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Questions asked of Harness Racing New Zealand, and the process followed in appointing an independent director has brought to light issues concerning the constitution and integrity of the process ultimately followed.
The evidence suggests that the process followed by the board and management of HRNZ in selecting its appointment to the independent director position was unconstitutional, and, furthermore, flawed.
On the 11th of October 2022, Harness Racing New Zealand announced the appointment of Anna Gallien to the incumbent role of Independent Director on the HRNZ Board.
Gallien replaced Todd Anderson of Winton, whose 12-month term officially ended at the most recent AGM in October this year.
A total of fifteen people applied for the role with applications closing on the 19th of July.
Six weeks after applications closed, candidates received notice on behalf of the HRNZ Chief Executive informing them whether they had made the shortlist or had been unsuccessful.
Robert Famularo, a businessman and prominent industry participant, received notice that he was unsuccessful with his application on the 1st of September 2022.
He immediately had cause for concern, with the more questions he asked about the application process and the outcome, the more he found needed answering.
“I was one of fifteen people who applied for the recently advertised role of HRNZ independent director, closing 19 July,” said Famularo.
“After more than six weeks delay, I received notice on the 1st of September that I had not made the short list of candidates that the Chief Executive believed had a “more closely aligned expertise and experience to that which we are seeking.”
“My immediate concern was that the Chief Executive was involved in selecting a director he would be answerable to. A quick check of the HRNZ constitution confirmed that the correct process had not been followed,” he said.
The HRNZ constitution states that the call for applications to the Independent Directorship should come from the Independent Appointment Committee, in this case, a three-person panel with the constitution stating;
10.26 When required, the Board shall establish an Independent Appointment Committee comprising:
- 10.26.1 one person representing HRNZ appointed by the Board;
- 10.26.2 one person appointed by the Board who has expertise in governance recruitment; and
- 10.26.3 one person appointed by TAB NZ.
10.27 The Independent Appointment Committee shall call for applications and appoint the independent members of the Board.
“Immediately, the process has been undermined given the call for applications was made by HRNZ management, long before the establishment of the independent appointment committee took place,” said Famularo.
In a letter sent to Famularo as a result of his inquiries, HRNZ’s legal counsel, Chris Lange, advised HRNZ that: The process adopted I understand was undertaken in accordance with what had been a long-standing practice. However, under the Constitution the call for the applicants should come from the Independent Appointment Committee.
While Lange goes on to say that ‘the process of calling for applicants should be part of the constitution review currently underway,’ Famularo believes it should not be the only element of the appointment that gets a closer inspection.
While not acknowledged in questions put to HRNZ Chair, John Coulam, it is believed he and Gallien have shared a professional working relationship prior to her appointment as a director.
A quick review of Gallien’s LinkedIn profile would indicate this to be likely, given that she is directly involved in the education sector as a governance adviser, among other appointments in the Waikato region.
The letter from HRNZ’s legal counsel indicates Coulam withdrew from the selection process on the 30th of August and, a day later, informed the board of that decision.
The letter from HRNZ legal counsel makes no mention of a conflict of interest, something Coulam confirmed after being contacted directly, stating “several conflicts of interest were declared to the board.”
Coulam went on to say that “on that basis, the Board proceeded to appoint an Independent Panel as required under the constitution. The Panel chair was a lawyer, and no Board members were on the Panel.”
Despite being informed of several conflicts, the HRNZ board gave Coulam the autonomy to select his own replacement on the Independent Appointment Committee.
Coulam was ultimately replaced by Mauro Barsi on the 5th of September, joining Jessica Meech and the TAB appointment Sam Moncur.
Questions were asked whether the three-person Independent Appointment Committee were given a shortlist prepared by Coulam and the Chief Executive, prior to receiving information on all 15 applicants and selecting a shortlist of their own.
Coulam states that “the Panel reviewed the entire list of applicants, created a shortlist, interviewed the candidates, and then made a recommendation back to the Board.”
HRNZ’s legal counsel states the following happened when referring to the shortlisting process:
“The Chief Executive advised me of the short-listing process and my advice was all applications should be before the Independent Appointment Committee. The Chief Executive provided the information from all 15 applicants to the Independent Appointment Committee on 8 September 2022.
“It is the Independent Appointment Committee decision to determine who they seek to interview. I understand it did so. The Independent Appointment Committee were to inform the board secretary of any additions or deletions of those to be interviewed.”
“I am of the firm view that the Independent Appointment Committee was only allowed to review all 15 applicants after the issue was raised,” said Famularo.
“The fact that the Independent Appointment Committee were asked solely to advise of any additions or deletions can very well be interpreted that the IAC has already been presented with a shortlist, to begin with,” he said.
HRNZ’s legal counsel states that letters were sent to applicants between 31 August 2022 and 8 September 2022, with the latter date being when the appointment committee received all 15 applicants.
There is some evidence to suggest that the shortlisted applicants were contacted prior to the 31st of August.
Our lines of investigation suggest that of the half a dozen unsuccessful applicants we were able to establish contact with, nobody received any further correspondence beyond the original ‘dear john’ letter, which all individuals contacted received on the 1st of September within minutes of each other.
When contacted as to how she became aware of the directorship, given it was only advertised on Harness Racing New Zealand’s website, Gallien had the following to say:
“I’ve been a member of the Institute of Directors for a number of years and I saw the position advertised through the emails they send to members on directors’ vacancies back in 2021 (I think around July-August of that year). I requested an application back then from the HRNZ office but never put in my application, which I regretted as I remember thinking the advert asked for the very skills I thought I could help them with.
“I always keep a little bit of an eye on the vacancies and as it happens, I saw the role come up again this year. I didn’t want to regret not putting my name forward again so this time I pushed forward with the application.”
There is little doubt that Gallien has directorship and governance experience from which the board will benefit.
However, in the letter sent to applicants who had shown interest in the role, many of the areas addressing acumen and desired expertise weren’t quite as strong.
Keith Sumner, a successful commercial travel business owner and industry participant from Auckland, was another of the unsuccessful applicants and stated the following:
“Given the comments in the email stating I was unsuccessful, I was surprised at the final appointment.
“Having held the exact same position with the ATC, having sat on numerous boards, having completed the IOD’s residential course, and having run a substantial and successful business for 25 years together with horse ownership and a brief amateur driver’s stint, I felt I might have merited a phone call. Learning that there was a personal relationship at the heart of this makes me glad I was unsuccessful! I just feel for the industry,” he said.
There is nothing in the constitution to state that only three applicants were to be shortlisted, and if the IAC were, in fact, asked to solely add or subtract from the original shortlist supplied, it is probable that the original shortlist was left unchanged.
Coulam ultimately went on to state that: “As part of the process, the Panel was also able to assure the Board that the entire process met all the necessary legal requirements.”
This is something Famularo strongly disagrees with.
“Multiple questions addressed to the Chairman failed to get complete transparency or answers and you would have to say the process was tainted from start to finish,” said Famularo.
“I believe there is clearly a problem with the selection of this role both in terms of constitutional process and conflicts of interest.
“I believe the remainder of the HRNZ Board and the clubs that have elected them seek an urgent review of the appointment process to fully understand what has happened behind the scenes and act accordingly,” he said.
by Brad Reid, for Harnesslink
