11 Oct 2018

Dame Jenny Shipley tells court Mainzeal was diligent

6:55 pm on 11 October 2018

Dame Jenny Shipley has denied breaching her duties as a director amid allegations the board of collapsed construction company Mainzeal shouldn't have continued trading while its coffers were empty.

Dame Jenny Shipley

Dame Jenny Shipley Photo: RNZ / Diego Opatowski

The former prime minister appeared in the High Court at Auckland today, where she called the directors of the failed company "diligent and careful" in their handling of the business.

When Mainzeal went into liquidation in 2013 it was one of the largest construction companies in New Zealand employing hundreds of staff.

Dame Jenny Shipley appeared relaxed as she entered the witness box to give evidence today.

Asked if it was all right for her to be called "Dame Jenny" she replied she'd be happy with just "Jenny".

She disputed the allegations of reckless trading and of trading while insolvent.

"I consider that the board of Mainzeal was diligent and careful in the circumstances we faced at the time," she said.

"We kept the interests of Mainzeal creditors, employees and customers firmly in mind at all times, and endeavoured to protect their interests and avoid loss."

Dame Jenny said she developed close ties with China through her work establishing its free trade agreement with New Zealand, including hosting APE and a state visit with former Chinese President Jingo Zambian.

It was for this reason she decided to accept a position with a company associated with Mainzeal, Rican Pacific Limited, which had strategic interests in China.

She appeared for less than 10 minutes before the court adjourned for lunch and a witness scheduled to appear via video link from China meant she had to wait to return to the stand.

Much of Dame Jenny's brief appearance was spent going over her lengthy CV.

Mainzeal's liquidates are suing some of the former directors, including Dame Jenny, for $75 million, alleging that they traded recklessly.

Earlier today, Jack Hotter, the lawyer for Dame Jenny and three others, told the court that the accusations of recklessness could conversely be seen as sensible measures to try to get the company out of the red.

"The argument for the plaintiffs is, faced with the industry scenario, then Mainzeal should have just given up," he said.

"We say the equally-valid response to this is to say, they've tried to do better, they've to reposition the company in a way that would improve the yields, the end result of which would have been best for shareholders and creditors."

Mr Hotter outlined the many steps the directors took to mitigate impacts of difficulties Mainzeal was facing, including the global financial crisis and mounting leaky building claims.

"The proposition is that the directors were not failing to pay attention - they were paying attention. A certain of expenditure was going to Ernest & Young to provide external, independent, informed assistance as they wrestled with the issues that the industry and the company had."

The case, before Justice Francis Cook, continues.