Election Year : The following opinion is offered in the public interest. -Eds
Received from Christchurch Driver [CD]
Sun, 28 Feb 2016 at 9:10 p.m.
Your correspondent has used strong words to criticise the Delta Directors in recent posts in respect of the Noble Subdivision.
“Ineffectual”, “serial head nodders”, “slumbering”.
Doubtless some of the Directors concerned will disagree, violently.
Has this correspondent been too harsh ? After all, it is easy to have 20/20 hindsight.
So today let’s look at the “WWYD” test – What Would YOU Do – in the same situation.
Your correspondent had given this some thought on this sunny Sunday, and while not a captain of industry or commerce as the actual directors, is willing to give it a go.
Yesterday’s post asked if the Directors had any ability to rein in Delta’s management when necessary. This correspondent thinks that is the key issue.
In any company the executive team is tasked with running the company day to day, meeting their various KPI’s and targets, and quite properly that is their focus. No one is perfect and there will be mistakes and duds that could not have been foreseen.
The Directors are there to provide governance and limit the risk to the shareholders. This was doubly important for Delta, as Warren Larsen said DCC companies needed to have a particularly low risk threshold, being publicly funded, and because Delta was operating in the very high risk property development arena.
A further even more basic duty is to ensure that the company operates lawfully at all times.
That is the lens through which I as a Director, would view Delta’s activities.
With that in mind, I thought how I as a prudent Director would respond when at a Board meeting in late 2009, or very early 2010, when it is assumed the Directors learned of the plan change at Noble Yaldhurst just two months after starting work in October 2009.
As a Delta Director I would know that at some point it was likely there were going to be some thorny issues ahead on Noble, particularly given the experiences already encountered at Luggate and Jacks Point.
As a professional Director I would expect the management to have a response to the problem. I would also know that ‘when things go wrong’ is where there is always potential for greater risks to be assumed so Directors would need to be especially vigilant when evaluating management’s plan to fix the problem.
As a Director I would know that management in general don’t like problems – they just want to get rid of it in the fastest way generally and focus on the business and meeting their KPI’S.
They often don’t get a good perspective on the bigger picture. That’s what the Directors are for.
So when it was explained that yes, there was an “issue” with budget costs, but the plan by the Developer was to change the subdivision layout, alarm bells would have rung and the following questions spring to mind (Answers by Delta management).
1. How much of the work has already been done ?
Answer : Not very much just general site excavation.
2. How does this affect the Resource Consent and Engineering Consent ? Answer : Noble (NIL) are or have already applied for a variation.
3. Weren’t there specific provisions for the roading and layout for this zone ?
Answer : Yes there were.
4. What can we do in the meantime while we wait for the varied consent ? Answer : We can do some site clearing but NIL have assured that the consent is a formality and are keen for us to continue.
5. But we cannot do work without a consent surely ?
Answer : Err…NIL have assured us that it won’t be a problem, the CCC are relaxed about us continuing.
6. Is there anything in writing from CCC to say this ? This seems very risky – Councils have to comply with the Building Act, they don’t have a choice, otherwise people would be doing deals with Council inspectors all over the place, and Council would be liable.
Answer : No, we don’t have anything in writing yet.
7. Why don’t we just stop work until it’s sorted ?
Answer: We’ve already set up on site and we want to make the most of the Summer.
8. Directorial discussion ensues : My position would have been : We think the risk is too great. We are already financing the subdivision and not getting paid until sections are sold. We have the upper hand here. Noble will just have to wait. Changing the roads is a major. We don’t need a court case about working on a major subdivision without a consent with the CCC to tarnish the company at this point.
Clearly, a majority of Directors did not agree with the above, and voted to continue.
A key point is that the Directors didn’t only get one chance to exit Noble. From this point Noble would have been on the agenda at every meeting, and they had many opportunities to stop work, when things went from bad to worse. Instead, it appears they took ALL those opportunities to look the other way and, and one result, apart from many millions written off, was to be a party to illegal work.
Delta may say that CCC were relaxed about working without a consent, or some other vagueness, but the Yaldhurst community and the neighbours were far from relaxed. They were never going to stand by and watch a Developer cynically try to ram through a major change on a land zoning that the CCC had just spent years formulating and with public consultation, etc.
So, readers, what would YOU do ?
New Zealand Companies register: Delta Utility Services Limited (453486)
█ Directors: David John Frow (appointed 25 Oct 2012), Trevor John Kempton (01 Nov 2013), Stuart James McLauchlan (01 Jun 2007), Ian Murray Parton (25 Oct 2012)
Related Posts and Comments:
● 27.2.16 Delta #EpicFail Noble Subdivision Consent : Strictly Optional
● 27.2.16 Delta #NUCLEAR EpicFail —Noble Subdivision : Incompetent…
● 25.2.16 Delta #EpicFail: Mayor Cull —Forced Sale Fundamentals 101
● 24.2.16 Delta #EpicFail —Noble Subdivision: Cameron, Crombie & McKenzie
● 23.2.16 DCC: DCHL half year result to 31 December 2015
19.2.16 Delta: Update on Yaldhurst subdivision debt recovery
15.2.16 Delta / DCHL not broadcasting position on subdivision mortgagee tender
30.1.16 DCC Rates: LOCAL CONTEXT not Stats —Delta and Hippopotamuses
● 29.1.16 Delta #EpicFail —Yaldhurst Subdivision ● Some forensics
● 21.1.16 Delta #EpicFail —Yaldhurst Subdivision
21.1.16 DCC LTAP 2016/17 budget discussion #ultrahelpfulhints
10.1.16 Infrastructure ‘open to facile misinterpretation’…. or local ignore
15.12.15 Noble property subdivision aka Yaldhurst Village | Mortgagee Tender
21.9.15 DCC: Not shite (?) hitting the fan but DVL
20.7.15 Noble property subdivision —DELTA #LGOIMA
1.4.15 Christchurch subdivisions: Heat gone?
24.3.15 Noble property subdivision —DELTA
23.3.15 Noble property subdivision: “Denials suggest that we have not learned.”
17.3.15 DCC —Delta, Jacks Point Luggate II…. Noble property subdivision
● 14.5.14 (via DCC website) Larsen Report February 2012
A recent governance review of the Dunedin City Council companies was conducted by Warren Larsen.
● 20.3.14 Delta: Report from Office of the Auditor-General
Inquiry into property investments by Delta Utility Services Limited at Luggate and Jacks Point
█ For more, enter the term *delta* in the search box at right.
Posted by Elizabeth Kerr