Standard scoop: Another senior Nat failed to disclose conflicts

Written By: - Date published: 10:39 am, October 28th, 2008 - 34 comments
Categories: corruption, economy, election 2008, john key, national - Tags:

Last month, Key lied when he was asked whether he had more Tranzrail shares, over which he had failed to declare his conflict of interest. On Sunday, it was revealed on The Standard that Key had also held shares in Fletcher Challenge Forests, which was campaigning for the Government to buy the rails off Tranzrail, at the same time as he was using his powers as an MP to gain information on the prospects for that sale. He didn’t reveal that conflict of interest, either. But Key wasn’t the only Nat breaking the rules.

In between 2002 and 2005, Gerry Brownlee asked numerous written and oral questions, and gave numerous speeches about Contact Energy, and about government policy that relates to Contact Energy’s share price. He often criticised policies that would reduce Contact’s profitability – environmental standards, Kyoto, the establishment of the Electricity Commission – and asked questions on specific Contact projects.

Here is an example from 2002 of just one of the instances in which Brownlee used his powers as an MP to obtain information on Contact Energy:

Gerry Brownlee: In the light of that answer, why has Contact Energy put on hold its combined-cycle gas plant planned for Otahuhu [Hansard,8 Oct, 2002]

Here is another from 2003

Gerry Brownlee: Can the Minister confirm that the Government is considering establishing a systems operator who will buy and sell all generated electricity, doing away with the market and destroying all incentives for investment in new generation that we desperately need?

and one more from 2003

Gerry Brownlee: Is the Minister aware that similar comments from the Prime Minister last week wiped millions of dollars off the capital value of Contact Energy; can he tell us whether he has discussed those threats with the Minister for State Owned Enterprises; and can he also tell us how bringing generators to their knees helps the current crisis?

He seems a little upset about the drop in Contact’s share price, doesn’t he? Well he might, because Gerry Brownlee was a Contact shareholder; he had a financial interest in Contact’s performance and share price. In none of the instances I’ve seen where Brownlee refers to Contact or its interests does he reveal he is a shareholder. He first made it public when the Pecuniary Interests Register came into force in 2006. Prior to that, he did not declare his conflict of interest as he was required to do, even as he used his privileges as an MP to obtain information that gave him special information on the value of those shares.

I discovered Brownlee’s shareholding while examining the share registers of eight New Zealand companies. My primary purpose was to ascertain whether John Key had any holdings in those companies (more on those holdings later); I only checked whether Brownlee has a holding in Contact on a whim. So what are the odds that there are not more, undiscovered, conflicts of interest that the Nats have kept secret?

As with the secret agenda tapes, what we are seeing here is almost certainly just a small snapshot of the full picture. Even more concerning than the secret conflicts of interest that have been discovered is the knowledge that this is just the tip of the iceberg.

[Update: Brownlee’s shares disappear in 2006, when he creates a family trust. Presumably, the shares went into the trust. Parliamentary procedure expert Idiot/Savant argues that, while listing an interest in the pecuniary interests register (as Brownlee has done with his trust) removes the need to reveal conflicts of interest under SO166, a conflict arising from assets within a trust that are not named in the register still needs to be revealed. To put it bluntly, if Brownlee stills owns the shares in his family trust, he still needs to reveal the conflict of interest notwithstanding that he has registered his trust.]

34 comments on “Standard scoop: Another senior Nat failed to disclose conflicts ”

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  1. yl 1
    28 October 2008 at 10:44 am

    Great work Steve,

    Keep the crime busting going. It might not be front page stuff but it is more straw on the camels back. (the camel being National, and the straw being more lies and corruption).

  2. NeillR 2
    28 October 2008 at 10:55 am

    even as he used his privileges as an MP to obtain information that gave him special information on the value of those shares
    Howso? I haven’t seen a single piece yet which shows anything other than questions being asked in parliament – a public forum, which is televised. So at the same time Brownlee asked the questions they became a matter of public record and as such, the market was fully aware. Do you really have any understanding of markets and disclosure?

  3. Quoth the Raven 3
    28 October 2008 at 11:06 am

    If Gerry Brownlee bashing a pensioner didn’t sully National party supporters opinion of him I doubt this will.

  4. Ianmac 4
    28 October 2008 at 11:07 am

    Good Stuff Steve.
    NeillR: Should Bill Ralston declare his interest in John Key as his media trainer, when asking questions on public TV?
    Should David Farrar declare his interest in being a National Party blogger, when appearing as an “independent” commentator on TV or Radio?
    Should Gerry or John declare a pecuniary interest when asking questions in Parliament (which is a privileged position which others outside do not have)? This even before any money is made or shares traded which would lift it to greater more serious levels.
    I ask as a non legal non economist person.

  5. Steve Pierson 5
    28 October 2008 at 11:07 am

    NeillR.The standing orders are clear – it doesn’t matter that these statements and questions go on the public record, it is that someone with a financial interest in the company is asking questions without revealing that interest which is the violation of the rules.

  6. vidiot 6
    28 October 2008 at 11:07 am

    NeillR – No he (SP) doesn’t.

    If he (Brownlee) was asking questions behind closed doors, he would have a conflict of interest and could be in breech of insider trading rules. However, as you (NeillR) has pointed out, all matters in the chambers are public record, so no wrong doing can be found.

    Now the questions I would like to ask SP is why do you have such a beef with our politicians who are willing to back NZ companies ? Do you not think it’s a good idea to back NZ made ?

    Next you will be assumpting that because Brownlee has shares in Contact, that he can’t argue against the compulsory introduction of CFB’s as the impact of switching over to these will see Contact’s profit’s lowered. Or promoting the electrification of Auckland Rail, as Contact might be the ones powering that.

    [this has nothing to do with insider trading rules. It is about the rules of Parliament. MPs are given privileges, powers of inquiry that ordinary people don’t have, they have to abide by rules on the use of those powers. MPs are allowed to speak on any issue but they must reveal any conflict of interest when they do so. Brownlee and Key have failed to do so. SP]

  7. coge 7
    28 October 2008 at 11:11 am

    Good on NZ politicians for investing in local companies. Sure, some of these investments turned out to be complete dogs, but good on the politicians for backing them. I’m reasonably confident that some Labour pollies have adopted the same approach.

  8. NeillR 8
    28 October 2008 at 11:13 am

    NeillR: Should Bill Ralston declare his interest in John Key as his media trainer, when asking questions on public TV?
    I suppose he should if Paul Holmes declares his interest in sleeping over at Helen and Peter’s.

  9. Janet 9
    28 October 2008 at 11:30 am

    Declaring a conflict of interest when discussing anything you could potentially benefit financially from, is generally an ethical issue, and, increasingly, a legal one. Best advice is always to declare in the interests of transparency and others can judge whether it is relevant or not.

    Notable examples when people don’t declare conflicts of interest when ethically they should, in my opinion, include some writers on a particular well-known weekly magazine, several contributors to the op ed pages of the newspapers, the sacked Hawkes Bay DHB, as well as the MPs already mentioned.

  10. T-rex 10
    28 October 2008 at 11:34 am

    Does the moron Brownlee still own those shares Steve? Because if so, I’d say his behaviour earlier this year during the “Power Crisis OMG WTF That Wasn’t”, namely endlessly talking up the degree of peril the country faced, was fairly self serving. No doubt he wanted to make Labour look bad – that’s self servingness that I can accept from the opposition. But did you see how much money Contact made during the high spot prices? Clyde and Roxborough are basically run of river dams – you can’t just shut them down. If power is cheap, contacts profits are lower.

    —

    I’m mostly bitter because someone who is so clearly an ill-informed idiot leveraged his moronic opinions into more airtime than anyone not accused of blowing up a childcare centre should ever receive.

    Good ol’ Gerry. Tirelessly championing the dire times in the electricity industry… well, you know, at least right up until the point that it rained. Durn rain.

    In fact, when it comes right down to it, how the f*ck can a political parties energy spokesperson EVER have shares in a power company without a conflict of interest, especially in a semi-regulated market. What a joke. I now dislike him even more, and I already disliked him quite a lot.

  11. rave 11
    28 October 2008 at 11:35 am

    Have these questions been put to Key and Brownlee by Francesca Mold yet?
    I would like to see Key derailed and Brownlee getting a charge up his whatsit.

  12. Steve Pierson 12
    28 October 2008 at 11:43 am

    T-Rex. Impossible to know. He owned the shares in his own name in the 2006 register but in 2007 he had set up a trust and the shares had disappeared (presumably, but not provably, into the trust). for the purposes of the standing order, that’s ok, so it’s not a breach of the rules, but there should be questions about a shareholder in a power company using his power as Opposition Energy spokesperson trying to scare up a power crisis every year.

    captcha: ‘locked recounts’ are vision of New Zealand, post-election?

  13. Steve Pierson 13
    28 October 2008 at 11:46 am

    rave.. Kevin Taylor responded to the Key story, said it was like saying an MP has a conflict of interest if they talk about petrol prices because they own a car. Not true of course. A conflict of interest arises from a special interest that person has, not something everyone has, and Key owned shares in a company campaigning for the Government to undertake a certain action (buy the rails) at the same time as he was asking questions about that action.

  14. NeillR 14
    28 October 2008 at 11:58 am

    SP, it’s not a conflict of interest. A conflict of interest would arise if he were a shareholder in a company – let’s say it made wind generated turbines for power consumption and then the government happened to buy those turbines.
    Or if a DHB decided to contract out part of it’s operation and the company that got the contract was run by that MP’s spouse. Or a conflict of interest might arise if someone was looking to gain residency and the MP in question invited the person along and got them to drop a wad of cash into the collection box and later they got given residency. Those are examples of conflicts of interest.

    [no, you just don’t understand the rules. Here is Standing Order 166(1)
    166 Declaration of financial interest
    (1) A member must, before participating in the consideration of any item of business [business means activity of Parliament], declare any financial interest that the member has in that business.
    If Key had a conflict of interest over his Tranzrail shares, and he conceded he did, then Brownlee had one over his Contact shares. SP]

  15. Daveski 15
    28 October 2008 at 12:00 pm

    I know this is not a Labour site because LP says so and as much as I disagree with LP’s comments (he’s is openly Labour and says so) I respect his comments.

    But this line of attack contrasts vividly with SP’s line on Winston. Moreover, for this to be relevant, it would need to be accompanied by a similar analysis of the left MP’s to prove that this is of consequence.

    To be more constructive, I think the Standard is having a bit of an identity crisis. I understand the intended purpose but posts such as these illustrate it is less a left wing labour forum of like minded people and more of a surrogate pro-Labour site.

    Yes I have read the About pages 🙂

    But SP’s line of attack mean this site is becoming more Labour and less labour.

  16. Tane 16
    28 October 2008 at 12:08 pm

    Daveski. SP, like the rest of us, opposes a National-led government. While in Auckland he had a look at the share register and found Nat MPs had been engaging in dodgy behaviour. He is now making that behaviour public.

    There’s no identity crisis here, just a bunch of National supporters who don’t like seeing their heroes exposed and, in your case, are desperate for a line.

  17. Danny 17
    28 October 2008 at 12:10 pm

    “Is the Minister aware that similar comments from the Prime Minister last week wiped millions of dollars off the capital value of Contact Energy; can he tell us whether he has discussed those threats with the Minister for State Owned Enterprises; and can he also tell us how bringing generators to their knees helps the current crisis?”

    If Brownlee said that while he was an undisclosed shareholder, he is an idiot, and he is in trouble. Plain and simple.

    NeillR/Vidiot; this is not about “markets and disclosure”. It is not an accustion concerning securities law at all. It is about “conflicts” and “pecuriary interests” (the latter often needing a consideration of the ‘market price’ when the interest is non-direct, which is not the case here).

    Therefore, it is patently obvious that you are either 1. confused; or 2. politically motivated.

  18. Steve Pierson 18
    28 October 2008 at 12:12 pm

    Daveski. I’m a Green voter, always have been. Been a member since 2003. Inactive though.

    and I’m not sure how a post revealing the results of research I have conducted for the Standard on National MP’s conflicts of interest has anything to do with whether this site is broad Left or Labour

  19. Quoth the Raven 19
    28 October 2008 at 12:17 pm

    There’s no identity crisis here, just a bunch of National supporters who don’t like seeing their heroes exposed and, in your case, are desperate for a line.

    Don’t worry DPF will soon provide them with their scripts.

  20. Daveski 20
    28 October 2008 at 12:24 pm

    Tane/Sp

    Acknowledged your points although you are assuming I am a National supporter.

    I certainly don’t hero worship the Nats – I’ve been quite open about their public failings.

    Clearly, conflict of interest is a valid line of attack. However, this is far from an open case of corruption and as I’ve noted fails the test of whether this is something that is characteristic of just some MP’s or whether similar straw men could be created about Labour or other left MP’s.

    SP – you have acknowledged your Green status before. My comments are based on perception.

    To me, this looks like the left being desperate for a line given the polls.

    I’m not trolling, not trying to deflect, but it’s the equivalent of the Kiwis saying at least we won the haka against the Kangaroos.

  21. Danny 21
    28 October 2008 at 12:24 pm

    Vidiot?NeillR,

    … and Brownlee can ask/state whatever he damn pleases about Contact as a shareholder and as a member of Parliament, provided he first discloses that interest.

    Securities law does not come into it unless he 1. becomes an information insider, and 2. acts on that information (disclosure of his interest is irrelevant to that point, and besides, it is not even close to what was suggested). You have both mistakenly (deliberately?) confused the two to create a higher threshold for wrongdoing.

    The test is simple.
    1. a member of Parliament; 2. an interest; 3. that interest not being disclosed; and 4. participation in business related to that interest.

  22. Akldnut 22
    28 October 2008 at 12:34 pm

    NeillR – Daveski You can put up all the different scenarios and whine as much as you like but that dosn’t change the fact that they’ve both been snapped not conforming to parliamentary rules.

    Daveski you need to look at your third scenario again because
    1. The MP in question did not “get” anyone to drop off a wad of cash, it was a donation.
    2. He acknowledged having a form of dealing “as such” with this guy by passing it on to the next person as the rules state that he should. ( Look he ‘s following the rules and he’s not going to make any money out of it – unlike some dodgey pricks)
    3. The dude was hedging his bets by dropping of a wad of cash to national as well. (or was it a donation?…. mmmmm convenietly ommited again)

  23. Idiot/Savant 23
    28 October 2008 at 12:42 pm

    Steve:
    He owned the shares in his own name in the 2006 register but in 2007 he had set up a trust and the shares had disappeared (presumably, but not provably, into the trust). for the purposes of the standing order, that’s ok, so it’s not a breach of the rules

    Really? SO 165 includes benefits to trusts in which the MP has an interest in the definition of a financial interest. And while SO 166 allows MPs to avoid declaring an interest already contained in the register, if the register simply lists the trust rather than the shares, then there is arguably still a duty to declare. Which likely makes some of his questions and debating points (particularly over climate change) over the last few years in breach of standing orders as well.

    You should do some more digging into this. The results would be fascinating, and help protect our democracy.

  24. Dancer 24
    28 October 2008 at 12:49 pm

    Good work here Steve. And for those who are unclear on standing orders – they are the rules that MPs live by – and so are important (it was a breach of the SOs that got Winston sent to the priviliges select committee). This is what Mr Key said about SOs over the earler Tranzrail event on Sunrise (23 September)

    JK: at the time in 2002, when I came into Parliament, there wasn’t a pecuniary interest list to register it on so it didn’t work like that. The correct process for me to have followed was if there was a point at which I asked um, information about a company that I had a shareholding under a standing order, I should’ve declared that and ah, I failed to do that. I was, that was a genuine error on my part.

    Now Mr Brownlee is an experienced politician so he should have known better (so should Mr Key but that’s a different story!)

  25. the sprout 25
    28 October 2008 at 12:52 pm

    Great stuff. If only we had like, journalists, who could do this stuff too.

  26. Danny 26
    28 October 2008 at 12:58 pm

    Yes quite.

    Of all people, Mr Brownlee is in absolutely no position to downplay the importance of standing orders or the significance of this apparently egregious breach.

  27. Ianmac 27
    28 October 2008 at 1:47 pm

    Idiot Savant: Having great respect for your perceptions , I think your input is a great help. How do you think the story should be unfolded.

  28. randal 28
    28 October 2008 at 2:26 pm

    handed out in free broadsheets every morning at wellington and auckland railway stations

  29. Sarah 29
    28 October 2008 at 2:51 pm

    I think Steve doesn’t like people having shares in the first place. Oh those filthy capitalists.

    [I own shares. Would a perfect world not have this system of wealth ownership? Sure but that doesn’t make it immoral to own shares in the existing system. SP]

  30. jo zinny 30
    28 October 2008 at 3:28 pm

    Steve,

    Your checking back some and I’d like know whether other related-to-stock issues have been taken up by the mp.. looking for options.. and if available data or details whether option/s and/or option contract rights issued with any such financial asset/s..? The former could be regular to shareholders, the latter privileged and – in the circumstances you describe – most definitely in need of disclosure..

  31. Ianmac 31
    28 October 2008 at 5:29 pm

    Jerry Brownlee has answered the Standard’s contention in the Press today.
    http://www.stuff.co.nz/thepress/0a28824.html?source=nav
    Says that there was never any requirement to declare.

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