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    Former directors cut a deal, without admitting liability

    Governance Leadership Management Performance Societal Wellbeing
    The former directors of failed finance company Strategic Finance have successfully negotiated a deal that sees them avoid civil or crown action against them, so long as they uphold some binding commitments made as part of the deal. The $22m settlement sees the directors avoid further court action in return for making a significant payment and promising not to act as a director, CEO, CFO or promoter of a public issuer for several years.

    The deal was made with the Financial Markets Authority and the Strategic Finance receiver, PwC. Interestingly, the fine print includes a line "without the regulator's approval", which suggests that any of the directors could, if they wish, mount a case to obtain permission to act in one of the roles for which they are now disqualified. 

    This is an interesting outcome. It enables the directors to avoid any form of conviction or detention. In effect, they are free to carry on their lives, albeit within the constraints of not performing certain roles. I doubt that would be too much of an inconvenience for the gentlemen concerned. However the investors lose 85–95 cents of every dollar they invested. The sounds like a deal in which there are a few winners (the directors) and many losers (the investors). I understand the deal has been done, but how fair is this type of outcome?
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    Postie Plus: now in administration

    Governance Leadership Management Performance
    Despite tough trading and assurances of an improved future, Postie Plus on the ropes. It appears the die has been cast for the once strong retail business, with the announcement today that an administrator has been appointed.

    I suspect this sad tale will make a very interesting case study for an MBA class or a governance researcher in the months and years to come. It will be very interesting to learn whether the board had full visibility of the situation; what it was doing about it; and, why assurances of an improved future were provided as recently as two months ago. However, answers to these questions can (and should) wait until the dust settles. Jobs and livelihoods are on the line. The administrator needs space to work out what has gone wrong, and to tidy up what looks like a rather messy situation.
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    Feltex case: yet more revelations

    Governance Management Performance Research
    There was another round of revelations in the Feltex Carpets case today, and they do not make good reading for the defendants. When I wrote about the case in March, the suggestion was that Feltex was a lemon and that most of the juice had been squeezed out already. It now appears as though the defendants knew of the sales shortfall before the IPO was launched. Oh dear. If this is correct, the directors knowingly oversold the business and misled prospective investors—which puts them is a very awkward position.

    The representative action case on behalf of 3639 former shareholders is being heard by Justice Robert Dobson. It has quite a complex case—both sides have been rolling in expert witnesses—so the judgement could be weeks away. Notwithstanding this, the decision has the potential to set an important precedent for future IPO activity, not to mention the duty of care responsibilities of directors and disclosure benchmark requirements. For this reason, it is being watched closely by investors; directors; advisors; and, the Institute of Directors in New Zealand (IoDNZ)—and rightly so.
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    On FMA's investigation of St Laurence: the right decision?

    Governance Leadership Performance
    There was an interesting development in the long-running St Laurence story yesterday. St Laurence, once a darling amongst finance companies in New Zealand, collapsed in 2010 under a mountain of debt, falling liquidity and, potentially, misrepresentations. The case has been investigated by the Financial Markets Authority (FMA). However, the FMA issued this announcement yesterday. Rather than pursue a court action, based on a breach of the Securities Act 1978, the FMA has issued a formal warning to the directors and closed the file.

    I am disappointed by this decision by the FMA. While it's probably the right decision from a pragmatic perspective, an important principle remains untested. Whether the directors were incompetent, negligent, unlucky or fraudulent should be determined. The answer makes a huge difference to the investors that lost millions, and, crucially, to any companies and owners that might consider any of the directors for a future appointment onto their own board.
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    What's up at Postie??

    Governance Leadership Management Performance
    Things are not going well for struggling clothing retailer Postie Plus. They have just called a halt to share trading, pending an announcement. In April, the listed retailer was under threat of suspension for not filing it's half-year results within the required deadline. Back in December, the board got a grilling at the company's annual meeting. 

    Clearly, something is not right. Is the board active and acting in the best interests of the company, or is it simply asleep at the wheel? The former is hard to swallow given the evidence of late.
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    Please bear with me!

    There seems to be a technical glitch with the blog page of my website just now, whereby the Twitter counter at the bottom of each blog post is not working correctly. About ten days ago, my website provider—Weebly—changed the way blog posts are referenced. The change is for the better, but the Twitter counter has not been adjusted yet. Only new posts are affected. 

    The team at Weebly has admitted there is a problem and they've said they are working on it. I appreciate their candor, and commitment to customer service. Hopefully the problem will be fixed very soon, to reflect the actual re-tweet activity, and so that you can again see how popular (or otherwise!) individual posts are. In the meantime, please bear with me!