Nelson MP Nick Smith is warning Nelson mayor Aldo Miccio to be cautious with his business interests, citing his resignation from his ministerial portfolios as evidence that perception can be everything.

Dr Smith's comments came after news that Mr Miccio had accepted a co-directorship in new business NZ Inc Shop in August, through a contact he made in his mayoral role.

NZ Inc Shop intends to source New Zealand product to sell in China through e-commerce site Tmall.

Mr Miccio visited China twice this year on council trips to develop business links for Nelson.

Mr Miccio said there was no conflict of interest between his mayoral role and his involvement in the new venture. That arose after he was approached by an Auckland-based businessman Yong "York" Zhang he had previously met through the Nelson Economic Development Agency.

He said the new company would bring benefits for Nelson and New Zealand companies.

Dr Smith said he had "real admiration" for Mr Miccio's "entrepreneurial streak", and that local government needed people with business experience.

"The future is with China and Asia and it's great we have a mayor who is linked into opportunities there," he said. "But when you are in public office you have to be so careful that your public and private roles don't conflict.

"I resigned as a minister in March because of the perception that a friend might have been getting special treatment, even though the subsequent inquiry found the ACC claimant did not get anything extra. The key lesson for me was that perception can be as important as reality.

"My advice to Aldo is to be cautious. It not only has to be right, it has to look right.

"It might be a good idea for him to get some extra clarity from the Office of the Auditor-General on how he can ensure he keeps his mayoral role and his quite legitimate business interests separate."

The Office of the Auditor General published a 2010 report advising local government members how they should interpret the local authorities (Members' Interests) Act 1968.

It says that a conflict of interest exists where two different interests intersect.

"In other words, where your responsibilities as a member of the local authority could be affected by some other separate interest or duty that you may have in relation to a particular matter. That other interest or duty might exist because of your own financial affairs; a relationship or role that you have."

The Nelson City Council Elected Members' Code of Conduct says members must "not [make] improper use of information acquired or [make] improper use of their position as a member of Council".

Nelson-based Labour list MP Maryan Street said although she took Mr Miccio at his word, "it's the sort of thing that can be seriously problematic unless it's managed in a way that's completely transparent and above reproach".

"If there is a whiff of self-interest in this kind of arrangement, it will bring everybody into disrepute. Clearly China values positions like mayoralty and they are very respectful of position.

"But I hope that the work that Aldo has been doing will have substantial benefits for Nelson business and that has to be the focus of all his efforts."

Massey University local government specialist associate professor Christine Cheyne said she did not want to comment on the specifics of Mr Miccio's case, but said all elected members, and in particular mayors, needed to have a responsibility to set a high standard of ethical conduct.

"As holders of public office they need not only to act with probity but to be seen to be doing so," she said.

- © Fairfax NZ News