A Pack of Bankers

The Monthly (Australia) - - CONTENTS - Com­ment by Don Wat­son

Vasily Zhukovsky, a Rus­sian poet and trans­la­tor who flour­ished in the first half of the 19th cen­tury, be­lieved that the ex­e­cu­tion of crim­i­nals should af­ford a de­gree of re­li­gious up­lift. He rec­om­mended hang­ing the mis­cre­ant be­hind a cur­tain while clergy and a choir sang hymns and the pub­lic kneeled amid solemn mys­tery. In this way, nei­ther in­de­cent plea­sure in the grisly spec­ta­cle nor an of­fender’s “swag­ger­ing and pluck in the face of death” would sub­vert the majesty of the law and the higher feel­ings its ex­er­cise in­cited. Zhukovsky’s vi­sion can­not fail to re­mind us of the equally solemn pro­ceed­ings of the Royal Com­mis­sion into Mis­con­duct in the Banking, Su­per­an­nu­a­tion and Fi­nan­cial Ser­vices In­dus­try. Of course we do not wish the evil-do­ers hanged, or even too thor­oughly knouted, but like the kneel­ing cit­i­zens of the poet’s imag­i­na­tion we feel a cer­tain el­e­va­tion as our own swag­ger­ers go down, and the fair go is force­fully as­serted in our sov­er­eign’s name. We’re sing­ing from the same hymn­book. The Lord shall de­stroy them (and their ex­quis­ite ap­parel and hair­cuts and groom­ing) in his dis­plea­sure, and the fire shall con­sume them (and their Fer­raris). De­liver us from evil. Blessed are the meek. For­give us our schaden­freude, but of course we’re feel­ing el­e­vated. The first wit­ness to ap­pear at the royal com­mis­sion was Karen Cox. Ques­tioned by Rowena Orr QC, the coun­sel as­sist­ing the com­mis­sioner, Ms Cox put be­fore the in­quiry a star­tling ar­ray of sharp prac­tices. She spoke plainly. She was con­crete, di­rect and to the point, in­tel­li­gent, ra­tio­nal and ar­tic­u­late. She was ev­ery­thing one has a right to ex­pect in a CEO or other high-rank­ing cor­po­rate ex­ec­u­tive on a salary of a mil­lion dol­lars or more. If Ms Orr, as re­lent­less as a wood­pecker, and Ken­neth Hayne QC, the bony and lugubri­ous com­mis­sioner, were grate­ful for her con­tri­bu­tion they gave no sign of it. Yet they would have done well to bring her back from time to time over the next few weeks: not to add to the abun­dant in­for­ma­tion she’d pro­vided, but merely to stand as an ex­am­ple of a de­cent hu­man be­ing – an old-fash­ioned sort of hu­man be­ing who spoke from the head and the heart with­out ap­par­ent ar­ti­fice. Her mind and char­ac­ter seemed to have been formed in­de­pen­dently of cor­po­rate fash­ion or its faux val­ues, and at a safe dis­tance from the bull­shit that in mod­ern man­age­ment does for lan­guage and truth. Alas, Ms Cox is not a cor­po­rate ex­ec­u­tive and it’s a fair bet that her salary is a great deal less than a mil­lion dol­lars. Poor soul, she is merely the co­or­di­na­tor of the Fi­nan­cial Rights Le­gal Cen­tre. She told the com­mis­sion of the var­i­ous dev­as­tat­ing ef­fects of cor­po­rate mis­con­duct. When at last she was al­lowed to leave the wit­ness box, it was as if or­di­nary, in­tel­li­gent life left with her, and a much murkier form ar­rived. First up, coun­sel prised from NAB’s rep­re­sen­ta­tive cer­tain facts about what the bank called an “In­tro­ducer Pro­gram”. That the pro­gram earned NAB $24 bil­lion in home loans was one of the facts. An­other was that the de­sire to earn com­mis­sion was pretty well the only qual­i­fi­ca­tion an “in­tro­ducer” needed: that, and know­ing some­one who wanted a home loan. The “flawed” pro­gram gave rise to bribery, forgery and fak­ery. A NAB “mo­bile banker of the year” has been charged by po­lice with 49 counts of ob­tain­ing prop­erty by de­cep­tion and other of­fences (in­clud­ing, it seems, buy­ing a Fer­rari F430 from the pro­ceeds of crime), and an “in­tro­ducer” with whom he is friendly is fac­ing the same 49 charges. Un­der ques­tion­ing from the QC, the NAB man con­ceded that peo­ple did “step out­side their re­spon­si­bil­ity guide­lines”. Of what th­ese guide­lines con­sisted was un­clear, but what lay on the other side of them, ac­cord­ing to NAB’s sub­mis­sion, was “in­ap­pro­pri­ate”. “In­ap­pro­pri­ate con­duct” was how the bank de­scribed it.

Ms Orr asked if that was a rea­son­able de­scrip­tion of the con­duct. The man from the bank wanted to say that it was, in the main, though … “Let’s be frank,” said Ms Orr, “there was fraud­u­lent con­duct.” Each day brought forth more ev­i­dence of rort­ing, rip-offs and in­com­pe­tence. AMP and the Com­mon­wealth Bank vied for lead­er­ship in the busi­ness of charg­ing fees for ser­vices never pro­vided. CBA took the prac­tice a step fur­ther and charged dead peo­ple for fi­nan­cial plan­ning advice. The com­mis­sion heard of brazen crimes and sneaky lit­tle trick­eries that net­ted millions. Cus­tomers were lied to. The cor­po­rate reg­u­la­tor was lied to. Fi­nan­cial plan­ners gave folk ex­pert advice that ru­ined them. There was mis­man­age­ment on top of de­ceit. As the com­mis­sion finds more and more dirt we tend to for­get how much had al­ready been dug up. In the course of the past decade many millions have been paid in com­pen­sa­tion to ripped-off cus­tomers and millions more in fines. ASIC, though widely re­garded as too friendly with the com­pa­nies it in­ves­ti­gates, if not in ac­tual col­lu­sion with them, gathered $118.5 mil­lion in 2016–17 alone. Bankers have been jailed, dozens of dodgy plan­ners sacked. And this, as count­less peo­ple in­side and out­side the in­dus­try knew, was the re­sult of only shal­low dig­ging. The gov­ern­ment’s re­fusal to hold a royal com­mis­sion de­spite the ev­i­dence of such wide­spread hornswog­gling al­ways looked cu­ri­ous; cou­pled with their re­sis­tance to the so-called FoFA re­forms and their peren­nial hos­til­ity to in­dus­try su­per funds, it looked sus­pi­ciously as if they be­lieved their in­ter­ests aligned more sweetly with those of the fi­nan­cial in­dus­try than with the pub­lic’s. Of course, some cit­i­zens, es­pe­cially those watch­ing from be­hind the cur­tain of class envy that no­to­ri­ously gives rise to such hal­lu­ci­na­tions, might see the mer­est out­line of a palsy-walsy re­la­tion­ship be­tween the higher reaches of gov­ern­ment and the top end of town. But even if such ar­range­ments could be shown to ex­ist, the cor­rect des­ig­na­tion for them is “cul­tural is­sue” – a term so splen­didly foggy, pompous and ex­hausted the prob­lem starts to go away even be­fore you fork out half a mil­lion to PwC or some­one like them to come up with a process to re­solve the is­sue go­ing for­ward. Twenty-five years ago, when the banks were right­ing them­selves af­ter the near-fa­tal in­dul­gences that fol­lowed the first decade of dereg­u­la­tion, the cap­tains of the fi­nan­cial ser­vices in­dus­try – like cap­tains through­out the cor­po­rate world – spoke solemnly of their so­cial re­spon­si­bil­i­ties. Cor­po­rate so­cial re­spon­si­bil­ity, or CSR, sat neatly with the com­pany “mis­sion state­ment”, the “vi­sion state­ment”, and com­mit­ment to the “triple bot­tom line”, along with such re­frains as “trans­parency”, “ac­count­abil­ity”, “sus­tain­abil­ity” and com­mit­ment to “stake­hold­ers”. Soon no self-re­spect­ing busi­ness (or school or foot­ball club, for that mat­ter) could do with­out th­ese “com­mit­ments”, and a book by Tom Peters, like a Gideon’s Bi­ble, in ev­ery desk drawer. Among big busi­nesses, the fa­mil­iar line be­came that if they did not want the dead hand of gov­ern­ment reg­u­la­tion to re­turn they must reg­u­late them­selves. They must prac­tise CSR, live up to their val­ues and align them with their goals (and vice versa) and, in keep­ing with a value propo­si­tion, de­liver value to their val­ued cus­tomers and all their other stake­hold­ers. Th­ese might be taken as the moral guide­lines of ne­olib­er­al­ism: the lines out­side which wit­ness af­ter wit­ness has ad­mit­ted to the royal com­mis­sion their com­pa­nies have stepped. They are only “guide­lines”, af­ter all. It’s not as if they’re foun­da­tions. There was noth­ing to stop cor­po­ra­tions with rape and pil­lage on their minds from declar­ing an un­shake­able com­mit­ment to the high­est eth­i­cal stan­dards. On the other hand, no doubt when they wrote in­tegrity and so­cial re­spon­si­bil­ity into their mis­sion state­ments, preached them in their train­ing ses­sions and their ad­ver­tis­ing, and pep­pered ev­ery speech and press re­lease with ref­er­ences to their “cul­ture” and their “val­ues”, many other com­pa­nies gen­uinely be­lieved in what they were do­ing and tried to live by the stan­dards they set them­selves. But no ex­am­ple of good be­hav­iour or of bad should ob­scure the fact that at the bot­tom of man­age­ment ide­ol­ogy there lies the hol­low doc­trine of “stake­holder the­ory”. The the­ory, which en­com­passes the “stake­holder the­ory of ethics”, holds that a com­pany ded­i­cated to prof­its, div­i­dends and salaries can be equally ded­i­cated to the wel­fare of con­sumers, em­ploy­ees, so­ci­ety at large, the en­vi­ron­ment, and so on. The pledges to “all our stake­hold­ers” are get­ting harder to sell to em­ploy­ees who, for all the prom­ises and all the re­train­ing, out­sourc­ing and cat­e­gory man­age­ment ini­tia­tives, and all the de­mands for “flex­i­bil­ity”, haven’t seen a wage rise for a decade and a half. Em­ploy­ees be­ing con­sumers and a part of ev­ery­thing that goes un­der the name of “so­cial”, they at least are en­ti­tled to say cor­po­rate so­cial re­spon­si­bil­ity is as fraud­u­lent as any­thing the bloke with the Fer­rari was allegedly into. More in­ter­est­ing – and, in the longer run, pos­si­bly more use­ful – than the com­mis­sion’s dis­cov­ery of ever more scams and fol­lies has been see­ing cor­po­rate ide­ol­ogy and man­age­ment prac­tices un­picked, and the fan­tasy ex­posed. To watch is to see all but con­firmed the truth of Rose Michael’s sug­ges­tion, made in an es­sen­tial es­say af­ter three years work­ing at one of the banks two decades ago, that “maybe … work is not about out­comes, but process: job cre­ation, job jus­ti­fi­ca­tion. Per­haps this is not the neg­a­tive side ef­fect but the quin­tes­sence of cor­po­rate life.” For peo­ple work­ing in the Ma­trix that Michael de­scribed, or even in our “out­comes-based” ed­u­ca­tion sys­tem, this must be a shock­ing thought. What

More in­ter­est­ing than the com­mis­sion’s dis­cov­ery of ever more scams and fol­lies has been see­ing cor­po­rate ide­ol­ogy and man­age­ment prac­tices un­picked.

is man­age­ment about if not out­comes? With­out out­comes the whole thing would be a joke. Life would be a joke. What next? Value propo­si­tions of no value? Ac­tion plans that in­hibit ac­tion? “I have never be­fore seen peo­ple work so hard at do­ing noth­ing,” Rose Michael wrote. And man­age­ment lan­guage be­ing the medium of noth­ing­ness, if you watch the com­mis­sion you will never see peo­ple work so hard at say­ing noth­ing. At times it has been hard to tell if a wit­ness is dis­sem­bling or no longer has the abil­ity to an­swer in sen­si­ble terms. In the space of a minute or so, a man­ager from CBA re­ferred to an is­sue, a po­ten­tial is­sue, po­ten­tial un­known is­sues, siz­ing an is­sue and scop­ing the size of an un­known is­sue. Look­ing like she was drown­ing in quick­sand, or at least wish­ing that she was, ANZ’s chief risk of­fi­cer of dig­i­tal and wealth re­sponded to ques­tions with long ag­o­nis­ing si­lences in which she might have been as­sem­bling a pru­dent an­swer or just try­ing to find in the ver­biage of her pro­fes­sional life some words re­lated to the re­al­ity the QC was try­ing to in­ter­ro­gate.

It has been hard to tell if a wit­ness is dis­sem­bling or no longer has the abil­ity to an­swer in sen­si­ble terms.

What we are see­ing from the wealth man­age­ment in­dus­try at the royal com­mis­sion is but a lo­calised man­i­fes­ta­tion of a con­di­tion en­demic to man­age­ri­al­ism wher­ever it is prac­tised. When it was re­vealed in the United States last month that the gi­ant telco AT&T had paid Don­ald Trump’s lawyer, Michael Co­hen, $600,000 dol­lars for a lit­tle help with a prospec­tive merger, the com­pany CEO said that en­gag­ing Co­hen, though within the law and “en­tirely le­git­i­mate”, was a “very se­ri­ous mis­judge­ment”. Caught out on a shonky ma­noeu­vre with a shady oper­a­tor un­der fed­eral in­ves­ti­ga­tion, that can only have been mo­ti­vated by a de­sire to gain ad­van­tage what­ever the moral cost, the CEO baulks at per­sonal moral re­spon­si­bil­ity and puts the “mis­judge­ment” down to a fail­ure of the com­pany’s “vet­ting pro­cesses”. And that is what the royal com­mis­sion is turn­ing up re­peat­edly: all the moral fail­ures, all the fail­ures to com­ply, all the rip-offs were fail­ures not of hu­man bas­tardry or weak­ness, but of process. And as with the in­dus­try, so with the reg­u­la­tor: all the pro­cesses were ex­pressed in lan­guage so in­ge­niously mean­ing­less, so cal­cu­lated to dis­guise or make le­git­i­mate what was clearly il­le­git­i­mate, they never used and never heard words, like “swin­dle”, “dupe”, “cheat” or “scam”, that might have wo­ken them to the truth.

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