1990s, maintenance crews for the then Dunedin Electricity were reduced as the quest for profits was pursued. The city council-controlled companies had a mandate to provide dividends back to the council as a way of keeping rate rises at a minimum. Successive councils have gouged the balance sheets of these companies, taking cash back even as maintenance faltered. It now appears as if ratepayers, the residual owners of these companies, are going to have to pay for work which should have been carried out earlier.
There has been decades of duty dereliction by successive chief executives, boards, council staff and elected officials and it is time now for someone to take responsibility. Bad decisions have been made. There has been a series of disasters across council and its companies. It must stop.
Responsibility starts at the top and Delta chief executive Grady Cameron is paid a generous amount of money to oversee the company. Beneath Mr Grady, named Young Energy Executive of the Year at the Deloitte Energy Excellence Awards two years ago, is a layer of other well-paid executives charged with keeping the electricity network in top condition. That has not happened.
Board chairman Ian Parton is supported by very experienced directors. How did they let the situation get this bad and why have they let the earlier bad decisions become amplified rather than diminished? Ratepayers deserve to know through a detailed investigation.
The oversight of the council-owned companies is undertaken by Dunedin City Holdings chaired by Graham Crombie. A fellow board member is Kathy Grant, the Southern District Health Board commissioner, where Mr Crombie is the deputy commissioner. Dunedin has a small pool of directors and a search of the boards of council companies will reveal just how closely they are interlinked.
City holdings reports to the council, overseen by Mayor Dave Cull — the elected representative of the shareholders, the ratepayers.
An urgent review is being carried out by an independent party. Some answers may be available by Monday. But the main damage has already been done.
The Otago Daily Times does not take this step lightly, but there is a need for some urgent resignations starting with Mr Cameron. Delta and Auroa board members should also look deeply into their own consciences and decide what should be their next steps.
The elected council can no longer adopt a hands-off approach to assets owned by the ratepayers.