Top law firm called in over car conflict of interest

The car company at the centre of a conflict of interest scandal has hired top law firm Chen Palmer to lobby for an extension to an NZTA consultation into the rules it was found to have broken. 

Last year, Newsroom reported vehicle inspectors JEVIC and VINZ had not informed regulators they were owned by the Optimus Group, which also owned Nichibo, a car importer. The companies only corrected the record in 2017, two years after the ownership change took place.

In 2016, it mislead the regulator, saying it was “throes of changing the ownership of its parent companies”, when the ownership change had actually occurred a whole year earlier. 

This broke conflict of interest rules that required the companies to disclose their ownership to NZTA. The NZTA regulation is itself a watered-down version of an international rule maintained by the International Standards Organisation that prohibits testers inspecting things in which they have a financial interest. 

Under current rules, vehicle testers may inspect vehicles in which they have a financial interest, provided the conflict is disclosed to NZTA and the organisation has a plan in place to manage the conflict of interest. It was the group’s lack of disclosure that violated the regulation, rather than the corporate structure, which was permitted provided the companies managed the conflict of interest. 

In response to the scandal, NZTA outlined a change of rules that it said would clarify conflicts of interest. The rule change would effectively make corporate structures like that used by the Optimus Group impossible.

The rules would prohibit companies certifying vehicles they have an “ownership interest in” or carrying out entry inspections of vehicles “they or someone linked to them” had previously inspected at the border.

In a Q&A on the agency’s website, it said it had “identified the current process as a potential risk to safety”, and that it had launched the proposed changes to address concerns.

The agency also said that people who had safety concerns should have their vehicle checked by an approved vehicle certifier.

The Optimus Group hired top public law firm Chen Palmer to submit to NZTA for an extension of the consultation period.

Correspondence between Chen Palmer and NZTA had been requested under the OIA, but the Agency has withheld the communication, instead providing only a summary. 

On November 16, NZTA announced its proposed changes to the rules, giving affected companies just two weeks to respond.

On November 19 and November 22, 2018, Chen Palmer wrote to NZTA saying the consultation period was too short and in breach of minimum standards for consultation. They requested the consultation period be extended. 

This request was finally picked up by the NZTA board on November 28, two days before consultation was due to close. Chair Michael Stiassny emailed fellow NZTA board members saying he had been asked to leave the consultation open to February. In an email from the 29th, Stiassny said the decision to leave consultation open to February had moved forward, “with the support of most board members”.

The agency notified industry on November 29 - one day before consultation was due to close - that the period had been extended until February 20, 2019.

Gordon Shaw, CEO VINZ, told Newsroom his company had yet to submit on the proposals as it was waiting for a response from NZTA. 

“VINZ and JEVIC NZ have urgently requested, under the OIA, information that is necessary before we can make an informed response to the consultation document,” Shaw said. 

“To date, NZTA has not provided us with key relevant information about why the policy change is needed and evidence of any public safety risk,” he said. 

NZTA’s original consultation document noted the current regime posed “a potential risk to safety”. 

A briefing to Transport Minister Phil Twyford from earlier in November explains why Optimus companies are so concerned.

“Changes to this operational policy will have the greatest impact on the Optimus Group,” it reads.

“It will remove the ability of VINZ to inspect any vehicles that are imported by Nichibo, the company within the Optimus Group that imports vehicles to New Zealand. We are informed by VINZ that they currently inspect about 20 percent of Nichibo’s imported vehicles, the balance being handled by other inspecting organisations”.

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