Jenny Shipley quits China Construction Bank board after Mainzeal verdict

Former Prime Minister Dame Jenny Shipley was ordered to pay $6m to Mainzeal creditors.

Former Prime Minister Dame Jenny Shipley will step down from the board of China Construction Bank New Zealand in the wake of the Mainzeal court decision where she and other directors were found liable for creditor losses.

In a statement she said she believed it was in the best interests of the bank that she retire from the board at the end of March, which coincided with the end of the current reporting cycle.

She said she intends putting her energy into dealing with personal and legal matters related to the Mainzeal case and to spending more time on her private business and philanthropic interests.

Last week Shipley was ordered to pay $6 million to creditors of Mainzeal, as part of a $36 million award by the High Court against the company's directors.

Mainzeal was one of the country's largest construction companies when it went under in February 2013, owing unsecured creditors $110 million.

Just under half of the money was owed to unpaid subcontractors, including tradespeople working on Mainzeal projects.

Shipley was a director of Mainzeal from 2004, and chair of the company when receivers were appointed.

In his 178-page judgment Justice Francis Cooke said Mainzeal directors were reckless, "had adopted a policy of trading while insolvent", and "used money owed to trade operators, particularly sub-contractors, as working capital".

The directors also relied on assurances that the millions of dollars Mainzeal had lent to its China-based parent company Richina Pacific would be paid back if Mainzeal got into trouble.

"The assurances relied upon were ambiguous, conditional, and subject to the constraints of Chinese law, which restricted the ability to return money to New Zealand from China," the judgment said.

Justice Cooke decided on total compensation of $36 million, with Shipley and two other directors - Peter Gomm and Clive Tilby - expected to pay up to $6 million each. The rest must be made up by Richina founder and boss Richard Yan.

Shipley served as a director of the Hong Kong and Shanghai listed China Construction Bank global board for six years from 2007 to 2013.