Independent Investigation:
Resignation of former Deputy Chairman of the CAA Board

In September 2017 the Deputy Chairman of the Civil Aviation Authority Board, Mr Peter Griffiths, resigned when he realised that information he had received by virtue of his membership of the Board, and which he had acted on, was still confidential. During his tenure as a Board member, Mr Griffiths acquired an ownership interest in two small aviation companies providing passenger transport services. On 8 September 2017, in accordance with normal practice, the Acting Director of Civil Aviation issued a 'no surprises' advice to the Board noting that due to significant safety concerns he was about to suspend Tauranga-based Sunair Aviation, an operator providing scheduled and charter services in the North Island. On receipt of this advice Mr Griffiths contacted the management of Barrier Air - one of the operators he had recently taken an ownership interest in - and suggested they contact Sunair to offer assistance in meeting any contractual obligations they had, but would now be unable to satisfy due to their suspension. It is worth noting that in the past, Sunair and Barrier Air had competed for some contracts. Sunair learned of its suspension from the competitor operator prior to its receipt of the suspension notice from the Acting Director.

Once it became apparent that he had breached the confidentiality of information he had received in his role as a member of the Authority Board, Mr Griffiths resigned. He was adamant, however, that his intention in contacting Barrier Air was to reduce potential disruption suffered by Sunair customers and noted that he had overlooked the delay between his receipt of the information and Sunair being officially advised. He apologised for his error.

During my investigation of this matter and also subsequent to Mr Griffiths' resignation, it became apparent that a small number of aviation sector participants were of the belief that Mr Griffiths had used his influence as a member of the Authority Board to ensure that regulatory action was taken against some of his competitors, or that he had in some way utilised knowledge obtained as a Board member for commercial advantage. Such suggestions are particularly serious in that they call into question both the integrity of the Board and the statutory independence of the Director of Civil Aviation. As a consequence, I considered it to be in the public interest for there to be an independent investigation into the circumstances leading to the Deputy Chairman's resignation.

I appointed Mary Scholtens QC as the independent investigator and in the terms of reference for her work, tasked her to determine whether the former Deputy Chairman used his position as a member of the Board to:

  • gain, or attempt to gain some form of advantage for him or an aviation business he had an interest in by virtue of knowledge he gained as a member of the Board; or
  • influence or attempt to influence regulatory decisions about particular aviation operators to advance his interests or disadvantage the interests of others.

I explicitly did not limit the scope of the investigation to the events associated with the suspension of Sunair and it is noteworthy that Ms Scholtens conducted a broader investigation. I also asked Ms Scholtens to provide advice on any matters related to the recording of interests and management of conflicts of interest at Board level. Ms Scholtens has now completed her investigation and a copy of her report is provided on this web page. I have summarised her conclusions and recommendations below.

Conclusions

Ms Scholtens finds:

  • That Mr Griffiths did use (albeit inadvertently) the information he gained as a member of the Board regarding the forthcoming suspension of Sunair, to attempt to gain some form of advantage, being to carry passengers who could no longer be carried by Sunair. While she found no reason to doubt Mr Griffiths’ explanation that he read the message quickly, did not pick up the point that the decision was yet to be advised to Sunair, and his action was genuinely intended to assist Sunair if possible, at an objective level his action was nevertheless likely a breach of his duty under s57 of the Crown Entities Act 2004.
  • There is no evidence to suggest Mr Griffiths knowingly influenced or attempted to influence regulatory decisions. Having established the facts with respect to the two primary questions in the Terms of Reference, Ms Scholtens notes the potential difficulties posed by a Board member having an active ownership interest in the sector. She also notes that perceptions created in the industry when such a situation exists are exceptionally difficult to manage and can lead to a suspicion that regulatory decision making is being influenced. Even though shown to be unfounded in this case, the perceptions are a threat to the Authority's reputation.

Recommendations

Ms Scholtens has made the following recommendations in her report:

  1. The Board review its conflicts of interest policy to ensure that it complies with all the relevant provisions of the Crown Entities Act 2004.
  2. The Board consider whether the current 'no surprises' practice is appropriate and if it is, develop a policy which includes checking the interests register to see if all Board members are entitled to the information and which provides a format that signals very clearly the confidential nature of the information and that fact that the decision has not yet been advised.
  3. The Board consider, to the extent it may have influence, whether it should support the appointment to, or the continuation of appointment on, the Board of persons with a current financial interest in the industry, (i.e. ownership or investment holding), perhaps particularly in the General Aviation sector.
  4. The Board and the Authority ensure that there are clear policies for any contact between Board members and Authority staff where 'private' regulatory decisions are involved and that such contact, if it is to occur, should be minimised, bearing in mind the potential for perceptions of conflict.
  5. The Authority continue to take opportunities to educate the General Aviation sector on those matters which ensure an unbiased, fair system, such as the independence of the Director's functions, the method of assessing risk and identifying participants for audit or similar regulatory action and the principles of 'just culture' applied by the Authority.

Board Action

The Board considered the report at is meeting on 1 March 2018. It accepted the report as the outcome of a comprehensive and independent investigation of the facts related to concerns expressed about Mr Griffiths' actions and influence. The Board accepted the conclusions and recommendations of the report. The recommendations will be actioned as a matter of urgency. The Board also resolved to make the report public as soon as practicable.

I would like to express my regret over the events that led to the attached report. While I accept that Mr Griffiths' actions in the Sunair case were well intentioned, they nevertheless represent a profound error of judgement by a member of the Board. He has suffered the consequences of that error and will likely continue to do so for some time. The Board notes the sad end to a very valuable contribution to the public interest in civil aviation by a dedicated and very capable Board member.

Finally, the Board has always been very alert to the need to manage conflicts of interest and the report rightly identifies the need for improvement in our documentation of related processes. That said, perhaps the most valuable outcome from Ms Scholtens' work is the confirmation that there has been no interference with, nor undue influence on, the statutory independence of the Director's regulatory decision making role.

Nigel Gould
Chairman


Investigation of an Alleged Conflict of Interest (PDF 3.2 MB)