THE RAILWAYS BOARD

Southland Times, Issue 22856, 3 April 1936, Page 8

THE RAILWAYS BOARD

Clash of Interests PRIVATE BUSINESS OF MEMBERS ALLEGATION BY MR SULLIVAN (From Our Parliamentary Reporter.) Wellington, April 2. An allegation that the private business interests of some members of the Railways Board were frequently in conflict with the interests of the board itself was made by the Minister of Railways (the Hon. D. G. Sullivan) in moving the second reading of the Government Railways Amendment Bill in the House of Representatives to-night. The Bill seeks to abolish the Railways Board. Mr Sullivan said that a claim for £16,000 had been made against the Railways Board by the Morningside Timber Company, in connection with the destruction of its mill by fire. The acting-chairman of the Railways Board was also chairman of the New Zealand Insurance Company. Mr W. J. Polson (Nat., Stratford): You are not imputing anything, are you? The Minister said that he was not suggesting anything improper. It appeared to him, however, that it was an invidious situation, insofar as the act-ing-chairman had to serve both plaintiff and defendant. Surely it was a striking illustration of the impossible situation that must eventuate when commercial men involved in widespread concerns found themselves in control of a great national asset like the railways. Acting-Chairman's Courtesy. “The acting-chairman of the Railways Board has treated me with great courtesy, and given me great assistance,” said the Minister. “I„am not making any reflection on him.” An Opposition member: The inference is there. The Minister said that the illustration was one of several he was able to quote. In circumstances such as he had outlined, how as it possible for the acting-chairman to give undivided lovalty to the State? '“Again I am not making any reflection upon members of the board, but we have definite evidence that some of them are interested in the timber business,” continued the Minister. “Two of them, I think I am correct in saying, are directors of timber concerns.

A Government member: Quite true. The Minister: Now the original suggestion to close down the Mamaku railway mill came from a gentleman on the board, who is deeply interested in the timber trade. How can one square that kind of situation with the best interests of the State? What is the answer to the Case .1 am putting up here. The Mamaku mill was closed down without any business justification whatever. Sir Alfred Ransom (Nat. Pahiatua): What loss was being made? A Question of Cost. The Minister: It is not a bit of good the hon. gentleman trying to escape. Tenders were called to ascertain whether supplies could be got cheaper from our own mill than from the outside market. The balance was in favour of our own mill, yet in the face of that Mamaku was closed down. I think the hon. gentleman might be logical and accept the truth of this statement. He and his party are out of court. I think one of the members of the board is chairman of directors of an important timber concern that tenders for railways supplies, and that another member of the board, as I have already said, is interested in the timber trade. I think the Opposition will be serving the interests of the country if they recognize the facts and admit that such a position is most undesirable in the public life of the country. Is there any member of the House or anyone in New Zealand who can justify the situation. Sir Alfred Ransom: Ls it not possible that the Minister may be interested in the trade also? Mr Sullivan: It is quite possible that a Minister on that side of the House may be, but I can assure . the. hon. gentleman that so far as this Minister is concerned he has no money in timber. Mr S. G. Smith (Nat. New Plymouth): No experience. The Minister: Well, if I have not got experience I think I am better oft than the hon. gentleman who made the interjection. With all his experience he has not been much of a success. Tenders For Supplies.

There were at least two members of the Railways Board whose firms had sent in tenders for railway supplies, Mr Sullivan continued. Those gentlemen were in a position to obtain information, not only about their own firms, but also about competitors. They had all the details, and he wondered what the business community thought of the position. The Leader of the Opposition (the Rt. Hon. G. W. Forbes): Have these men any chance to reply ? “The Rt. Hon. gentleman will have an opportunity to speak,” Mr Sullivan said. “He will have a great deal of difficulty in disposing of the statements I have made, because they are facts. I cannot believe that even the Leader of the Opposition would risk his reputation by trying to justify the tilings I have described.” The Minister also referred to the position of the Nelson line. In July, 1935, the board had proposed closing a section of the line. The decision was deferred to the August meeting and then deferred until December, the meeting to be held after the election. It would have been most impolitic for the board to give effect to its considered opinion then. He knew that the board had been dissatisfied with the line and that it had discussed imposing penal rates, and even closing it. It was very significant that the decision was held over until after the elections. “The fact of the matter is that the board is not necessary,” Mr Sullivan concluded. “There is no place for it, and no job for it. The work is done by the Department, by a very complete and thoroughly well-equipped Department.” Reply By Mr Forbes. The points raised by Mr Sullivan were referred to later in the debate by the Leader of the Opposition. Mr Forbes said that the members of the board had always acted in the interests of the service which they controlled.

Mr Forbes said that Mr Sullivan’s remarks had carried an insinuation that something underhand had been done by the members of the board. The

name of an insurance company had been mentioned from time to time. The board had made claims against that company and they had been taken to the Courts for a settlement. No director or board member could exert any influence in those circumstances. The members of the board should be given some opportunity for reply. Mr Forbes added that it was not fair to condemn them unheard. The Minister of Public Works (the Hon. R. Semple) said that the Leader of the Opposition might be interested to know that one of the members of the board was an adviser to a foreign oil company, which was definitely in conflict with the railway system. Tenders For Oil. “I have here a summary of tenders for oil,” said the Minister. “The document contains the names of the contractors and the specifications and quality of the oil. Documents like that are in the hands of a member on the board who is acting in an advisory capacity to a foreign oil company. | It might be interesting for the Leader of the Opposition to know that the board members have not been a happy family. They have been quarrelling among themselves, and some of them are very thankful they are about to be discharged. The chairman of the board has been absent from New Zealand for 12 months. Has he been chasing business? I wonder. I know that for a long time he was chasing football matches. His salary still goes on. He receives £lOOO a year, plus £l4OO superannuation. I understand that he is allowed £lOOO in pocket money while away, and has a secretary who costs £750, besides his expenses. He would want to chase business to compensate for that.”