Commonwealth Bank scraps CEO bonus over money-laundering allegations

MELBOURNE: Commonwealth Bank of Australia yesterday scrapped its chief executive’s bonus for damaging the bank’s reputation amid allegations it broke money- laundering and counter-terrorism financing laws, but said he retained the board’s confidence.

Australia’s financial intelligence agency last week accused the bank of roughly 53,700 breaches, launching a civil court action that could see the country’s biggest lender fined several billion dollars.

The case is the largest of its kind in Australian corporate history, and sent Commonwealth Bank shares sliding for their biggest one-day decline in 18 months on Friday.

CBA’s board said on Tuesday it had cut short-term bonuses to zero for the chief executive, Ian Narev, and other top executives for the year to June 30, 2017.

“In reaching this conclusion the overriding consideration of the board was the collective accountability of senior management for the overall reputation of the group,” chairman Catherine Livingstone said in a statement.

The accusations have revived calls for a powerful judicial inquiry into Australia’s banking system following a series of scandals including insurance fraud and interest rate rigging in recent years.

Treasurer Scott Morrison, who has previously rejected pressure for such an inquiry, told parliament on Tuesday the government was prepared “to consider all options”.

An inquiry known as a Royal Commission could have the ability to interrogate bank executives and demand full disclosure of internal documents.

The proposal has widespread public support and the backing of the opposition Labor Party.

“Mr Narev retains the full confidence of the board,” the bank’s statement said. Sharing some accountability, Livingstone said directors’ fees had been cut by 20 percent for the 2018 financial year.

The move, designed to smoothen public concerns, came a day before the bank releases its annual results on Wednesday, with analysts tipping record cash earnings of A$9.8 billion (US$7.78 billion).

Commonwealth Bank paid Narev A$ 2.9 million in shortterm bonuses as part of a total package of A$8.8 million in 2016. — Reuters