A flippant Ken Henry could prove a liability at NAB

Ken Henry’s performance at the royal commission raises the question how much longer he can continue as chairman of NAB.

NAB chairman Ken Henry leaves the banking royal commission in Melbourne. Picture: David Geraghty

Ken Henry’s failure yesterday to meet the simple test set for him by the royal commission raises the question how much longer he can continue as chairman of NAB.

All that counsel assisting, Rowena Orr, QC, wanted — all that the commission ever wants from its witnesses — was for Henry to listen to the questions she asked and answer them.

Instead, an arrogant Henry disrespected Orr and the commission by trying to bully her.

The attempt failed — Orr is made of tougher stuff — but it was an angry, dismissive, snide and flippant performance.

Henry was angry when asked what better way there was to demonstrate intolerance of customer rip-offs than reducing the bonus pool.

“Well, we could have fired everybody, I suppose,” he snapped.

He was dismissive when asked if the board had done enough to question chief executive Andrew Thorburn on why his executive team shouldn’t get a pay cut in 2016 because changes were being made to fix the bank’s compliance woes.

“Yes. I think we did,” he said. “Mmm, I do.”

He was snide when Orr challenged him on why chief legal ­officer Sharon Cook’s interactions with the Australian Securities & Investments Commission over the fee-for-no-service saga — interactions that culminated in September with the regulator suing the bank — were appropriate.

“We’ve been through them,” he said.

Orr thought they hadn’t.

“You don’t,” Henry said. “No.”

“No. No. You wouldn’t.”

And he was flippant when Orr asked why the board risk committee wasn’t told in August 2015 that the bank’s fee-for-no-service problem was one previously not flagged.

“If you’re saying should the chief risk officer have said, well there may have been a breach, OK, fine,” he said. “Perhaps.”

Orr tried to pin him down, but Henry stuck to his ambiguous guns.

“Back to where we started, perhaps, Dr Henry?” she asked.

“Yes, perhaps,” he said.

Orr said she still didn’t understand the reason for his hesitation.

“I probably can’t explain it to you,” Henry breezily responded.

It might have been expected that Henry would have learned from the experiences of NAB’s former wealth boss Andrew Hagger, who was lauded for his fancy footwork over two stints in the stand.

Back then, it was conventional wisdom in some circles that counsel assisting, Michael Hodge, QC, didn’t land a clean hit on Hagger during his second appointment with commissioner Kenneth Hayne.

But that’s not how it works. Cross examination is not a boxing match; it is a rigged contest in which the barrister strikes at the witnesses’ pressure points like some kind of anime martial artist.

In the cartoons, the victim drops dead later, sometimes after gloating about how little damage has been done. And at the royal commission, a month later Hagger was gone from National Australia Bank.

Over the past two days both Henry and Thorburn have appeared keen to throw Hagger under the bus, deflecting blame for the bank’s myriad woes away from anyone still standing within the executive circle of trust. But it seems Henry hasn’t listened and learned from Hagger’s fate.

Henry’s apparent unwillingness to listen to bad news and learn from it would seem something of a handicap for a chairman, who is supposed to be the ultimate circuit-breaker in a company — the last-resort outlet for whistleblowers, the person who steps in when CEOs go haywire, the guiding hand on the governance tiller.

But his fate ultimately lies in the hands of the bank’s shareholders, who, as the very existence of the royal commission shows, have been slow to recognise the dangers to their investment posed by executives blind to misconduct, greed and laziness.

Shareholders are, however, generally quite good at telling the difference between an asset and a liability. Those watching Henry’s performance yesterday shouldn’t have any difficulty figuring out which category to put him in.