Call for Independent Vote Probe into Zespri

Call for Independent Vote Probe into Zespri

Following the revelations on the front page of the National Business Review on Friday the Independent Kiwifruit Growers Association (IKGA) is again calling for an independent inquiry to be launched into the repeated misuse of confidential shareholder proxy votes before Zespri’s company AGMs.

IKGA Chairman, Marcus Wilkins said it was clear from the reported breaches of shareholder confidentiality and the company’s attempts to cover up the extent of these breaches that an independent inquiry is the only way for Zespri shareholders to regain confidence in the Zespri Board.

“Sound democratic processes and robust corporate governance go to the heart of shareholder confidence in any company. Zespri is not a co-operative (as mistakenly reported in the NBR article). We believe as many as 30% of growers are not shareholders and an unknown but significant number hold less shares than their production. Given the fact that all kiwifruit growers (and not just Zespri shareholders) have to supply a company with monopoly powers conferred on it by the Government, these revelations are even more serious.”

The NBR article describes what it calls a “damning report” by Barrister David Connor into the accessing of proxy votes which was never disclosed to kiwifruit growers or Zespri shareholders. “It would appear from this report that the re-election of Mr Greenlees at successive AGM’s is seriously called into question. Even if he did have the votes to regain his seat on the board, he should have resigned because, according to the article, he received confidential shareholder proxy vote information prior to the AGM’s in 2005, 2006 and 2008 in breach of a confidentiality agreement that he negotiated.”

The report pointed out Mr Greenlees significant personal interests in the kiwifruit industry and said “Mr Denyers choice of Mr Greenlees as the person to whom he divulged the “no” vote information also lacked care as Mr Greenlees was the very person who could make use of it and had a variety of interests in it”.

“Zespri Chairman, John Loughlin refused to agree to an independent inquiry on this matter when IKGA raised the issue at the last AGM and his continuing role as Chairman must now be in doubt, given his role in keeping these matters from shareholders and attempting to justify the reason Mr Greenlees was not immediately forced to resign.” Mr Loughlin seems to justify not requiring Mr Greenlees resignation by stating that Mr Greenlees is a “key board member” and a “strong contributor” to the Board. “Does Mr Loughlin have one standard for Mr Greenlees and another standard for the rest of the board? This has the unpleasant whiff of an old-boys club where Directors interests are put above those of shareholders and growers.”

Even more extraordinary is Mr Loughlin’s apparent justification for his failure to act decisively on what is a clear cut breach of trust and confidence by stating that the board needs to keep its focus on grower returns. Election to the Board of Zespri is a political process and not a commercial one. Directors like Mr Greenlees are politicians who need grower support for their re-election which is why the integrity of the voting system is of great interest to growers.

Mr Loughlin is; of course, right to point out the need for a clear focus on grower returns because if the Board of Zespri get it wrong they get it wrong for the whole industry including those growers who are shut out of holding shares by growers who have shares in excess of their production. -2- That is not, however, an excuse for the inexcusable and IKGA wonders what other governance failures the board may be “excusing” and what other information the board may be “managing” under this guise. This concern is highlighted by comments already posted to the NBR Website www.nbr.co.nz

“We think that growers are getting tired of statements like this that are designed to either shut down debate or achieve popularity at the expense of genuine accountability and transparency. That Mr Loughlin attempted to shut down any debate on this issue at the last AGM raises further questions about what appears to be a cover-up of just how serious and widespread this has been and underlines the need for an independent inquiry.” IKGA considers that the following steps must be immediately taken in order to restore shareholder and grower confidence: 1. That there be an immediate independent inquiry into these matters the results of which must be made public. 2. That the damning independent “Connor” report paid for by Zespri with grower funds be made public. 3. That NZKGI must make available to growers all information that NZKGI had on the accessing of proxy votes in breach of the confidentiality agreement including the full content of the legal opinion that NZKGI obtained on this matter.

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