Super fund HESTA pushes Westpac board for more action

Superannuation giant HESTA has warned its support for reappointing Westpac directors will be influenced by whether the board can lay out a clear plan for improving the embattled bank's governance and culture.

As Westpac reels from a money laundering crisis that has already forced the resignations of chairman Lindsay Maxsted and chief executive Brian Hartzer, the $53 billion fund has written to Mr Maxsted seeking answers on further steps the bank will take to fix governance and cultural problems.

HESTA chief executive Debby Blakey said the board's response to its letter would influence its voting decision at next month's annual general meeting.Credit: Wayne Taylor

HESTA, an industry super fund that represents health and community service workers, has about $500 million in shares in the bank.

After two proxy advisers this week recommended investors vote against long-standing director Peter Marriott at next month's annual general meeting, HESTA said it had not yet determined how it would vote its shares in the bank, including on the re-election of directors.

However, the fund's chief executive, Debby Blakey, said how Westpac's board responded to the super fund's request for a more detailed plan would influence its voting decisions.

“We have various channels, one of them is engaging directly, obviously, with the board and with management, and the other is clearly the way we vote. We will give careful consideration to how we vote at the upcoming AGM because that’s a very important way for us to send a strong message of where our concerns sit,” she said.

“I feel as a shareholder I want to give the Westpac board an opportunity to respond to us, so that we can understand how they are going to address these cultural issues, how they are going to strengthen governance,” Ms Blakey said. “Obviously we will feed that response into the decision as to how we will vote.”

Ms Blakey did not name directors but said the fund was “particularly concerned” about directors with longer tenure, and those with responsibility for risk oversight.

HESTA's demand for more action came as a key governance adviser to industry super funds, the Australian Council for Superannuation Investors (ACSI), said it would be recommending a vote in favour of Mr Marriott. It said he was the only director on Westpac's board with significant Australian banking experience. It is also recommending a vote for the remuneration report.

Meanwhile, Westpac on Thursday revealed more details of its response plan to the crisis sparked by allegations it breached anti-money laundering laws 23 million times. The financial intelligence agency AUSTRAC last week also said the bank failed to properly vet thousands of payments potentially linked to child exploitation.

Westpac on Thursday said Promontory, a consultant, would lead a review into accountability and financial crime reporting. A board committee overseeing the review will be led by non-executive director Peter Nash, and include directors Nerida Caesar, Steven Harker and Margaret Seale.

“Westpac is determined to urgently address the issues that have given rise to the AUSTRAC statement of claim,” Mr Maxsted said.

HESTA was one of the long-term investors in Westpac that met with Mr Maxsted on Monday, the day before he announced Mr Hartzer's resignation and that he would step down from the board in the first half of 2020. Director Ewen Crouch is also not seeking re-election at the annual general meeting.

Ms Blakey said the fund was "very concerned" about AUSTRAC's allegations, and said the board has an opportunity to be “more specific” on how its improves the culture.

“Many of our members dedicate their lives helping vulnerable people, so they would expect that their retirement savings are working towards that cause of helping vulnerable people, not working against it. So we’re very very concerned about the allegations.”