Dialogue: Business confidences just as vital as public accountability

LINDSAY FERGUSSON* says private sector support for events such as the America's Cup entails commercially sensitive information being kept under wraps.

The Herald is obviously entitled to take a stance on a public policy issue, as it did last week, arguing for public accountability for public funds spent by the America's Cup Village Ltd.

However, suggesting that I somehow acted improperly with regard to American Express in carrying out a request of the ACVL board within accepted corporate governance practice and present public policy is grossly unfair.

As a fellow of the Institute of Directors, I take my responsibilities as a director, or chairman, very seriously.

With 14 years' experience as a director in the public sector, I am well aware of and always conscious of the public interest where public money is involved. The America's Cup Village was no exception.

For the record, Rob Sutherland did not resign as chief executive of ACVL on the basis reported in the Herald. Nor did I enter into any deal with American Express on my own initiative, before or after Mr Sutherland left ACVL.

I was asked by the board of ACVL to finalise an unresolved agreement with Amex after Mr Sutherland's departure. The final agreement was consistent with the premise upon which Amex had always based its sponsorship and on terms agreed by the board of ACVL.

The issues involved were complex, but finalising an agreement with Amex was the key to finalising other major sponsorships worth several million dollars to ACVL, and which were outstanding at the time.

Reaching agreement with Amex was definitely in the public interest. The terms of that agreement were also based on independent professional advice. I was not flying solo as the editorial and the earlier report in the Herald suggested.

ACVL was established under government legislation as a local authority trading entity so that it could carry out commercial activities, including enlisting sponsorship from the private sector to help to fund a public project. It had a board of proven, experienced business and public sector members.

While I was chairman, it complied fully with all its public accountability obligations under the Local Government Act, the Companies Act and the Financial Reporting Act. It had an audit committee headed by one of the country's top public accountants. Its accounts received unqualified audit clearances from Audit NZ on behalf of the Auditor-General. I understand that is still the case.

While chairman of ACVL, I made more than 60 public presentations on the America's Cup Village to a wide range of people. I always disclosed the forecast cost of the project and a likely deficit of around $30 million at the end of the day.

This deficit included all the costs of dredging the old Viaduct Basin and creating the public facilities to allow Aucklanders, and visitors, to enjoy free access to our waterfront in a way that had never before been possible.

It will come as no surprise that, without exception, the people who were in those audiences thought that this was a fair amount to pay for the public benefits gained and the creation of what is now a substantial asset for Auckland. As the Herald, itself, acknowledges, that point seems to be universally accepted.

The point about those public presentations I made is that I was able to provide sufficient information without the need to disclose anything of a commercially confidential nature about individual sponsors. The same still applies today.

Public accounting for the project now it is complete does not need to breach commercial confidentiality for those private sector companies which made such a valuable contribution to the success of America's Cup 2000.

Public accountability is not the same as corporate voyeurism, even though the latter may appeal to some politicians and some members of the public.

If the public sector is going to invite the private sector to support major events with their money, their products or services, or their technology, the public sector has to expect that they will be asked to protect commercially sensitive information from competitors.

Sponsorship is a very competitive commercial activity. In my 40 years in business around the world and 14 years' public service in New Zealand, I have found very few in the private sector who do not require confidentiality of their sponsorship details.

This was reinforced for me three days ago when a major corporate sponsor told me that if confidential details of their sponsorship of an event were to be publicly disclosed, they would withdraw from future sponsorship of that event.

Clearly the private sector has a valuable role to play in supporting public events and New Zealand cannot afford to discourage that support.

If the public sector was to adopt the Herald's views, the public cost of staging major events and providing facilities for those events would increase significantly.

The America's Cup is no different. There is no doubt that without sponsor support, the cost to the people of Auckland of staging America's Cup 2000 would have been much higher.

Few would disagree that Auckland fulfilled Sir Peter Blake's dream of staging the best America's Cup ever. We did this because the public and private sectors worked together to put money, resources, skills and expertise into creating an outstanding event for New Zealand.

It required then, as it does in the future, regard not only for public accountability, but also for commercial realities.

* Lindsay Fergusson is the former chairman of America's Cup Village Ltd.