Probe into CBA cor­po­rate cul­ture

In­quiry af­ter se­ries of scan­dals at Aus­tralia’s big­gest lender

Bangkok Post - - WORLD - TOMWESTBRO­OK

Aus­trali a’s bank­ing reg­u­la­tor says its un­prece­dented in­ves­ti­ga­tion of Com­mon­wealth Bank of Aus­tralia would ex­am­ine whether its cor­po­rate struc­ture had en­abled a se­ries of scan­dals that have rocked the lender’s rep­u­ta­tion.

Trea­surer Scott Mor­ri­son said yes­ter­day the watch­dog had the power to re­move di­rec­tors and its in­ves­ti­ga­tion would dig deep into what had gone wrong at Aus­tralia’s big­gest com­pany, amid calls for a wider ju­di­cial in­quiry into the fi­nan­cial sec­tor as a whole.

“It’s going well be­yond the spe­cific in­stances to look at broader is­sues of how is­sues are man­aged, how is­sues are es­ca­lated, how the board them­selves have dealt with these ac­tions,” he said.

The Aus­tralian Pru­den­tial Reg­u­la­tion Author­ity (Apra) said it aimed to iden­tify whether “any core or­gan­i­sa­tional and cul­tural driv­ers” at the coun­try’s big­gest lender had con­trib­uted to scan­dals at the bank in re­cent years.

CBA was sued last month by fi­nan­cial in­tel­li­gence agency Aus­trac claim­ing “se­ri­ous and sys­temic non-com­pli­ance” with anti-money laun­der­ing rules al­lowed crim­i­nals and ter­ror fi­nanciers to wash mil­lions of dol­lars through CBA ac­counts.

Last year, CBA ad­mit­ted us­ing un­scrupu­lous prac­tices to cheat peo­ple out of life in­sur­ance pay­ments, and in 2014 chief ex­ec­u­tive Ian Narev pub­licly apol­o­gised af­ter the bank’s ad­vis­ers were found to have given cus­tomers poor fi­nan­cial ad­vice.

The Aus­trac law­suit is the first of its kind against a ma­jor Aus­tralian bank and it ex­poses CBA to the big­gest cor­po­rate fine in Aus­tralian his­tory po­ten­tially amount­ing to bil­lions of dol­lars.

Since it was lodged, Apra and cor­po­rate watch­dog the Aus­tralian Se­cu­ri­ties and In­vest­ments Com­mis­sion have opened in­ves­ti­ga­tions into the lender, while a clas­s­ac­tion law firm is plan­ning a suit on be­half of share­hold­ers.

The bank says a cod­ing er­ror was to blame for most of the more than 50,000 sus­pi­cious trans­ac­tions and plans to de­fend it­self in the Fed­eral Court against the Aus­trac al­le­ga­tions.

Even so, in the wake of the cri­sis it has slashed bonuses for ex­ec­u­tives, an­nounced the de­par­ture of a third of its non-ex­ec­u­tive di­rec­tors and flagged that chief ex­ec­u­tive Narev would stand down by mid-2018.

Apra said in a state­ment that its in­quiry — the first of its kind to be held in pub­lic — would ex­am­ine risk man­age­ment, com­pli­ance, re­mu­ner­a­tion and ac­count­abil­ity at the bank. It would also con­sider whether CBA’s ef­forts to ad­dress short­com­ings in those ar­eas were suf­fi­cient.

It would not make spe­cific de­ter­mi­na­tions re­gard­ing other le­gal pro­ceed­ings or in­ves­ti­ga­tions.

The in­quiry would be run by former Re­serve Bank of Aus­tralia di­rec­tor Jil­lian Broad­bent, former Apra chair­man John Laker and former Aus­tralian Com­pe­ti­tion and Con­sumer Com­mis­sion chair­man Graeme Sa­muel.

It would de­liver a progress re­port by Jan 31 and a fi­nal re­port by April 30.

Com­mon­wealth Bank said it wel­comed the ap­point­ments and would co­op­er­ate fully with the in­quiry.

CBA shares have dropped 12% since the money-laun­der­ing scan­dal erupted last month, wip­ing A$17 bil­lion off its mar­ket value even though it re­ported its eighth con­sec­u­tive record cash profit on Aug 9.

Newspapers in English

Newspapers from Thailand

© PressReader. All rights reserved.