Friday 8th July 2011 2 Comments
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The New Zealand Shareholders Association welcomes the conviction of three Nathans Finance directors today.
The decision supports our view that it is the duty of all directors to act in good faith and in the best interests their company and its shareholders. “Directors needed to exercise the care, diligence and skill that a reasonable director would exercise and not just warm the seats around the board table” said Chairman John Hawkins.
Hawkins said the defence of relying on advice from others has now been shown to be flawed both in this case and the recent Centro decision in Australia. “That is exactly how it should be. Directors are paid to do a job and an important part of that is to bring their own skills and experience to the task” he said. “These three were so incompetent and deceitful they did not even warrant the title of Director”.
Hawkins said the three convicted directors were commercial hazards who had cost investors $174m and contributed to a loss of confidence in the markets when the country could least afford it. The scale of offending requires a message to be sent loud and clear. The NZSA would not be satisfied unless there was a substantial custodial sentence and reparations. “They bled the investors dry. Now they should feel the pain themselves”, he said.
Hawkins was also scathing of the manner in which the former Securities Commission had discharged its duties. “These three have been convicted under laws that were available to the Commission, but they waited until the damage was complete before stepping in”, he said.
“The Shareholders Association strongly supported the formation of the FMA to replace the Securities Commission. The FMA has already shown a much more proactive approach. Combined with law changes that the NZSA has been closely involved with, we believe there will be a greatly reduced likelihood of similar offending in the future” Hawkins said.
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