Part 4: Board policies and practices

4.1
The focus of our inquiry was on ACC's Board and its approach to governance. Our terms of reference concern the Board's management of risks arising from conflicts of interest. We wanted to establish whether ACC's Board had clear policies and procedures:

• to manage conflicts of interest with claimants; and
• to transparently apply those policies.

4.2
Given that most New Zealanders will be ACC claimants at some time, the chance that Board members will know claimants is high. We expected to find policies and procedures that reflected that likelihood and that removed the possibility for a claimant's personal relationship with a Board member to result in special treatment or benefit.

4.3
ACC's governance policies and practices are set out in the Board Governance Manual 2012 (the Manual). The Manual sets out the governance structures, responsibilities, policies, and processes of the organisation and its subsidiaries. The purpose of the Manual is to help Board members and directors of subsidiary companies to carry out their duties and responsibilities effectively and to the highest professional standards.

4.4
The Manual covers Board policies on disclosures of significant financial interests and conflicts of interest. The Manual notes that a conflict of interest can arise when a Board member or a person in a close relationship with a Board member can gain a financial benefit from a decision made by the Board. The Manual says that, if there is any doubt about a potential conflict of interest, the possible conflict should be brought to the Chairperson's attention at the earliest possible date.

4.5
The board secretary (at the time, Mr Seymour) maintains an Interests Register to record all declared conflicts. We understand that Mr McCliskie did not declare his meeting with Ms Pullar on 14 September as an interest because he did not have a close relationship or friendship with her.

4.6
The Manual does not provide guidance for managing risks with communications between Board members and claimants. Nor does the Manual describe the policies or practices that should apply when claimants contact Board members directly.

4.7
Mr Seymour told us that he managed the induction of new Board members. It was his practice, as part of that induction, to give the new member an oral briefing on what to do and how to act if a claimant contacted them directly. Mr Seymour acknowledged, in hindsight, that the importance and significance of that message could be lost in the detail of the other induction material. However, Mr Seymour also told us that, in his experience, ACC claimants rarely raised issues directly with Board members.

4.8
We have recommended to ACC that it prepare a formal written policy to guide Board members' interaction with claimants and ACC staff. This policy has been prepared and will be presented to the Board for approval at the Board meeting of 23 August 2012.

4.9
It became clear to us during our inquiry that the lack of formal ACC policies or practices on how a Board member should act when approached by a claimant could create inconsistent practice. We consider that it contributed to two experienced directors (Mr McCliskie and Mr Judge) holding differing views on the appropriate way to act in the situation with which Mr McCliskie was presented.

4.10
Mr McCliskie told us:

My general policy has always been to listen to what the relevant person has to say. I see it as the responsibility of me a Director of an organisation to be available to hear what people want to say on matters about which they wish to talk to me as a Director.

4.11
He noted that he considers that matters concerning the culture and reputation of an organisation are the proper concern of a Board member. However, he also told us:

Equally I am acutely aware of the importance of a director remaining uninvolved in management decision-making, and restricting my involvement to appropriate matters of overarching Board policy. I am always very clear about making this distinction plain to anyone to whom I talk about an organisation of which I am a director.

Having heard what the relevant person wants to say to me then if I think the matter should be considered by the organisation my invariable practice is to refer the relevant matter to management for consideration.

4.12
We note that Mr McCliskie's first reaction was to refer Ms Pullar to ACC senior management. He suggested Ms Cosgrove as the General Manager, Claims Management. Mr McCliskie agreed to the meeting of 14 September only after Ms Pullar indicated that she would prefer not to meet Ms Cosgrove.

4.13
In contrast to Mr McCliskie's view, Mr Judge believed that Mr McCliskie should not have met Ms Pullar without first obtaining his permission as Chairman. Mr Judge expressed to us his disappointment that Mr McCliskie accepted the meeting without first consulting him:

… it is ACC Board policy (consistent with good governance practice) that members of the Board not become involved in operational matters or other matters that are properly the domain of management.

The reality is that ACC touches, directly or indirectly, many New Zealanders (probably most of them) at some stage of their lives. What this means is that member of the ACC Board can expect to become involved, whether by way of approaches or otherwise, in discussions outside the Boardroom about ACC matters from time to time. ACC is something on which many people (including claimants, health professionals and others) have views, and in my experience often those views are strongly held and voiced.

When I received Mr McCliskie's 14 September 2011 email I became aware of the fact that he had met with someone who seemed to be an ACC claimant without first consulting me, as Chairman of the Board, or, it seemed, consulting with ACC senior management. Because I know Mr McCliskie to be someone who is very concerned about ACC doing the right thing (and, I noted from his email, he knew Ms Pullar from his days at ENZA) I was not completely taken aback by the fact that he had met with her. Nevertheless, I certainly thought that best governance practice meant that he should have first consulted with me and obtained my permission to meet with Ms Pullar and I was disappointed that he had not done so. But the meeting had already taken place without my knowledge and I took comfort from the fact that Mr McCliskie advised me that (as I would expect of him) he had not engaged in any discussion about the details of her claim and that he had referred the matter to me immediately after his meeting. If, as seems to be the case, Mr McCliskie copied to Ms Pullar his e-mail to me of 14 September 2011 then that certainly does not accord with appropriate Board practice.

4.14
Mr Judge acknowledged that the Manual did not address communications between Board members and claimants, but he believed that general principles about Board conduct should apply. He explained that common principles require a Board member to not discuss operational matters with a claimant and, if further action or response is required, to refer the matter to the Chairman and, through the Chairman, to the chief executive or (as in this instance) to the board secretary to take up with management.

4.15
We agree with Mr Judge that it is best practice for a Board member to clear with the Chairperson of the Board any meeting with a claimant (about ACC issues) before it takes place.

4.16
We note that both Mr Judge and Mr McCliskie were clear that matters relating to individual claimants are strictly the concern of management. Mr McCliskie said:

I am acutely aware of the importance of a director remaining uninvolved in management decision-making, and restricting my involvement to appropriate matters of overarching Board policy.

4.17
Mr Judge said:

My practice when approached about any ACC operational matter is to refer the matter to ACC management. Plainly, it is not the role of the Board Chairman or any other Board member to become involved in management or operational matters, including ACC claimant matters.