"Young Maori Leaders Conference Economic Resources"
Young Maori Leaders Conference Economic Resources Governance 17 June 2003 Guy Royal / Damian Stone Introduction Governance and management principles How these rules apply to Māori organisations Common structures used by Māori organisations Incorporation of tikanga Common issues Preliminary comments Structure vs Operations Shakeholderism vs shareholderism Accountability through structural detail Accountability through – alignment of incentives – adequate performance analysis – other contractual matters The ideal shareholder Separation of Governance and Management Clear division between personnel Clear division between responsibilities Governance – board or executive – external focus – overall strategic direction Management – internal focus – task oriented Rationale for Separation Decision making powers do not go unchecked Balance of power and authority Transparency Accountability Responsibility Applicability to Māori Introduction Best practice rationale applies to all entities Māori organisations – commercial focus – wealth creation – wider objectives - social Applicability to Māori Governance Levels At least four levels Members – owners Member representatives – represent members interests Directors – strategy orientated and monitor performance Managers – task and results orientated Applicability to Māori Rationale for Separation Assists management of assets Transparency and accountability Ease of monitoring Different governance levels have different resources/skills Avoid potential conflicts in fulfilling different functions Skills managers Applicability to Māori Roles Executive – set clear objectives for managers – monitor managers – report to members Managers – more specific strategies – report to member representatives Applicability to Māori Structures Number of general options available Ultimately up to individual group Other criteria - Crown and TOKM General criteria – member control – legal capacity and powers certain – separation of owners and managers – separation of commercial and non-commercial – consistent with tikanga TOKM Requirements Two categories – Mandate requirements – Structural requirements Summary of mandate requirements Summary of structural requirements TOKM Requirements Mandate requirements – Obligation to act for all iwi members, irrespective of where they reside – Membership open to whakapapa members – Right to request postal vote – Establish and maintain registers – “on-going efforts” TOKM Requirements Mandate requirements (cont.) – AGM • annual plan • annual report • annual audited accounts • performance of asset holding entity • amendments – Certain amendments require 75% approval of voting members – Dispute resolution TOKM Requirements Structural requirements – Accountability – Annual plans • key strategies • financial returns • rationalisations – Separation of key functions/transparency TOKM Requirements Structural requirements (cont.) – Discrete legal entity to manage PRESA and POSA – Iwi organisation to provide strategic governance, which should be included in iwi organisation constitution – Elected reps. no more than 40% of directors of asset management body – Representative iwi organisation amend constitution of asset management body by 75% majority TOKM Requirements Structural requirements (cont.) – Separation between asset management and distribution of funds – Separation between asset management and daily fishing management Crown Requirements 20 questions – development of entity – representation of members – accountability – transparency Governance Structures Introduction Some structures – not all Brief discussion of advantages and disadvantages Derive from Westminster system of law Square pegs, round holes Law Commission Report Governance Structures Common Law Trust Established under common law Flexibility in Trust Deed Unclear trustee duties Time consuming and costly Finite period – rule against perpetuities Governance Structures Ahu Whenua Trusts Established under TTWM Act 1993 Avoid further fragmentation of Māori land Land vested in trustees and benefits range of people Arguably not fully representative of iwi Uncertainty of trustee’s duties and powers Replacement of trustees problematic Under scrutiny and control of Māori Land Court Governance Structures Māori Incorporations Established under TTWM Act 1993 Not truly representative of iwi Uncertainty as to powers Under scrutiny and control of Māori Land Court Governance Structures Incorporated Societies Established under Incorporated Societies Act 1908 Well known and understood Potentially not fully representative of iwi Pecuniary gain issue Membership – must register each beneficiary – contractual obligations – enforcement issues Porima v Te Kauhanganui o Waikato Inc Governance Structure Māori Trust Boards Established under Māori Trust Boards Act 1955 Legally uncertain Powers limited Accountable to Minister of Māori Affairs rather than beneficiaries Inconsistent with tino rangatiratanga Governance Structures Statutory Bodies Established by special legislation Allows for iwi control Clear, comprehensive and flexible Passing of legislation can be costly, time consuming and requires government agreement e.g. Te Runanga o Ngāi Tahu Act 1996 Governance Structure Companies Established under Companies Act 1993 Provides legal and commercial certainty Strong accountability (e.g. shareholder protection) Constitution allows for flexible, iwi specific structure Financing and commercial powers Difficulties in identifying shareholders Governance Structures Law Commission Recommendations Treaty of Waitangi Claims: Addressing the Post Settlement Phase (Aug 2002) Necessary for uniform model settlement entity to be created by statute Must meet needs of settlement group and members Should clearly define responsibilities of those managing assets Governance Structures Law Commission Recommendations Core obligations that should be included – stewardship – transparency – accountability – dispute resolution – distribution rules in event of winding up Incorporation of Tikanga Māori Structures traditionally derived from Westminster system of law – certainty (law) Traditionally Māori governance structures today less certain (lore) Tikanga varies Incorporation of Tikanga Māori Possible conflict between tikanga Māori and governance structure rules Tikanga can be incorporated into governance structures e.g. constitution / charter / Trust Deed The more flexible structures allow for greater incorporation of tikanga Māori Incorporation of Tikanga Māori Examples Recognition of Tino Rangatiratanga and Kaitiakitanga – settlements allow for collective Māori ownership and management over tribal assets, land and destiny – settlements allow an iwi to hold assets and administer them as kaitiaki – duty to protect assets for future generations – can be incorporated into modern structures Incorporation of Tikanga Māori Examples Recognition of Whanaungatanga – whakapapa based – membership and participation of all members of kin group in the settlement process and governance structure – whangai Incorporation of Tikanga Māori Examples Recognition of Mana – political power ascribed through whakapapa and acquired through accomplishment – executive to make decisions subject to wishes of group – executive accountable to members – Kaumatua role Common Issues – Merging of Functions Issues may arise if: – member representatives taking active role in management – directors become management – management become directors Difficult to isolate responsbility May not have appropriate skills Common Issues – Māori Specific Resource availability Difficult for people who have historically undertaken merged roles to separate functions Tikanga – varies – can be incorporated into constitution etc – difficult to reduce concepts to writing Common Issues – Decision Making How should decisions be made? – unanimity vs majority? – what majority? – what voting process? – hui vs postal vote? – preferential voting rights? – Kaumatua input Common Issues – Decision Making Who should make decisions? – members control over overall direction – impractical to have members make all decisions – what decision should they have input into? Conclusion Separation of management and governance is important Structure will impact on successful management of assets Ultimately people who work within structure have greatest influence over whether group is successful in managing assets