Last week I wrote a post about Jenny Shipley’s position in the wake of the High Court judgment against her and other directors of Mainzeal.

I noted then that her position as chair of the local China Construction Bank was almost certainly untenable. Even if, for some reason, the owners (the parent bank) had still been happy to have her, the Reserve Bank could not have allowed her to remain in her post and still retained any credibility around its “fit and proper person” regime. The Mainzeal board, chaired by Shipley, had continued trading for years with negative equity, with only the weakest suggestions of possible support from the parent. Corporate law is designed to protect creditors from that sort of corporate (mis)governance.

Shipley has now announced that she will be leaving the China Construction Bank board. We don’t know how much of a role the Reserve Bank played in that departure. No doubt they would hide behind the Official Information Act (or worse, section 105 of the Reserve Bank Act) and refuse to tell us. That is a shame: it is a lost opportunity to demonstrate to the public that the regime has teeth when it comes to seriously problematic individuals. Mind you, I guess it might also leave them open to questions about how it is that they were happy to have Jenny Shipley chairing a New Zealand bank for the last several years, as more and more information about the Mainzeal situation emerged.

The focus now turns to Shipley’s role on the Executive Board of the New Zealand China Council. In my earlier post I commented on this only briefly

As for Shipley’s membership of the executive board of the China Council……surely that tawdry taxpayer-funded body that sticks up for Beijing at every turn, has Jian Yang on its advisory board, defends Huawei, and won’t stick up for Anne-Marie Brady is just the place for her? Then again, if the government doesn’t want the last vestiges of any credibility its propaganda body still has to be in shreds, they should probably remove her too.

Shipley has clearly been very much in the good graces of Beijing over the years. It wasn’t long ago that she had actually been on the parent board of the China Construction Bank, and she is now on the board of the regime-sponsored Boao Forum. She has a long history of giving cover (literally in this case) to Beijing, going back to her brief time as Prime Minister. Even that interview she gave to the People’s Daily back in December suggests a strong (and useful to Beijing) alignment between her public views and the preferred stances of Beijing.

But it isn’t clear whose interests are now really being served if she remains on the Executive Board of the China Council – except perhaps those like me who poke the stick at this taxpayer-funded pro-Beijing advocacy and propaganda body.

Perhaps it suits Beijing to have such a tainted individual on their tame domestic lobby group. See, democracy and ‘doing the right thing’ is so enfeebled in New Zealand that our friend gets to retain her public position despite the very evident systematic poor governance on display at Mainzeal. Perhaps, but Shipley’s failings are now sufficiently evident – and will now always be associated with her name – that is doesn’t look as though it would really help the cause of keeping New Zealanders lulled into obliviousness about the nature of the regime. The China Council is supposed to look like a bunch of decent public-spirited New Zealanders.

For similar reasons it can’t really be in the interests of the China Council itself for Shipley to stay on. All the other, individually decent, people who sit on the Executive Board will be tarred by association. You can’t so fundamentally mismanage a major business, resulting in huge losses for many people as a result of choices that were irresponsible and probably illegal, and expect to keep right on in prominent governance roles. It wasn’t one small mistake early in someone’s career, but a big and very costly mistake for someone with the seniority and experience people should have been able to count on. Shipley might still be well-connected in China, but there are other people with connections (if not, I’m sure Madame Wu at the PRC Embassy could help with introductions). And everyone knows that neither corporate governance nor political governance in the PRC operate to the sorts of standards we expect in New Zealand. If the China Council really wants us to believe that they champion New Zealand standing for New Zealand values, standards, and interests – not just pre-emptively submitting to Beijing’s preferences – it should be in their interests too to get Jenny Shipley off their board, and quickly.

In a sense who owned Mainzeal shouldn’t be that relevant here – the failure of the directors was alarming and unacceptable whoever the shareholders had been – but the fact that the firm was owned by someone originally from the PRC, and with extensive interests back there, just strengthens the argument around appearances. The suspicion has been that, in effect, the China Council serves PRC interests more than those of New Zealanders. A harsh critic might suggest something similar (perhaps unfairly) about the Mainzeal board.

And it shouldn’t be in the government’s interest for Jenny Shipley to remain on the China Council board either. I was staggered at the way the Prime Minister the other day sought to avoid any responsibility or any involvement.

Prime Minister Jacinda Ardern was earlier asked whether she had any problem with Shipley being on the New Zealand China Council. She said it was not an appointment the Government had any role in.

The rules of the incorporated society that is the China Council are not readily available, so I’m not sure quite what the formal mechanism is for appointments to the Executive Board. The China Council’s website also doesn’t say. But it shouldn’t matter greatly. The government pays

The Council receives approximately two thirds of its operational funding from the New Zealand Government through an annual grant from the Ministry of Foreign Affairs and Trade.

[UPDATE: The latest set of accounts suggest just under half now, but with the government clearly the single largest funder.]

and very senior government officials serve on the Executive Board with Shipley.

The Secretary of Foreign Affairs and Trade and the Chief Executive of New Zealand Trade and Enterprise are both ex officio members of the Executive Board.

It is a creature of the New Zealand government and the Prime Minister simply can’t avoid responsibility. I wonder what the Foreign Minister – no fan of Shipley – thinks? Is the Secretary of Foreign Affairs and Trade really comfortable serving on an Executive Board with someone like Shipley?

Perhaps there are discussions going on behind the scenes, but after a week since the judgment was handed down, it is quite inappropriate that Jenny Shipley is still on the Executive Board of this prominent government-funded body, and that the Prime Minister won’t express a view on the appropriateness of Shipley’s position.

I was debating this point with someone the other day who argued that if the Prime Minister expressed a view she would open herself to attacks from the National Party (presumably something about inappropriate interference, or upsetting (Todd McClay’s, Jian Yang’s, Peter Goodfellow’s friends in) Beijing). Well, maybe, but I wouldn’t have thought Jenny Shipley, in her current position, is someone even National would want to touch with a barge pole. Are those the sorts of business governance practices National wants to defend, in public? I can’t imagine so.

And so if the Prime Minister won’t express concern about a senior figure, found to have grossly underperformed in a very prominent governance position, it risks looking as though (a) the Prime Minister isn’t bothered by such misconduct (generally) or (b) remains more interested in not upsetting friends of Beijing and Beijing’s sensitivities than about defending acceptable standards of corporate governance and decency here in New Zealand. She associates herself with all the tawdriness of the China Council – defences of Huawei, silence on Jian Yang, silence on Anne-Marie Brady, and a general reluctance ever to articulate New Zealand interests when, as inevitably happens, those sometimes clash with those of the PRC. Perhaps it buys her an easier life in the short-term. In the longer-term it further corrodes whatever reputation for decency she might once have had. It simply shouldn’t be in her interests, or that of the government, for Shipley to remain on the China Council board. And no one really doubts that – as the agency holding the purse strings – if she wanted Shipley gone she would very soon be gone.

Whatever other contributions Jenny Shipley may have made over the years, her record at Mainzeal now means that she diminishes the standing and reputation of any body or individual that continues to use her in governance roles, or which support her in such roles. Foremost among those now, the Prime Minister and the China Council itself. As one expert noted in the Dominion-Post this morning, the market has ways of taking care of these issues – Shipley (and her other fellow Mainzeal directors) might now struggle to get directors and officers liability insurance. But those mechanisms can’t protect us when it comes to public bodies. Only leadership protects us there. But at present there seems to be a void – an abdication – where leadership on this issue should be.

I did an interview with Morning Report on this issue this morning. If they put the audio up I will link to it. [UPDATE: In fact, here it is.]

UPDATE: A reader has pointed me to where the constitution and rules of the China Council are online (details in a comment). It appears that the Executive Board is self-selecting and self-perpertuating

The point remains that if the Prime Minister, representing by far the largest funder, wanted Shipley off the Executive Board (a) she would almost certainly be gone quite quickly, and (b) even if she wasn’t, the PM would have made clear her refusal to countenance the standards of corporate governance on display in the Mainzeal case.