Venu Menon
Wellington, June 22,2023
Michael Wood’s resignation from the Cabinet over conflict of interest has left Prime Minister Chris Hipkins facing a crisis of credibility that could prove crippling for the Labour Party with the general election round the corner.
Hipkins was at pains to articulate his frustration over Wood’s lack of transparency around his shareholdings. Instead, what has emerged before the public is the prime minister’s moral brinkmanship and failed attempts to save his beleaguered minister by affording him ample room to manoeuvre his way out of a crisis of his own making. In doing so, the PM has conveyed the impression that he was prepared to accommodate his minister until his continuance in office became untenable.
Human error appeared to be the operative phrase of Hipkins’ vocabulary while retaining Wood in Cabinet and allowing him time to get sorted.
But there are mechanisms in place to ensure MPs and ministers disclose possible conflicts of interest. Yet, Wood was allowed to operate beneath the compliance radar of Cabinet and Parliamentary rules by not properly disclosing his ownership of shares in Auckland International Airport.
Wood was divested of his Transport portfolio while questions raged about his suitability to remain in Cabinet. In the process, Prime Minister Hipkins put politics above probity.
The PM’s monitoring and surveillance role was severely compromised when Wood failed to enter details about his shareholding in the Pecuniary Interests Register, designed for accountability and transparency. It is a mechanism that allows for public scrutiny of a politician’s personal finances.
Wood’s failure to disclose his Auckland International Airport shareholdings, owned by him since 1998, was a clear breach of Parliament’s Standing Orders, a violation that merited referring him to the Privileges Committee.
The Standing Orders rules oblige MPs to correct their entries in the Pecuniary Interests Register, or make entries retrospectively in case of omissions.
It is clear Wood had enjoyed undue leeway and latitude despite failing to declare his shares in Auckland Airport for five years. He was made aware of this lapse in 2022, but declared his assets in the register from that point onwards, omitting entries from previous years between 2017 and 2021.
But conflict of interest got out of hand when Wood continued to hold shares in Auckland International Airport after becoming a minister.
By owning shares in a company that he was involved in regulating as a minister, Wood transgressed the Cabinet Manual.
The manual binds ministers to a strict code of conduct and ethical standards. There simply cannot be a perception of personal pecuniary gain attached to ministerial decision making.
The gross error of judgement the PM attributed to his minister might easily be stretched to include himself, when he allowed Wood to continue in the portfolio at this point.
To make matters worse, Parliament heard that the Cabinet Office had reminded Wood on a dozen occasions, over two and a half years, to offload his Airport shares. Wood dragged his feet for well over a year before acting on the reminders by the Cabinet Office.
It also appeared as though Wood misled the Cabinet Office on the issue. Hipkins is on record as saying, “One of the challenges is that the Cabinet Office had been advised by [Wood] on a number of occasions that he had divested himself of the shares, that clearly hasn’t happened. That is quite a material issue.”
The tipping point came when Wood’s conflict of interest management (or lack thereof) spilled over into additional undisclosed shareholdings in other sectors, including banking.
The moral dilemma Prime Minister Hipkins faces in the aftermath of Michael Wood’s fall from grace is whether he can wash his hands, Pilate-like, from the transgressions of a former Cabinet colleague whose probity he tried to protect where there was none.
Venu Menon is an Indian Newslink reporter based in Wellington
