By Paul McBeth

Treasury is keeping mum on its advice over the fiduciary duties of government-appointed directors for the state-owned enterprises to maximise returns for minority shareholders.

Secretary Gabriel Makhlouf told the parliament’s finance and expenditure select committee he wouldn’t be drawn on the department’s advice to ministers over whether government-appointed directors in partially-privatised energy companies would have to operate in a strictly commercial basis.

Makhlouf told the committee directors of the partially-privatised companies will continue to have fiduciary duties already covered by existing law, but anything specific to these entities will rely on the legislation being written to allow the sales.

“I think we’re jumping now to decisions the government may or may not make and the legislation that parliament may pass which will set the framework within which these companies will operate,” Makhlouf said. “I’m not going to get drawn on what precisely on what advice we’re giving and on what particular issue.”

That was in response to Green Party co-leader Russel Norman, who questioned whether the model would open up conflicts for directors to recommend the sale of companies’ individual assets if the right offer was put forward.

Makhlouf said the companies will “operate within the framework of the legislation that will be introduced to put this change into effect.”

“So within that context and whatever constraints in the legislation, we would expect them to operate commercially,” he said.

The prospect of tinkering with the directors’ duties adds another layer of complexity to the legislation, which has already seen the government at loggerheads with its support partner, the Maori Party, over existing Treaty of Waitangi obligations for SOEs.

Last week, SOE Minister Tony Ryall said the government will include the concepts of Section 9 in the SOE Act in the new legislation after a round of meetings with Maori tribal leaders.

At last year’s elections, the government successfully campaigned on selling minority stakes in four energy companies and reducing its holding in Air New Zealand, in a bid to free as much as $7 billion for new capital investment.