Commonwealth Bank chair Catherine Livingstone defends approving executive bonuses despite looming money-laundering scandal
THE head of the Commonwealth Bank board has defended a decision to approve lucrative bonuses for senior executives despite knowing of a brewing money-laundering scandal at the group.
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THE head of the Commonwealth Bank board has defended a decision to approve lucrative bonuses for senior executives despite knowing of a brewing money-laundering scandal at the group.
Catherine Livingstone said the CBA board was working with the facts available “at the time” when it awarded the bonuses last year, and when it failed to alert investors to the pending controversy.
Ms Livingstone, flanked by outgoing chief executive Ian Narev, made the comments in Canberra on Friday before a blistering hearing of the House of Representatives standing committee on economics.
Committee members questioned whether the board only dialled back bonus payments in 2017 because the scandal had become public.
“Based on the facts at the time (last year), we exercised judgments in terms of remuneration and continuous disclosure,” she said.
Ms Livingstone said she stood by the decisions and would make them again under the same circumstances.
Anti-money laundering authority Austrac has since launched legal proceedings against the bank.
“The facts known now — since the filing of the Austrac proceedings — includes things we did not know at the time,” Ms Livingstone said.
“We met our continuous disclosure obligations based on our knowledge at the time.”
She told the parliamentary committee Austrac’s legal proceedings prevented her going into greater detail about the money-laundering scandal.
Austrac launched the legal action in August, triggering a $15 billion rout in the CBA’s market capitalisation.
It alleges the bank failed to provide on-time reports for 53,506 cash transactions of $10,000 or more made using its smart ATMs between November 2012, and September 2015.
Ms Livingstone has chaired the CBA board since January, but has served as a director since March last year and, with other directors, signed off on its 2016 remuneration report.
The parliamentary hearing is the latest in a series instigated by the federal government amid a succession of scandals engulfing the banking industry.
Ms Livingstone said that once the new information from Austrac came to light, she and board members elected to cut all short-term bonuses — about $16 million worth — for Mr Narev and 11 executives.
She said “reputational damage” caused by the money-laundering charges was the rationale for the cuts.
Ms Livingstone — who garnered widespread respect as a change agent when she chaired the Telstra board following the turbulent reign of former chief executive Sol Trujillo — said more work was under way reforming the CBA.
More staff could lose their bonuses and potentially their jobs, she said.
Mr Narev, 50, announced in August he would retire by next June. He revealed on Friday before the parliamentary committee the bank would be filing a statement of defence in December to the Federal Court action brought by Austrac.
Speaking at the same hearing yesterday, National Australia Bank chief Andrew Thorburn insisted his bank had not increased interest-only mortgage rates this year to profiteer, nor to pass on the cost of the government’s bank tax introduced in July.
Shares in the CBA closed up 0.3 per cent on Friday at $78.97, while NAB shares also climbed 0.3 per cent, to $32.46.
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