Former New Zealand prime minister ordered to pay $3.9 mln after company collapse

Former New Zealand Prime Minister Jenny Shipley has been ordered by the country’s highest court to pay NZ$6.6 million ($3.9 million) plus interest as compensation for her role in the collapse of a construction company, a judgement released Friday said. Shipley was New Zealand’s first female prime minister holding the role from 1997 to 1999.

Former New Zealand Prime Minister Jenny Shipley has been ordered by the country's highest court to pay NZ$6.6 million ($3.9 million) plus interest as compensation for her role in the collapse of a construction company, a judgement released Friday said.

Shipley was New Zealand's first female prime minister holding the role from 1997 to 1999. She was chair of the board of construction firm Mainzeal when the company was placed in liquidation in 2013 after a number years of financial difficulty. The liquidators of the company bought charges against Shipley and directors Richard Yan, Clive Tilby and Peter Gromm, arguing they had let the company operate in a way that created a risk of serious loss to creditors and took on debts that could not reasonably have been repaid. The Appeal Court had previously found that this was the case.

The Supreme Court agreed. In the judgement, the court ordered the four directors to contribute NZ$39.8 million plus interest to Mainzeal creditors. It stated Yan was most culpable and said he was responsible for the entire amount of compensation, with Shipley, Tilby and Gromm's liabilities capped at NZ$6.6 million and interest each.

Lawyers on behalf of Shipley, Tilby and Gromm released a statement on behalf of their clients that they were "deeply disappointed then their appeal has been dismissed" and "they continue to regret the collapse of Mainzeal and its serious consequences for its staff, customers and creditors." The statement said they will now take time to consider the consequences of the court's judgement.

Yan's solicitor did not immediately responded to a request for comment and his lawyer said he had no instruction to comment on the case. Mainzeal liquidator Andrew Mckay told local media he welcomed the court's decision confirming the directors breached their duties.

"This is a landmark judgment which reinforces the obligations directors have to fulfil their duties diligently and responsibly," he told Stuff.co.nz. ($1 = 1.6883 New Zealand dollars)

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