Three cheers for a resignation

OPINION: Fonterra chairman Henry van der Heyden's resignation from the NZX board - to remove any perceptions of potential conflict of interest - is to be commended.

Conflict of interest issues are all too often glossed over and/or dismissed in both business and political circles in this country.

Van der Heyden's decision to step down as an NZX director comes as dairy co-operative Fonterra again looks at its capital structure after farmer shareholders shot down plans in 2007-08 for a partial sharemarket listing.

The resignation also comes as NZX moves to set up a futures market for the trading of whole milk powder and in the wake of the sharemarket operator's acquisition of rural publisher Country-Wide.

So although NZX chairman Andrew Harmos and van der Heyden maintain no conflicts of interest actually exist, there's plenty of scope for the perception they could. And this wriggle room for perception of conflicts, whether they're real or not, is the key point.

The van der Heyden situation reminds me of a scenario under the previous Labour-led government where Labour Party president Mike Williams sat on the boards of various State Owned Enterprises. These included the NZ Transport Agency, formerly Transit.

In 2003 Williams' role at Transit came under fire from National's then associate transport spokesman John Key. Key questioned whether there was an element of pork barrel politics when projects in Labour cabinet ministers' electorates were bumped up Transit's priority list.

Labour - and Williams - denied this. And Williams, when I questioned him, said he saw no conflict of interest between his dual roles as president of the governing party and sitting on the board of the government owned transport agency.

"No, I don't see any conflict of interest as long as I'm honest about what I do," Williams said at the time. "I think I'm generally regarded as someone of integrity."

Whether this was accurate or not is irrelevant. Because the perception was surely there that a person so close to the government could, at least in theory, influence a state owned transport agency.

Ironically, Williams was forced out of his SOE directorships when the Key-led National government took office last year.

As for Fonterra and NZX, you've got New Zealand's biggest business, Fonterra, in our biggest industry, agriculture, and the operator of our sole stock exchange, NZX. It's inevitable the two will cross paths at some point and it's important stakeholders in each, plus the broader public, are clear at all times on whose interests van der Heyden, Harmos and NZX's CEO Mark Weldon are primarily representing and advocating on behalf of.

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