Banking royal commission: CBA chairman Catherine Livingstone bemoans ‘lack of challenge’ at bank board

Catherine Livingstone tells bank inquiry she was surprised by the “lack of challenge” when she joined the bank’s board.

Commonwealth Bank chairman Catherine Livingstone says she has introduced a “show me, don’t tell me” board culture, after conceding the scandal prone bank’s management team had not been adequately challenged in the past.

Appearing on day two of the final round of the Hayne royal commission, Ms Livingstone was grilled about the board’s slow reaction to CBA’s anti money laundering and terrorist financing shortcomings and when she knew of the failed audits.

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While she joined the board in 2016, Ms Livingstone said after red flags were raised she and other board members hadn’t requested audit reports dating back as far back as 2014.

“We should have asked for the detailed reports but we didn’t,” she said.

Under intense questioning by senior counsel assisting the commission Rowena Orr QC, Ms Livingstone said although she had concerns about the audits and raised the matters, she did not take further action until taking the reins as chairman in January 2017.

“I was concerned about them (the audits) and not confident in the assurances I was receiving from management,” she said. That assurance was provided by finance chief at the time David Craig, documents tendered suggested.

“I may have raised the style of the board,” Ms Livingstone added. “I can’t recall specifically … as a new member of the board and three meetings in at that point you’re still trying to get a feel for how the board works.

“I was quite surprised by the lack of challenge.”

Commonwealth Bank chairman Catherine Livingstone. Picture: Royal commission screenshot

But Ms Livingstone had further trouble recalling exactly what was said when she raised the matter and at which board monthly board meeting.

CBA was implicated in helping to facilitate criminal activities, some of which was conducted through its so-called intelligent deposit machines (IDMs).

In June, CBA agreed to a $700m penalty from Austrac to resolve its breaches of anti-money laundering and counter-terrorism financing laws, representing the largest ever civil penalty in Australian history.

CBA accepted, among other things, that it had failed to provide 53,506 threshold transaction reports to Austrac on time for cash transactions more than $10,000 from its IDMs over a three-year period, and that it had not complied with requirements of its AML/CTF program on 778,370 accounts.

Ms Livingstone admitted CBA’s board didn’t hold management to account and the bank lacked systems and processes to deal with its legal obligations and the long list of compliance failures in its reporting to Austrac.

In renewing the board and management, putting together a “remedial action plan” and tightening protocols around non-financial risks, Ms Livingstone said the bank was under going a program of change and had more to do.

“I don’t think I’ve reached a stage of satisfaction at all,” she said.

“I want to see that our code of conduct is actually lived, people are actually disciplined.”

Ms Livingstone also told Ms Orr the bank’s systems were being made “fit for purpose” and that staff had to better deal with workplace issues.