OIO looked at Fairfax track record before approving merger
Wednesday 26 October 2016 05:25 PM
OIO looked at track record of Fairfax, NZME directors before approving merger
By Sophie Boot
Oct. 26 (BusinessDesk) - The Overseas Investment Office looked into the activities of key directors of NZME and Fairfax Media executives before signing off on their merger plan, documents released under the Official Information Act show.
The OIO asked the lawyers acting for NZME and Fairfax for further information about John Anderson, chairman of NZME, and Jack Cowin and Linda Nicholls, directors on Fairfax Media's board of directors. In its decision to approve the merger delivered in September, the OIO said it was satisfied that the matters didn't affect the good character of the individuals after considering NZME's application. The deal still needs NZME shareholder and Commerce Commission approval to go ahead.
Concerns about Anderson related to his being chair of Steel & Tube Holdings, which was fined in 2014 by the NZX for breaching listing rules, as well as ongoing investigations by the Commerce Commission over whether the company breached the Fair Trading Act in its sale of steel mesh.
The OIO said it was unlikely Anderson or the rest of the board had any direct involvement with matters relating to the Commerce Commission investigation, and the earlier rule breaches were minor with a more serious breach occurring before Anderson was appointed to the board.
Cowin is the executive chairman and chief executive of Competitive Foods, which owns fast-food chain Hungry Jacks. In 2009, Australia's Fair Work Ombudsman conducted surprise night raids on 12 Hungry Jacks outlets in Perth and investigated its wage payments, but found the company was complying with workplace laws.
In 2011, Hungry Jacks was fined A$100,500 as it had failed to have its industrial agreement with a union properly registered or certified. The OIO said it didn't think either event reflected adversely on Cowin's character.
Nicholls is a non-executive director of Australian health insurers Medibank Private, which is facing court action next year over the information it gave members when it changed the payments it made to diagnostic service providers. Nicholls is also a former non-executive director of ASX-listed Sigma Pharmaceuticals, which was investigated this year by the Australian Securities and Investments Commission, with the former chief executive and chief financial officer convicted of falsifying the company's books and giving false information to the directors and auditors.
Additionally, she is the non-executive chair of Japara Healthcare, whose subsidiary Aged Care Services Australia Group underpaid its staff over six years from 2008.
The OIO said the Medibank proceedings didn't have any allegations about any directors, and it didn't think they reflected badly on Nicholls, and nor did either of the issues related to Sigma and Japara.
A merger would combine NZME's flagship New Zealand Herald newspaper and nzherald.co.nz website, a portfolio of radio stations including Newstalk ZB and the GrabOne daily deals site with Fairfax's suite of newspapers including the Sunday Star-Times, The Press, the stuff.co.nz website and magazines including NZ House and Garden.
The OIO noted that its searches had revealed a number of defamation actions, or statements of intended defamation actions, relating to Fairfax, but said this wasn't uncommon in relation to large media companies and it didn't reflect adversely on the character of any individuals with control of the company.