Small city creates collision of interests

There may be six degrees of separation in many parts of the world, but in Dunedin, there appears to be none at all. Dunedin City Council reporter David Loughrey considers the complex web of relationships between major players in city projects.

He asks whether it is possible to do business in Dunedin without having some sort of conflict of interest, and at what point it is time to step aside.

Relationships between businesspeople, politicians, and those appointed to trusts, committees and to head major projects in Dunedin are inevitable, insiders say.

A lawyer approached for comment in the writing of this report had to decline, as his firm acted for one of the organisations mentioned.

The small size of the city means the pool of people with the expertise to run organisations is limited, and the potential for conflicts of interest high.

But the general consensus is while that can be managed, when pecuniary interest is involved, it is time to step aside.

And if there is any hint of a conflict of interest, put up your hand and make it clear before someone else does it for you.

The issue has made the news regularly recently, mostly in regards to the Awatea St stadium.

The problem: many of the players in the project are linked in a variety of ways.

It must be stressed that although stadium opponents have made much of some of these links, there is yet to be any official finding, or investigation, of illegal or unethical dealings.

But the links are many.

Otago Regional Council chairman and real estate branch manager Stephen Cairns acted for East Parry Investments, of which Earl Hagaman is a director, in respect of property at 64 Parry St - land needed for the Awatea St stadium - though Mr Cairns said he had "absolutely not" been involved in land negotiations with the Carisbrook Stadium Trust.

John Farry, who was a minor shareholder in a company that owned land at the stadium site is Carisbrook Stadium Trust chairman Malcolm Farry's cousin, and is past chairman of the Community Trust of Otago, which has indicated it will fund the stadium to the tune of $10 million.

John Farry, who has a long record of service to the community, has angrily dismissed claims of wrongdoing.

When the stadium stakeholders group appointed a retired High Court judge, John Hansen, of Christchurch, to head a new group looking after the interests of organisations funding the stadium, they chose a man who had joined law firm John Farry and Hansen, now Webb Farry, earlier in his career.

He later became a partner.

Dunedin Mayor Peter Chin was also a partner of that firm.

Most recently, Carisbrook Stadium Trust trustee Ron Anderson's company, Arrow International, was hired to manage the stadium project, a move criticised by some city councillors as a conflict of interest.

Such a complex web of connections raises the question of whether anything can be done in a city the size of Dunedin without suggestions of conflicts of interest, or, at the very least, creating that perception.

Cr Dave Cull said he had been considering the issue since he raised Mr Anderson's situation in public recently.

"In a smaller catchment, it's more statistically likely you'll have people who are connected."

While in the relationships listed above there were no further inferences that could be drawn, Cr Cull said, he was still concerned about Mr Anderson's situation, and felt it might be appropriate for him to stand down from the trust.

"Saying someone has a conflict of interest is not judging them - it's judging the situation they are in."

Like all those spoken to, he felt when pecuniary interest was an issue, that was the time to stand aside.

Otago Chamber of Commerce chief executive John Christie said potential conflicts of interest happened in Dunedin "all the time".

"You don't have to look very far to know or be related to someone.

"There's perception and reality. Sometimes those things are different."

National and local government had guidelines to work to, but while there were best practice documents in circulation, the situation was different in business.

Conflicts had to be managed, but when it got to the point they could not, people needed to step aside.

"The measure is whether people are gaining an advantage. If they are, it's a conflict of interest."

Asked if Dunedin struggled with a limited stock of people with the expertise to run projects and organisations, Mr Christie said it did.

There were some good directors in the city, but a limited number with both the ability and the passion to get involved in both major projects and community organisations.

"It goes right down to the local sports club or kindergarten.

"Getting good people on those committees sometimes can bring conflicts. It's not that they are there, it's how they are managed."

The size of the city's population caused problems, Cr Colin Weatherall said, and if he was a "purist" on the issue - and stayed away from making decisions where he knew some of the protagonists - "I wouldn't do anything".

The key, he said, was to put your hand up and declare your interest immediately, and to step aside if there was pecuniary interest, or a perception of pecuniary interest.

The issue occurred regularly in his work as a resource management committee chairman.

"How do we handle it? We say it up front."

If there was any sort of relationship with anyone who was coming before a hearings committee, he would ask everyone in the room if they had a problem with that, and proceed only if they did not.

One example was when he was chairman of the Otago Rugby Football Union, dealing with a case which involved a telecommunications company that sponsored the union.

"You have to be up front - declare it. Don't be discovered later."

Getting legal advice on conflicts was something councillors did fairly regularly, Dunedin City Council governance team leader Nina Darling said, but it was a decision for councillors after they had obtained advice whether to stand aside from a debate.

A government handbook for councillors on conflicts of interest stresses the importance of pecuniary interests.

The common law relating to bias, under which conflicts of interest are legally governed, is summed up neatly in a saying city leaders may want to ponder - "no-one may be the judge in their own cause".

 

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