Treasury officials harboured serious concerns about appointing Greg Miller as the chair of KiwiRail, newly released documents show.
His appointment was "very likely to be highly destabilising" for the state-owned rail company.
“I have strong reservations about how it will be perceived by the rest of the board, by the executive, by the unions, by the staff, and by the customers," Treasury adviser Mark Donnell warned in an email when Miller's potential appointment as either chair or executive chair was first mooted in April 2018.
“I have strong reservations that within one year several key staff will leave, and that key relationships (unions, key customers) will be more combative.”
Miller was appointed chair of the state-owned enterprise (SOE) in November 2018 with the support of New Zealand First. Finance minister Grant Robertson and transport minister Phil Twyford met with Miller ahead of his appointment, however Robertson was opposed to any executive chair role.
Around the time Miller's appointment was being firmed up, the then chief executive officer (CEO) Peter Reidy resigned to take a job at Fletcher.
Miller stepped down as chair to become the new chief executive in May 2019, but resigned abruptly in late 2021 midway through a board-initiated independent probe following reports of bullying and poor workplace culture.
Miller has always denied the accusations.
Senior staff exodus
BusinessDesk revealed in 2021 40 tier 2 and tier 3 managers resigned while Miller was chief executive as well as seven members of the 11-strong executive team. Nine people were paid settlements on the way out.
Miller himself was paid out for the six-month notice period he didn’t work, likely clocking up a further $500,000. His departure left KiwiRail leaderless at a key period. A replacement CEO has yet to be announced.
Emails and briefing documents obtained by BusinessDesk using the Official Information Act (OIA) show key officials within the Treasury weren’t keen on Miller being made chair of the state-owned rail operator.
The central agency first became aware ministers were considering Miller for the role in April 2018.
That month Donnell, a Treasury adviser, met with associate finance minister Shane Jones. Later that day, he emailed his colleagues telling them of the situation.
Ministers wanted to replace KiwiRail board chair Trevor Janes with Miller, Donnell said. Ministers (likely Jones and state-owned enterprises minister Winston Peters) saw Miller as being an “executive chairman” rather than just a chair.
Miller, who was managing director of Toll New Zealand at the time, was "the man who sold KiwiRail back to the Crown in 2008", Donnell noted.
He didn’t believe Miller was suitable for the role and had "very strong reservations" about the idea of an executive chair appointment.
“I think governance and management need to be kept separate," Donnell said.
"I am concerned that ministers will see a KiwiRail executive chair as a precedent that could be applied across the rest of the Crown's commercial portfolio."
Treasury was asked by Robertson to convene a panel to interview Miller and assess his suitability for the role. A trusted senior businessman, Brian Roche, was brought in to chair the panel, which also included Treasury officials. The interview took place on May 14, 2018.
Draft reports summarising the panel’s view include a number of positives. Miller is described as: “deeply knowledgeable”; “focussed, energetic and driven”; and the panel considered he would have much to offer in an executive role, however “the key concern of the panel is that it was interviewing Mr Miller for the chair role while in fact he wants a different role, namely executive chair”.
The panel didn't support his appointment.
A draft briefing to ministers asked them to note that the panel didn’t support Miller being made chair, that Treasury didn’t support the role of executive chairs for SOEs, that the terms of a review of rail be adjusted to include governance recommendations, including a new chair for KiwiRail, and that the then board member Mike Pohio be appointed acting chair.
What actually went to ministers in June was very different.
The briefing sent to ministers said Treasury had conducted a due diligence process, comprising the panel interview, and Miller was recommended as chair.
As Treasury noted in its OIA response letter, “Treasury’s written advice to ministers did not refer to the panel’s assessment or view of [Miller’s] suitability”.
BusinessDesk asked Treasury why.
The panel’s assessment wasn’t included, a Treasury spokesman said, because Treasury believed it had already been communicated verbally by the panel chair and senior officials to shareholding ministers.
The OIA documents show Roche spoke to Robertson directly about Miller in May.
“He is obviously thinking his way through things but was pretty clear that the idea of an executive chair wasn’t on the agenda,” Roche said in the email.
Treasury's briefing to ministers in June 2018 reflected "the appointing minister’s intentions that Mr Miller be appointed as chair, but not as executive chair", the spokesman said.
The language used in the briefing was “to reflect and give effect to the decision-making minister’s choice”.
A new board chair for KiwiRail started in January, former Westpac New Zealand chief executive David McLean. The board has yet to announce a new chief executive.
Attempts to reach Miller for comment yesterday were unsuccessful.