AMP’s rep­u­ta­tion as a ven­er­ated and trusted in­sti­tu­tion, painstak­ingly built up over 169 years, has been trashed in a day and a half of grubby ev­i­dence.

The CEO is hang­ing by a thread af­ter yes­ter­day’s hear­ings


AMP’s rep­u­ta­tion as a ven­er­ated and trusted in­sti­tu­tion, painstak­ingly built up over 169 years, has been trashed in a day and a half of grubby ev­i­dence be­fore the fi­nan­cial ser­vices royal com­mis­sion.

The late US pres­i­dent Richard Nixon can at­test that it’s ul­ti­mately the cover-up — and not the crime — that re­ally mat­ters.

It was a ver­sion of Water­gate that sprang to mind yes­ter­day as se­nior coun­sel as­sist­ing Michael Hodge’s of­fi­cial count of the num­ber of times AMP had mis­led ASIC over its fee-for-no-ad­vice scan­dal clicked past 20, and ev­i­dence was pre­sented that law firm Clay­ton Utz had shared 25 drafts of its 2017 “in­de­pen­dent” re­port on the prac­tice with AMP.

The com­mis­sion heard that AMP chair Cather­ine Bren­ner went into bat for chief ex­ec­u­tive Craig Meller be­fore the board set­tled on the fi­nal ver­sion of the re­port.

In an Oc­to­ber 11, 2017 email sent by AMP group coun­sel Brian Salter to Clay­ton Utz part­ner Nicholas Mavrakis, Bren­ner asked for the in­clu­sion of a state­ment that Meller was “un­aware of the prac­tices or their il­le­gal­ity”.

AMP be­lieved Meller had not seen in­ter­nal le­gal ad­vice that the prac­tice was il­le­gal, and had not been in­volved in com­mu­ni­ca­tions with ASIC af­ter a breach re­port was lodged with the watch­dog in 2015.

Four days later, in an email to Salter, Bren­ner asked for some talk­ing points on Meller for a sched­uled meet­ing with ASIC chair Greg Med­craft, and oth­ers, to present the fi­nal Clay­ton Utz re­port.

“Has Clay­ton Utz now in­cluded in their re­port that we will give to ASIC their find­ings on Craig?” the AMP chair asked in an email copied to Meller.

Salter for­warded the ques­tion to Mavrakis.

The com­mis­sion heard there were two un­usual as­pects to the email.

First, it was not sent to AMP group ex­ec­u­tive, ad­vice, Jack Re­gan, de­spite his sta­tus as one of only two peo­ple in the group with day-to-day deal­ings with Clay­ton Utz.

Asked for his re­sponse, Re­gan, un­der cross-ex­am­i­na­tion yes­ter­day for a sec­ond con­sec­u­tive day, said that the re­port was “sub­stan­tially set­tled by the board”, the gen­eral coun­sel and Clay­ton Utz.

The sec­ond un­usual as­pect was the level of in­ter­ac­tion be­tween AMP and Clay­ton Utz.

Af­ter fur­ther ev­i­dence of more ex­changes be­tween the com­pany and the law firm, Re­gan agreed he had a “level of dis­com­fort” about rep­re­sent­ing the re­port as in­de­pen­dent to ASIC be­cause of the “sig­nif­i­cant amount of in­ter­change” be­tween AMP and Mav- rakis. Hodge asked Re­gan if Mavrakis could have been in any doubt what­so­ever about the pre­ferred Clay­ton Utz out­comes by AMP’s most se­nior peo­ple.

“That’s up to Mr Mavrakis to de­ter­mine,” Re­gan said.

Com­mis­sioner Ken­neth Hayne clearly had con­cerns about AMP’s de­gree of in­flu­ence.

In yet an­other bomb­shell shortly be­fore the com­mis­sion ad­journed, Hayne ac­knowl­edged there might be ques­tions about the role of AMP se­nior man­age­ment and oth­ers in a re­port that was

sub­mit­ted to ASIC as in­de­pen­dent.

“It is a mat­ter for AMP and its ad­vis­ers whether it seeks to have some op­por­tu­nity to pro­vide any ma­te­rial which goes be­yond the ev­i­dence given by Mr Re­gan about that mat­ter and the doc­u­ments that ten­dered in re­la­tion to it,” the com­mis­sioner said. Suf­fice to say that AMP has a tar­get plas­tered all over its back af­ter yes­ter­day’s damn­ing ev­i­dence.

Against an oth­er­wise solid per­for­mance by the over­all mar­ket, the com­pany’s share price sagged 4.4 per cent.

Bren­ner said last month that Meller would step down be­fore the end of the year, but the CEO is now hang­ing by a thread. Se­ri­ous gov­er­nance con­cerns have also rocked the board, rais­ing ques­tions about Bren­ner’s fu­ture.

Can­berra has had a lot of fun kick­ing the banks around, and in­evitably there will be more to come be­fore Hayne hands in his fi­nal re­port next Fe­bru­ary.

But as things cur­rently stand, it’s AMP that has shown the most press­ing need for a rad­i­cal over­haul of its cul­ture.

Yes, much of the be­hav­iour is his­tor­i­cal, but Bren­ner, her fel­low di­rec­tors and se­nior man­age­ment bear re­spon­si­bil­ity for the way the mis­con­duct has been han­dled.

Re­gan, who was ap­pointed in Jan­uary last year to clean up the mess, has emerged with his rep­u­ta­tion mostly in­tact, and yes­ter­day of­fered his own thoughts on or­gan­i­sa­tional cul­ture.

Asked about the cul­ture of AMP’s ad­vice busi­ness, he said it wasn’t as ro­bust as it should be.

He agreed with Hodge that a con­scious de­ci­sion had been made to pro­tect prof­itabil­ity at the pos­si­ble ex­pense of AMP’s li­cence.

“But I think there are other el­e­ments that are con­cern­ing as well,” Re­gan said. “I think there is clearly a lack of clar­ity in terms of the way di­rec­tions are be­ing given, but also there’s a con­cern about the de­gree to which things should have been es­ca­lated as a re­sult of the things iden­ti­fied fur­ther down.”

Had prof­itabil­ity also been pri­ori­tised at the ex­pense of the law, Hodge asked. “Ab­so­lutely,” Re­gan said. “Ab­so­lutely.”


AMP group ex­ec­u­tive, ad­vice, Jack Re­gan leaves the royal com­mis­sion in Mel­bourne yes­ter­day

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