Big guns take aim at Norgate

By Duncan Bridgeman and Mark Peart

Friday 2nd July 2004

Craig Norgate might have gained control of Wrightson but the former Fonterra boss still has a lot to learn about running a public company.

Allegations of poor corporate governance are already flying after his Rural Portfolio Investments cleaned out the Wrightson board this week, replacing it mainly with RPI insiders.

"I think it's completely flying in the face of any of the discussion and literature about what constitutes good corporate governance in this environment," former Wrightson director Ruth Richardson said yesterday, after being forced to resign along with chairman John Palmer and fellow directors Paul Baines and Jeff Grant.

Richardson's beef is mainly over the treatment of Wrightson chief executive Allan Freeth, who is contemplating legal action for what appears to be his effective sacking.

Richardson, a former finance minister, said Freeth's axing raised a major governance issue, given that only one independent director new chairman Keith Smith had been appointed to the new Wrightson board, following RPI's successful partial takeover last week.

"We've had the ruler run over us and I accept the verdict of shareholders but I think now there are issues around good process in respect of the chief executive and good governance in terms of the board."

Smith announced Freeth's departure to the stock exchange mid-week, after four RPI representatives Norgate, cohort Baird McConnon, his brother Alan and associated business partner Sandra Keay replaced Richardson and co.

Freeth said the announcement was in breach of his employment contract but would make no further comment except to say the issue would, if necessary, be settled through legal process.

Shareholders Association chairman Bruce Sheppard backed Richardson's claims, saying RPI needed to appoint some independent directors smartly.

"If [Freeth] is to be dismissed, and there are ways you can do that that cause damage and ways that don't, it would be nice if there were some independent directors there to make an informed assessment on that, rather than having the major shareholder with their own vested interest doing it."

Sheppard said RPI would be well advised to appoint some new independent directors before it dismissed the current CEO.

Richardson said she had no beef with RPI taking control of the company she accepted the verdict of the market despite Wrightson stating it had issues with the price and the scaling of the shares. "I just think it is undesirable for a board of independents to be replaced by a board of insiders."

The morning after Monday's ruthless culling of the Wrightson board, RPI chairman Baird McConnon asked for 24 hours' grace to "let the dust settle" before being interviewed by the National Business Review.

As it turned out, the dust may take some time to settle, and McConnon would not comment on Freeth's situation or the hunt for a new Wrightson chief executive.

McConnon said he did not believe the acrimonious and at times ugly battle for control of Wrightson would destabilise the company. "It's been around for 160 years ... this has been a small blip in its history. It's resilient enough to recover from the last couple of weeks."

McConnon maintained the stance he and Norgate have maintained throughout of not discussing their plans for the company. The new board would start with a clean sheet, he said.

"We've got to develop a long-term strategy ... It's a complicated business, everything from real estate to potatoes."

McConnon said further changes at the senior management level were unlikely, although it was "early days."

"We've had a session with them and we're happy with what we see there. The next few weeks will be more about climbing inside the business."

One thing had already been agreed: "We have no ambitions to take the head office out of Porirua."

He said the new directors brought different strengths to the board: his own as the former CEO of Australasian Food Holdings, Alan McConnon in marketing, Sandra Keay in finance and Norgate with his "track record which is second-to-none in creating value.

"Growth is what is driving us at this stage. We want to focus on the existing business and make sure we get to a level of excellence. In 10 years, hopefully, when people look back and review our journey, they will say we did not a bad job and will see it as an example of New Zealand's excellence."

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