Former New Zealand leader must pay millions in compensation
WELLINGTON, New Zealand (AP) — A judge on Tuesday ordered a former New Zealand prime minister to pay several million dollars in compensation for her role in the collapse of a construction company.
Dame Jenny Shipley, who from 1997 to 1999 served as the nation’s first female leader, began serving as board chair of the construction company Mainzeal in 2004, after she left politics. The company built landmark buildings throughout New Zealand, including the Supreme Court in the capital, Wellington.
The company collapsed in 2013, owing creditors 110 million New Zealand dollars ($76 million). The company’s receivers then sued the board of directors, including Shipley.
In a written decision, High Court judge Francis Cooke found the directors had engaged in reckless trading by using money owed to subcontractors to continue operating over several years.
The judge found that China-based company Richina Pacific had extracted money from Mainzeal to buy assets in China, while the directors relied on promises from Richina that Mainzeal would get money when it needed it.
One of the directors, William Yan, was a significant shareholder in Richina and benefited from the arrangement, the judge found. The judge found Yan had induced the other directors to breach their duties.
The judge found Shipley had acted in good faith and not for personal gain. She was ordered to pay up to NZ$6 million ($4.1 million) as part of a NZ$36 million finding against the directors.
The judge noted that the directors collectively had liability insurance for NZ$20 million.
Shipley’s law firm Chapman Tripp said in a statement that the court ruling appeared to have “novel aspects” and it was considering its options, which would include appealing.
Shipley last year told the court that she and the other directors had hoped they could find ways to save the company and its 450 employees.
Shipley, a conservative, gained the premiership in 1997 after toppling the previous leader in a power struggle. She then lost the next election, but remained opposition leader for two more years.