Thu, Nov 22, 2018 - Page 10 News List

CBA chairwoman defends testimony

‘CULTURE OF GREED’:Catherine Livingstone said the bank has not reduced executives’ short-term bonuses, as ‘there will only be consequence’ if it goes public

Reuters, SYDNEY

Commonwealth Bank of Australia (CBA) chairwoman Catherine Livingstone yesterday defended her testimony to a financial inquiry that she had raised governance concerns with senior management, even though lawyers said there were no records of her doing so.

Livingstone was also grilled over why the head of the scandal-hit retail division was later appointed CEO and why executive bonuses were only affected after events were reported in the media rather than when the board became aware of them.

In her second day on the witness stand at the quasi-judicial inquiry, Livingstone said she had confronted management at a board meeting in late 2016 after regulators warned the bank about breaches of anti-money laundering and terror-financing laws (AML/CTF).

“Do you accept that they [the minutes] don’t record a very significant exchange that you say occurred at this meeting, but which we have no record of?” barrister assisting the inquiry Rowena Orr asked.

“I do accept that, but I am also aware that I am giving evidence under oath. To the best of my recollection, it was at the October board meeting that I challenged management in relation to the AML/CTF reports,” Livingstone said.

Australia’s largest bank in May agreed to pay a record A$700 million (US$506.56 million) fine to settle charges brought late last year over tens of thousands of breaches of AML/CTF laws.

The scandal led to a scathing report by the Australian Prudential Regulation Authority about the bank’s governance shortcomings.

Livingstone, who became chairwoman a few months before the breaches became public, said the board had cut directors’ pay in response to the scandal, but that former chairman David Turner had refused a request to return 40 percent of his final year’s fees.

From its first hearings in February, the Australian Royal Commission inquiry has revealed systemic wrongdoing and a pervasive culture of greed at CBA and other banks.

The money-laundering allegations and other scandals severely damaged CBA’s brand and led to the departure of former CEO Ian Narev in April.

On Tuesday, chief executive Matt Comyn also blamed previous management for the bank’s failings, although at the time he was head of retail banking overseeing one of the most scandal-hit divisions.

Asked at the inquiry whether Comyn was an appropriate choice to replace Narev, Livingstone said his character and ability to admit mistakes were factors that helped the board decide in his favor.

She said that since the 2011 financial year the bank had not reduced an executive’s short-term bonus because of “a risk-related issue” unless it had been made public.

The barrister asked what message that sent.

“Well, clearly that there will only be consequence if there is a public event, a media event,” she said.

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