First the cover-up, now the deeper hole

WAS Ian Narev sacked? In the clean-out-your-desk and you can forget about any bonuses sense? No.

Has the Commonwealth Bank dispensed with his services? Yes. And that’s the big, very big, problem.

The board is trying to have it both ways with a Clayton’s sacking.

This highlights the core problem that keeps biting CBA on its corpulent rear; and deeper every time.

Executive management and unfortunately the (highly successful) CEO in particular either don’t know or have refused to learn the two oldest and most basic lessons in the book. The board has made the same wilful failure.

The first is that it’s the cover-up, not the crime that gets you. Always. Irresistibly. Inexorably. And inevitably.

It is now blindingly clear CBA should have publicly come clean at least in 2015 when it discovered the stuff-up meant it had racked up 53,506 absolutely undeniable infringements of its mandatory Austrac reporting obligations.

As one astute observer put it to me, CBA should have come clean about the Austrac disaster when Narev was under questioning by the parliamentary economics committee on its assorted ‘other problems’.

There are a number of critical points about Narev’s failure to do so.

He or his successor has to front them under the obligation imposed on all the big four bank CEOs. Did it ever occur to him that they might be uniformly and aggressively, well, pissed?

Narev has single-handedly cruelled the banking industry’s position in the Canberra hothouse.

If the appointment of former Labor Queensland premier Anna Bligh as the industry’s public face was a blunder, because it pissed off one side of politics, Narev’s ‘economy with the facts’ left that in the shade. He pissed off everyone on both sides of politics and everyone else.

Clearly if he was going to come clean with the pollies it would have been necessary to make a comprehensive prior disclosure to the ASX and the world at large.

A whole series of arguably positive things would have flowed from that.

CBA could have been proactive instead of being ambushed by the Austrac move 12 days ago.

Secondly, it might have got the message internally that it needed to be not just proactive but aggressively proactive in fixing all its money-laundering failures.

In one sense CBA’s bigger crime (in the figurative sense, and subject to hearing its side of the story) was the way it not simply wasn’t aggressively proactive in monitoring and responding to suspicious money-laundering type activity, but was casually, even actively negligent in its approach.

The third, and not exactly minor thing that CBA would have achieved with full disclosure in 2015 is that it would have been discharging its basic disclosure obligations.

In her earlier statement last week, CBA chair Catherine Livingstone disclosed that not just management, but the board, knew about it back in 2015. It means the board endorsed the non-disclosure; and as such takes both legal and operational responsibility for the consequences.

That’s the second basic lesson gone unlearned. It’s the ‘first rule of holes’: when in one, stop digging.

Now it’s on to the AGM and over to the institutional shareholders.