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Dame Jenny Shipley in court during the Mainzeal saga (Radio NZ, Tom Furley)

The BulletinFebruary 27, 2019

The Bulletin: The sorry saga of Mainzeal

jenny shipley in a black blazer and stripey scarf
Dame Jenny Shipley in court during the Mainzeal saga (Radio NZ, Tom Furley)

Good morning, and welcome to The Bulletin. In today’s edition: High court rules on sorry saga of construction company Mainzeal, John Tamihere rejected by Labour, and Dunedin losing historic Presbyterian churches.

When construction giant Mainzeal went bust, it left a massive trail of debt in its wake. The company, which at the time was the third largest construction firm in the country, went into liquidation in 2013, owing more than $100 million, including more than $45 million to subcontractors. The latest development is that the High Court has ruled that directors of the company are now liable to pay $36 million, on the grounds of reckless trading.

So is that the end of the matter? That’s deeply unlikely, writes Radio NZ senior business journalist Kim Savage. It looks highly likely that the saga will drag on even longer, with the directors (including former PM Dame Jenny Shipley) saying they’ll weigh up their options. Even with that, the directors have insurance policies worth about $24 million, so that could go towards the debt.

The story of Mainzeal though is much more about just the dollar figures being thrown around. In the wake of this collapse, and the collapse of Eberts Construction last year, there has been heavy criticisms of systems which end up hitting subcontractors badly when things go wrong. The NZ Herald quoted construction law specialist Jeff Walters, who says the Construction Contracts Act doesn’t appear to be working properly. He says when financial shocks hit massive companies, payments to subbies are almost never up to date. Mainzeal had been trading while insolvent for eight years before it collapsed, and money owed to subcontractors had been used as working capital, reports Interest.

It’s also a story of compelling personalities, in particular Richard Yan, who owned Mainzeal’s parent company. His story is told by Stuff – he started with the company in 1981 sweeping the floors, and went on to take it over in 1996, through a company he owned. But he ended up presiding over it right at the very end too, when the final curtain was brought down by BNZ, a major backer.

It’s also the story of a former Prime Minister brought crashing down to earth. Dame Jenny Shipley, who is on the record raising concerns about the business practices of Mainzeal during the bad period, has ended up with her face on many of the articles about the collapse. This Stuff story illustrates that, with someone who went into hundreds of thousands of dollars worth of debt pointing the finger at her. It’s also an example of how politicians who move to corporate governance can end up being found out – unpacked in this feature from the Listener archives that was posted on Reddit in honour of the Mainzeal story. Radio NZ’s news bulletins this morning include reports that cabinet ministers are considering whether Dame Jenny should be pressured to step down as a director on other boards, such as the NZ-China Council.

But the key thing it shows is that ultimately, the sorts of business practices that kept Mainzeal going just aren’t sustainable. Stuff have placed the Mainzeal collapse in a long string of other companies who have ended up going under, names that will be familiar to many: Equiticorp, Bridgecorp, Hanover Finance. University of Auckland commercial law professor Julie Cassidy says the case shows why it matters to be able to hold directors personally responsible for the reckless actions of their companies.

The Labour Party has rejected the continued membership of former MP and Auckland mayoral aspirant John Tamihere, reports the NZ Herald this morning. The party isn’t commenting, but Mr Tamihere is convinced it’s because of his challenge to incumbent mayor Phil Goff, who has been endorsed by Labour. It has also reportedly caused ructions within the Māori membership of the party.

In fairness, Mr Tamihere’s candidacy is very much being seen as running from a position on the right of politics. He’s enlisted former National MP and Auckland City mayor Christine Fletcher as a running mate, and is engaging with the small-government zealots at the Taxpayers Union, as outlined in this editorial from TPU executive director Jordan Williams.

UPDATE: An earlier version of The Bulletin misrepresented the relationship between Mr Tamihere and the Taxpayers Union. I apologise for the error, and a full correction will be issued in tomorrow’s Bulletin.

Dunedin is losing historic Presbyterian churches, with another one facing demolition, reports the ODT. Partly that’s because of earthquake strengthening rules, but declining attendances are also playing a part, as churches have less money and people to call on to pay for those repairs. It means congregations are having to make decisions on how best to organise their worship spaces, as it’s not really realistic that they’ll be able to fill the pews any more.

Christchurch could be facing water restrictions, amid an admission from the Council chlorination is unlikely to finish by the specified deadline, reports The Press. Supplies were meant to be chlorine free by May – but it could be as late as October. However that could be sped up if water demand drops enough, as it would allow more securing of wells to take place.

Warnings are being sounded about the land use priorities of productive farmland, reports Farmers Weekly. With New Zealand’s population growing, and sky high house prices, a lot of that land – particularly in the upper North Island – is incredibly attractive for housing development. However, there are plenty of indications that food security will become an increasing concern in future years. Top economist Shamubeel Eaqub says farmland can’t be treated as a fungible commodity, because once it has been converted to housing, it can’t really be converted back into farmland.

Blogger Cameron Slater has declared bankruptcy, due to multiple and ongoing defamation lawsuits. The announcement was made in an update on the Whaleoil blog, which he will no longer be involved with because of his severe ill-health. The people currently running Whaleoil say the site will continue in his absence, and say they will be growing their editorial team. The post says if Mr Slater’s health allows, he will return to the site.

A new report has indicated a dangerous tipping point in climate change could be hit unless action is taken. Covered by Quant Magazine, the report indicates that if warming hits the upper levels of projections, we could also see significant cloud loss around the world. That in turn would mean more sunlight would hit the earth, warming it further, and accelerating the whole mess. If the loss of clouds sounds apocalyptic, that’s because the effects of it would be. It’s a sobering reminder that if action isn’t taken, the pace of climate change might end up being outside our control.

Meanwhile, this is a must read interview from the NZ Herald, with an expert on the greenhouse gas methane. It’s a gas that because of agriculture, makes up a big share of New Zealand’s contribution to global emissions. Professor Martin Manning says we absolutely cannot wait in tackling methane, because of the threat it poses to keeping global temperatures under 2C of warming.

Some correspondents had some pretty robust feedback yesterday about a few points in the GE free roundupIn short, the majority (but not universal) view was that I was really overstating the risks, and I think given the expertise of some of those readers, their views need to be given prominence here. With that in mind, here’s an article from Science Daily titled ‘Genetically engineered crops are safe, review of studies finds’. That was sent in by plant development biologist Bart Janssen, who followed up with this comment:

“My problem with the “research” thing is that I’ve been making transgenic plants since 1987! There really isn’t any need for research into the safety of GMOs. It’s absolutely true that any specific GMO needs to be tested properly – but the fact that it’s a GMO isn’t what needs to be looked at.”

From our partners: Climate change has already affected how electricity gets delivered to customers, and it’s only going to get more challenging. Vector’s Chief Networks Officer Andre Botha outlines what the lines company is doing to respond.

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Right now on The Spinoff: Academic Max Rashbrooke writes about the new idea of ‘social income’, which he argues is a better thing to push for that an universal basic income. Maria Slade reports on moves by truckies to bring a case against food giant Goodman Fielder. The anonymous landlord who first wrote for us two years ago is back, saying they’ve now sold up because they didn’t like who it made them become. And Steve Braunias farewells Peter Wells with an obituary.

Facebook moderators are working in terrible conditions, being exposed to the worst images on the internet, and being paid bugger all for their troubles. That’s the conclusion of this incisive piece of reporting by The Verge, which spoke to dozens of people involved with a company Facebook contracts to do their moderation. The people who spoke out say the endless barrage of disturbing content takes a huge toll on their mental health, and support networks are totally insufficient. Quite frankly, the working conditions sound evil. Here’s an excerpt:

Chloe cries for a while in the break room, and then in the bathroom, but begins to worry that she is missing too much training. She had been frantic for a job when she applied, as a recent college graduate with no other immediate prospects. When she becomes a full-time moderator, Chloe will make $15 an hour — $4 more than the minimum wage in Arizona, where she lives, and better than she can expect from most retail jobs.

The tears eventually stop coming, and her breathing returns to normal. When she goes back to the training room, one of her peers is discussing another violent video. She sees that a drone is shooting people from the air. Chloe watches the bodies go limp as they die.

She leaves the room again.

Eventually a supervisor finds her in the bathroom, and offers a weak hug. Cognizant makes a counselor available to employees, but only for part of the day, and he has yet to get to work. Chloe waits for him for the better part of an hour.

The Warriors have locked coach Stephen Kearney in for the long haul, reports the NZ Herald. Kearney has signed on for a three year extension, after a strong regular season in 2018 took the Warriors to their first playoff game since 2011. If he sees out the full contract, Kearney will equal the record for the longest serving tenure as coach, with Ivan Cleary.

NZ Football is looking at bidding for the 2023 Fifa Women’s World Cup. Stuff reports it might be the last chance New Zealand has to realistically host a senior World Cup tournament, as it will be the last one before the Women’s event grows to 32 teams. We’ll know by mid-March whether the bid is realistic at all, but if it is, it could be a significant boost for Women’s Football in New Zealand – and many of the U-17 Football Ferns who did so well last year would be ready for the top level by then too.

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