Securities Commission boss quick to find fault but her own role demands scrutiny
Jane Diplock's appearance on TVNZ's Q+A programme to justify the Securities Commission's spate of prosecutions against high-profile company directors has set the hares running.
The perfectly coiffed woman who claimed to host Paul Holmes that she was kept awake at night by the thought that "people's hopes and dreams have been destroyed" by the collapse of the finance sector, hardly fits the profile of the globe-trotter who signed up for an unprecedented third two-year term as chair of the International Organisation of Securities Commissions at the very time the avalanche of Kiwi finance companies collapses in New Zealand was snow-balling.
In the commission's 2008 annual report, Diplock said the collapse of a number of finance companies in early 2007-2008 was due to a combination of a downturn in the property market, poor business models, poor governance and in some cases fraud.
The collapses were being investigated by the commission and other authorities. It even took preventative action by cancelling a couple of Bridgecorp prospectuses.
If Diplock believed she did not have the resources to do her job, there was no particular mention in that annual report.
And precious little elsewhere in the other seven annual reports that she has signed off since crossing the Tasman to put a bomb under the Kiwi old boys' club that lack of regulations was to blame.
On Sunday, Q+A focused on Diplock's claims that the commission regularly only got one-third to a half of the funding it requested on her watch despite lobbying officials to open the Government's purse wider.
No, she hadn't gone directly to Cabinet ministers, or used the news media to get across the need for more budget. New Zealand's "regulatory desert" was a cause of the finance company collapses.
"Looking back, we needed a better regulatory framework," she told Holmes.
That's not correct.
What we really have needed all along is a commission chair who was happy to mind the shop. But that's not what New Zealand has enjoyed during Diplock's lengthy reign.
When she took up her role as chairman of the Securities Commission in September 2001 Diplock inherited a $3.116 million budget. A government grant of $2.267 million for operating expenditure made up the lion's share of the 2001/2002 budget.
It also included $300,000 for applications fees; $488,000 to provide administrative services to the Takeovers Panel, and $9000 for the use of assets.
The Government later boosted the budget by chipping in an additional $134,000 to review the NZ Stock Exchange and another unbudgeted amount of $45,047 came from the recovery of litigation and court costs.
The chairman's remuneration for 2001/2002 was recorded at $226,074 (including a motor vehicle allowance). It appeared roughly on par with that of her predecessor Euan Abernathy.
At that stage, John Farrell was the commission's chief executive - probably paid in the $200,000-$220,000 band.
Within months Farrell - who had served 17 years as CEO - stood down and Diplock assumed the role of executive chairman at remuneration of $300,000 (salary and motor vehicle allowance). Significant remuneration boosts have been made over the years.
By 2008/2009 Diplock was administering a $8.794 million annual budget. Her chairman's salary was $385,000 with a separate motor vehicle allowance of $34,000 - close to double the salary package she enjoyed when she came in as chairman.
On top of that she was luxuriating in her IOSCO role - an "extremely important post" which enabled NZ to participate in the highest deliberations of the group.
But despite the huge call on her time, she did not appoint another CEO to run the shop in New Zealand while she was addressing important global regulatory issues elsewhere.
In 2002, the Kiwi commission spent just 4 per cent of its budget on international liaison.
By the time Diplock was into her third term as IOSCO chair, the commission was spending nearly 20 per cent of its budget on international issues. Most of it underpinning Diplock's offshore roles.
Diplock had led the process to appoint a new secretary-general for the international organisation in late 2007. But despite the obvious drain on her time, she saw no reason to do the same thing at home.
The commission did not decide to look at that option until feedback from a widespread review let Diplock know in no uncertain terms that it was necessary for confidence.
The commission's financial statements are inconsistent and slightly opaque. But it's obvious that she enjoys a much larger budget than her predecessors.
What's also obvious is that the commission's expenditure on enforcement - as a percentage of its overall budget - is now considerably less than it was when she stepped into the role nearly nine years ago.
In the 2009 financial year, it was 37 per cent of expenditure, down from 38 per cent the previous year. Her international budget got a 1 per cent increase.
She has not used her litigation budget to its fullest either.
Diplock complains of not having enough legal staff to work on the finance companies investigations. Yet she has also diverted staff budget to pay for an international team to support her international endeavours. The number of lawyers has come and gone. But she did not replace Norman Miller who resigned as director of enforcement midway into her reign.
Something does not compute.
Diplock has proved quite a skilled blame-shifter.
She cleverly played on the Prime Minister's game plan for NZ to be a financial hub for Asia Pacific by telling TVNZ New Zealand's regulations were "not good enough".
Yet in her reports she has said her IOSCO role has direct benefits for New Zealand.
"I will continue to take the opportunity, when abroad, of speaking to key business and investor audiences, and working with the Ministry of Foreign Affairs and Trade and New Zealand Trade and Enterprise to promote New Zealand as a sound investment destination."
Diplock is no shrinking violet.
Blessed with personal charm, she can be delightful.
But she is ambitious and rather shrill when thwarted.
And she is improbably conceited.
In her latest report, she opines the Securities Commission remains absolutely committed to enhancing global regulation and supervision.
"Financial stability is everyone's business: we cannot expect to once more enjoy global financial good health until consumer confidence is restored everywhere. New Zealand is a geographical island but does not exist in economic isolation.
"We are, of course, affected by the crisis, but also have an important role to play in re-establishing world-wide financial stability."
What a shame that approach is not happening here.
