Young Maori Leaders Conference Economic Resources Governance

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Young Maori Leaders ConferenceEconomic
Resources Governance

• 17 June 2003
• Guy Royal / Damian Stone

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Introduction

• Governance and management principles
• How these rules apply to Maori organisations
• Common structures used by Maori organisations
• Incorporation of tikanga
• Common issues

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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

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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

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Rationale for Separation

• Decision making powers do not go unchecked
• Balance of power and authority
• Transparency
• Accountability
• Responsibility

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Applicability to Maori Introduction

• Best practice rationale applies to all entities
• Maori organisations
• commercial focus
• wealth creation
• wider objectives - social

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Applicability to Maori Governance Levels

• At least four levels
• Members owners
• Member representatives represent members
  interests
• Directors strategy orientated and monitor
  performance
• Managers task and results orientated

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Applicability to Maori 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

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Applicability to MaoriRoles

• Executive
• set clear objectives for managers
• monitor managers
• report to members
• Managers
• more specific strategies
• report to member representatives

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Applicability to MaoriStructures

• 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

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TOKM Requirements

• Two categories
• Mandate requirements
• Structural requirements
• Summary of mandate requirements
• Summary of structural requirements

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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

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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

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TOKM Requirements

• Structural requirements
• Accountability
• Annual plans
• key strategies
• financial returns
• rationalisations
• Separation of key functions/transparency

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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

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TOKM Requirements

• Structural requirements (cont.)
• Separation between asset management and
  distribution of funds
• Separation between asset management and daily
  fishing management

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Crown Requirements

• 20 questions
• development of entity
• representation of members
• accountability
• transparency

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Governance StructuresIntroduction

• Some structures not all
• Brief discussion of advantages and disadvantages
• Derive from Westminster system of law
• Square pegs, round holes
• Law Commission Report

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Governance StructuresCommon Law Trust

• Established under common law
• Flexibility in Trust Deed
• Unclear trustee duties
• Time consuming and costly
• Finite period rule against perpetuities

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Governance StructuresAhu Whenua Trusts

• Established under TTWM Act 1993
• Avoid further fragmentation of Maori land
• Land vested in trustees and benefits range of
  people
• Arguably not fully representative of iwi
• Uncertainty of trustees duties and powers
• Replacement of trustees problematic
• Under scrutiny and control of Maori Land Court

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Governance StructuresMaori Incorporations

• Established under TTWM Act 1993
• Not truly representative of iwi
• Uncertainty as to powers
• Under scrutiny and control of Maori Land Court

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Governance StructuresIncorporated 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

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Governance StructureMaori Trust Boards

• Established under Maori Trust Boards Act 1955
• Legally uncertain
• Powers limited
• Accountable to Minister of Maori Affairs rather
  than beneficiaries
• Inconsistent with tino rangatiratanga

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Governance StructuresStatutory 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 Ngai Tahu Act 1996

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Governance StructureCompanies

• 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

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Governance StructuresLaw 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

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Governance StructuresLaw Commission
Recommendations

• Core obligations that should be included
• stewardship
• transparency
• accountability
• dispute resolution
• distribution rules in event of winding up

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Incorporation of Tikanga Maori

• Structures traditionally derived from Westminster
  system of law certainty (law)
• Traditionally Maori governance structures today
  less certain (lore)
• Tikanga varies

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Incorporation of Tikanga Maori

• Possible conflict between tikanga Maori 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 Maori

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Incorporation of Tikanga MaoriExamples

• Recognition of Tino Rangatiratanga and
  Kaitiakitanga
• settlements allow for collective Maori 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

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Incorporation of Tikanga MaoriExamples

• Recognition of Whanaungatanga
• whakapapa based
• membership and participation of all members of
  kin group in the settlement process and
  governance structure
• whangai

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Incorporation of Tikanga MaoriExamples

• 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

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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

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Common Issues Maori 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

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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

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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?

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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