Directors Institute calls for more financial disclosure

By NZPA

Wednesday 24th July 2002

The Institute of Directors has backed a judge's call for more financial disclosure by companies.

The calls come after former Tasman Pacific and ex-Qantas New Zealand chief executive Kevin Doddrell was yesterday fined $32,000 for failing to prepare the airline's financial accounts for the June 2000 year.

The airline collapsed nearly 10 months later, leaving creditors about $136 million out of pocket.

Judge Fred McElrea, sentencing Doddrell in Auckland District Court, said he was surprised to learn that a company of the airline's size was not required to file its accounts publicly.

Unlisted companies must file accounts with the Companies Office only if they are more than 25 percent foreign-owned, a threshold Tasman Pacific did not quite breach.

Directors' Institute chief executive David Newman agreed with the judge.

"The commercial world is entitled to a greater transparency of information with the companies it does business with," he said.

"There's a greater awareness now of the importance of these financial statements, not just to shareholders but to major creditors as well.

"If these things aren't filed, and filed on time, there's a gap in the information available to people who do business with the company."

Mr Newman was not aware of other countries' rules on disclosure of financial accounts.

"But generally other countries up to now have been more prescriptive. I would be surprised if other regimes were less rigorous than ours."

Commerce Minister Paul Swain said he would request a copy of the judge's comments, and if there were issues to be addressed the Government would look into them after the election.

Judge McElrea said that while the failure to prepare proper audited accounts did not cost anyone money and had no bearing on the airline's collapse, it was a serious offence that had the potential to cause serious loss.

Shane Keohane, manager of the Companies Office Enforcement Unit, which brought the prosecution, said the sentence sent a clear message to businesses.

Directors had to realise that reporting requirements were crucial to keeping interested parties informed of the state of a company's affairs.

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