Ports of Auckland flouted the “no surprises” agreement with its Auckland Council owner in a nearly $1.8 million payment to departing chief executive Tony Gibson, a letter from Mayor Phil Goff suggests.

Goff has written to the port chair Bill Osborne, who this month is also leaving, seeking an explanation for the payment, revealed in the port’s 2021 annual report.

The council’s action comes as Herald inquiries show Gibson will remain as the port’s director representative on the North Tugz board until a new port chief executive is appointed.

Gibson is also still a director of Marsden Marine Holdings, 50 per cent owner of Northport. Ports of Auckland has a 20 per cent stake in MMH. A Northport spokesman said Gibson was elected to the MMH board by shareholders in his personal capacity for his experience. Up until his resignation from the Auckland port he was a non-independent director. Now he is considered an independent director.

Asked by the Herald why interim chief executive Wayne Thompson has not replaced Gibson on North Tugz board, which has two Auckland port directors, the port responded: “…the CEO is ex-officio one of these directors. To provide the business with stability and continuity, Ports of Auckland has retained Mr Gibson’s services as a North Tugz director until such time as a new Ports of Auckland CEO is appointed.”

As Gibson’s 2020 pay was $820,000, the balance of his 2021 year payment is assumed to be an exit payout.

Gibson left the company in June after 11 years in the job. The port has been under scrutiny for its documented poor health and safety record, including fatalities, poor financial performance and productivity during a time of shipping and supply chain congestion, and failure to fully implement a five-year-old costly container terminal automation project.

Goff’s letter said the council acknowledged payments to staff were operational matters. It was not questioning the port’s authority to determine the payment.

“However, under the port’s and council’s no surprises agreement, no notification had been given to council that the board was intending to make this payment, nor until the 2021 annual report was about to be published, that the payment had been made.”

Goff’s letter also noted no explanation was given in the report for the payment.

“Given that the chief executive had resigned, council members do not understand why a payment of this sum was required. It was deemed inappropriate when the port is suffering from a poor financial position and the dividend to shareholders was a small percentage of its normal level.”

The council sought to know why a payment of this level was made and why the council wasn’t informed of it. The letter also asked for information on the decision process.

The port declined to answer Herald questions on who made the payment decision and whether it was signed off by directors on the remuneration committee, saying it would not be appropriate to pre-empt in the media a response to the mayor.

An independent report commissioned by the council this year found systemic problems with the port’s health and safety culture. Maritime NZ last month laid charges in the Auckland District Court against the port company and Gibson over the workplace death a year ago of Pala’amo Kalati, who was crushed by a container.

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