27 January 2020
Madeleine Knaggs
[FYI request #11819 email]
Tēnā koe Madeleine
Your Official Information Act request, reference: GOV-002962
Thank you for your email of 06 December 2019, asking for the following information under the Official
Information Act 1982 (the Act):
1.
Any email correspondence between ACC staff or Board members regarding Te Ahumairangi
Investment Management or the retention of Mr Bagnall's services post resignation.
2.
Any Board or Committee papers that mention Te Ahumairangi Investment Management or the
retention of Mr Bagnall's services post resignation.
3.
A description of the procurement process fol owed to select Te Ahumairangi Investment
Management as an Investment Manager.
4.
Any documentation related to the procurement process described above
5.
A description of any due diligence (including financial due diligence) performed by ACC to ensure
the investment practices of Te Ahumairangi Investment Management are adequate to safeguard
ACC's funds.
6.
Any documentation related to the due diligence described above
7.
The contract with Te Ahumairangi Investment Management
8.
The value of funds to be managed by Te Ahumairangi Investment Management.
9.
Any conflicts of interest declared by ACC staff or Board members regarding Te Ahumairangi
Investment Management.
Background on the procurement of Te Ahumairangi Investment Management
ACC complied with government procurement rules in appointing Te Ahumairangi Investment
Management.
It is standard industry practice for external procurement of investment services to careful y research a
manager’s record, processes and capabilities, and assess them against al the alternatives. This has been
the case for all of ACC’s external manager appointments and is also the case for Te Ahumairangi
Investment Management. There were two main differences in the case to appoint Te Ahumairangi
Investment Management.
First, this was an existing specialist portfolio. It has operated for the past eight years producing excellent
returns and comfortably exceeding its benchmark. There was a desire for continuity and to keep the
portfolio operating as normal through the transition period. Mr Bagnall offers highly specialised services
and has unique experience from his 26 years at ACC. These factors, along with being a world class
investment manager with an exceptional track record, meant he offered a unique value proposition for
ACC.
Second, because of the manager’s connection to ACC, additional external advice was sought on the
commercial terms from a suitably qualified investment consultant. This is il ustrated in the
documentation provided. This confirmed that the proposed fees were reasonable.
GOV-002962
Te Ahumairangi Investment Management has not yet been formal y contracted as an external manager.
An extensive audit of the Te Ahumairangi Investment Management’s systems and operational readiness
wil be undertaken before the contract is signed and Te Ahumairangi Investment Management
commences providing management services. Such audits are always required by ACC for new
mandates. However, in this instance the audit wil be conducted by an independent third party rather
than by ACC staff.
Documentation related to the procurement of Te Ahumairangi Investment Management
We have interpreted your request for
any email correspondence between ACC staff or Board members
regarding Te Ahumairangi Investment Management or the retention of Mr Bagnall's services post
resignation, to be for al correspondence related to the decision to use, and the procurement of, Te
Ahumairangi Investment Management.
1
Any email correspondence between ACC staff or Board members regarding Te Ahumairangi
Investment Management or the retention of Mr Bagnal 's services post resignation
Your request for email correspondence is extremely broad. Our initial search of ACC’s email system
produced many hundreds of emails which are potential y within scope of your request. We expect the
final number to be significantly fewer, but it wil take some time to work through al the emails and
prepare them for release.
In the interests of responding to your request in a timely manner we are, as a first step, providing you
with the key decision paper titled
Board Investment Committee Paper: Appointment of Te Ahumairangi
Investors dated 31 October 2019 and accompanying appendices (
Document One). We have also
provided our response to the remainder of your request.
Once you have reviewed this document, please let us know if you stil require us to compile the emails
for question one. Otherwise, we will continue to process this information and will provide it to you as
soon as possible.
Information withheld
The Board Paper and Appendices 1, 2 and 4 are partially withheld, and Appendices 5 and 6 are withheld
in full under the fol owing section of the Act:
• Section 9(2)(ba)(i): the making available of the information would be likely unreasonably to
prejudice the commercial position of the person who supplied or who is the subject of the
information.
The information withheld relates to the commercial terms agreed between ACC and Te Ahumairangi
Investment Management Limited. If that information was to be released, then it would be likely to
prejudice the commercial position of both ACC and Te Ahumairangi Investment Management Limited.
For example, the withheld information includes details of the fee structure agreed between the parties
and a comparison of that fee structure against ACC’s other external managers and against market
practice. If this information was available to ACC’s other external managers, or to potential external
managers, it could make ACC’s negotiating position with those external managers very difficult as they
would know what fee structures ACC has with existing providers.
The release of this information would also prejudice Te Ahumairangi Investment Management Limited
as future clients of Te Ahumairangi Investment Management Limited would know the details of the
terms agreed with ACC.
Accident Compensation Corporation
Page 2 of 4
GOV-002962
The remainder of your request
Our response to the remainder of your questions fol ows:
2. Any Board or Committee papers that mention Te Ahumairangi Investment Management or the
retention of Mr Bagnal 's services post resignation.
The sole Board Investment Committee Paper in scope is
Document One,
as outlined above.
3. A description of the procurement process fol owed to select Te Ahumairangi Investment
Management as an Investment Manager.
The procurement process is described in
Document One.
4. Any documentation related to the procurement process described above
Document One is the key document related to the procurement process. Any relevant emails wil be
released to you in due course.
5. A description of any due diligence (including financial due diligence) performed by ACC to ensure
the investment practices of Te Ahumairangi Investment Management are adequate to safeguard
ACC's funds.
As set out in
Document One at paragraphs 4.19(d) and 7.1(2), an independent due diligence wil be
carried out prior to the formal engagement of Te Ahumairangi Investment Management Limited.
6. Any documentation related to the due diligence described above
As the due diligence has not occurred there is no documentation at this time. For this reason, this part
of your request is refused under section 18(e) of the Act, as the information requested does not exist.
7. The contract with Te Ahumairangi Investment Management
We are withholding the contract in ful under section 9(2)(ba)(i) of the Act as the making the information
available would be likely unreasonably to prejudice the commercial position of the person who supplied
or who is the subject of the information.
8. The value of funds to be managed by Te Ahumairangi Investment Management.
The initial value of the portfolio to be managed by Te Ahumairangi Investment Management Limited wil
be approximately $1.5 billion New Zealand Dollars.
9. Any conflicts of interest declared by ACC staff or Board members regarding Te Ahumairangi
Investment Management.
ACC recognised that as Mr Bagnall was an existing senior manager within the Investments function, all
Investments Staff and Board Members had potential conflicts of interest relating to the appointment of
Te Ahumairangi Investment Management Limited. For this reason, the probity steps outlined in part 7
of the Board Investment Committee Paper were undertaken.
Accident Compensation Corporation
Page 3 of 4
GOV-002962
Independently, when the Manager External y Managed Funds became aware of ACC’s discussions with
Mr Bagnall he declared a conflict of interest as Mr Bagnall was his manager. As noted in paragraph
7.1(4) of the Board Investment Committee Paper, al ACC staff with reporting lines to Mr Bagnall
(including the Manager External y Managed Funds) were excluded from the process for recommending
the appointment of Te Ahumairangi Investment Management Limited as an external manager.
How to get in touch
If you have any questions, you can email me at
[email address].
If you are not happy with this response, you have the right to make a complaint to the Ombudsman.
Information about how to do this is available at
www.ombudsman.parliament.nz or by phoning 0800
802 602.
Nāku iti noa, nā
Sasha Wood
Acting Manager Official Information Act Services
Government Engagement & Support
Accident Compensation Corporation
Page 4 of 4
Document Outline
