AMP: Weekend board showdown forced David Murray to fall on his sword

A spate of blunt phone calls and emails to the besieged David Murray-led AMP board late last week spelt the end for the group in its current form.

A spate of blunt phone calls and emails to the besieged David Murray-led AMP board late last week spelt the end for the group in its current form.

Investors had drawn a line in the sand over AMP’s conduct problems and were demanding accountability within days. The issues related to a sexual harassment scandal that included comments about one executive’s “limp dick” and lewd photos sent by another now former executive to a female colleague.

With the crisis engulfing the company, AMP investors were mobilising.

If AMP action wasn’t forthcoming, momentum was gathering for an extraordinary general meeting to be called by key shareholders to push for board scalps.

It was against this backdrop the AMP board convened a meeting on Sunday that spanned many hours. High on the agenda was investors wanting something done about the tenure of AMP Capital boss Boe Pahari, the subject of a 2017 sexual harassment complaint that had plunged the company into yet another crisis.

While AMP was yet to fully disclose the findings of an independent investigation into the matter — its version of events — it was too late. The scandal had spiralled out of control and wasn’t helped by the shock departure in early August of AMP Australia boss Alex Wade for inappropriate conduct and sending lewd photos to a female colleague.

Several directors, including AMP chief executive Francesco De Ferrari, are said to have offered to resign in light of the crisis over the weekend.

But it was banking stalwart Murray and fellow AMP director John Fraser, former treasury secretary, that fell on their swords ahead of Monday’s formal announcement. Pahari stood down as head of AMP Capital, demoted to his former role focusing on the division’s infrastructure equity business.

It was only mid-2018 when Murray, also the author of the landmark Financial System Inquiry and former Commonwealth Bank chief executive, took over as AMP chairman after the last board was purged in the wake of the Hayne royal commission.

David Murray’s two-year stint as AMP chair ended abruptly. Picture: Britta Campion

Some investors question whether London-based Pahari will stay the course, or opt to leave AMP in coming months, given the chain of events that culminated in former employee Julia Szlakowski making public sordid details of her 2017 complaint against her then boss.

Szlakowski’s complaint included Pahari extending her hotel booking without permission, calls and texts in the early hours of the morning after a night out, and referring to his “limp dick” when she declined to use his credit card to buy clothing.

On Monday AMP was still locked in a stalemate with Szlakowski and her legal team over the terms under which the initial investigation by UK employment law specialist Andrew Burns QC could be released.

For Pahari, who was photographed by The Australian returning from lunch at a Sydney restaurant on Thursday with fellow University of NSW alumni and long-time acquaintance Macquarie Group boss Shemara Wikramanayake, the pressure was starting to become insurmountable.

By Sunday, the writing was on the wall: he would vacate the role he had occupied only since July 1.

Late on Monday afternoon, AMP released the conclusion of the Burns probe and Pahari apologised to Szlakowski.

“For these reasons I find that there was poor judgment exercised by (Boe Pahari) during this evening and one moderate and two minor incidents which overall added up to a relatively modest breach of the AMP Workplace Behaviour and Equal Opportunity Policy,” the 2017 investigation found.

“However, this involved a senior manager who ought to have been observing a high standard of equality and diversity practice and who ought to have had a much better understanding of how his actions might be perceived by and may affect a junior colleague.”

AMP said a range of actions were undertaken, including financial and non-financial penalties.

He was said to have been docked about $500,000 of his bonus, or a quarter of his annual performance pay, while a settlement was reached with Szlakowski in 2018 and she left AMP Capital.

In Monday’s statement Pahari commented: “I deeply regret the events in 2017, and I apologise to Julia Szlakowski.”

The Australian understands the “moderate” breach of AMP’s behaviour policy related to Pahari extending Szlakowski’s hotel stay in London. There were also two minor breaches, but several other elements of the complaint were found not to have merit under the investigation.

The statement came as new AMP chairman and former banking executive Debra Hazelton began engaging with staff and investors on Monday to assure them of a path forward. De Ferrari had earlier identified fixing culture as his top priority for the remainder of 2020.

“Culture clearly starts from the top down, so addressing it from the top down is the appropriate approach,” said Hamish Carlisle, a Merlon Capital Partners portfolio manager and AMP investor.

“The new chairman needs to come out and clear the air. There have been multiple governance failures over the course of David Murray‘s tenure and I think the new chair has to distance herself from all of the governance failures and put in place a governance framework that is proper, sustainable and in line with all shareholder expectations.”

The University of Wollongong’s Dr Andy Schmulow called AMP’s predicament a “train wreck waiting to happen” after the company lost trust and credibility during the royal commission.

He questions AMP’s business model in financial advice and superannuation and whether it can recover from the controversial events of the past two months.

“In five years’ time there will be no AMP … I don’t see how they are going to survive,” said Dr Schmulow, a senior lecturer at the university’s faculty of business and law.

The real test lies ahead.