The directors of a council-owned contracting company based in Oamaru have been given the permission to continue approving major acquisitions off their own bat, even though concerns are being raised over their ability to turn a profit.
Just three months after Whitestone Contracting Ltd, a wholly owned subsidiary of the Waitaki District Council, announced a 6.5% drop in turnover for the first six months of the financial year, the council this week approved a new statement of intent from the company.
However, some councillors expressed doubts whether company directors should maintain their ability to approve major acquisitions or divestment transactions without first gaining a resolution from the full council.
After some discussion, the council agreed that directors would still be allowed to approve acquisitions worth up to 50% of the total value of Whitestone Contracting.
However, Cr Craig Dawson said he would rather see that level reduced to 20%.
''They don't have a great track record of making profit. I'm concerned for a company having trouble making profit, having trouble selling contracts.''
Cr Kevin Malcolm said he agreed with Cr Dawson, although he would like to negotiate a level between 20% and less than 50%. He said although the board of directors were ''doing their jolly best'', work had diminished in recent times.
The contracting market was ''very tough'' and the council should have the final say, he said.
Mayor Alex Familton said the council had already agreed to give the directors the task of running the business, and keeping the limit at 50% would let them ''do just that''.
Cr Peter Garvan said the directors already informed the council of any major acquisitions so it was not as if the council was kept in the dark.
