Man at the heart of banking’s maligned culture

Commonwealth Bank chief risk officer David Cohen was grilled yesterday and is due for a repeat performance.

David Cohen appears at the banking royal commission in Melbourne yesterday.

For 15 years, Commonwealth Bank chief risk officer David Cohen has been at the heart of a banking industry culture that is now being unpicked by the financial services royal commission.

Yesterday afternoon, counsel assisting the commission, Michael Hodge QC, spent a little over an hour grilling him over the inner workings of CBA at a crucial point in its history, the takeover of troubled Bankwest during the global financial crisis in October 2008.

Cohen will be back for at least another hour-long session this morning, Hodge told commissioner Kenneth Hayne as proceedings wrapped up yesterday.

Over his career, Cohen has run legal strategy for two of the commission’s biggest targets, AMP and then CBA, earning him a reputation for delving deep into detail in the cause of dogged ­defence.

He was general counsel at AMP from 2003 until 2008, when he moved to a similar job at CBA.

In July 2016, CBA promoted him from group general counsel to chief risk officer, one of the most important roles at any bank.

He wasn’t named in a scathing review of CBA’s culture, released by the prudential regulator late last month following a series of scandals that includes allegations it breached anti-money laundering and counter-terrorism finance laws more than 53,000 times, the exposure of dodgy planners in its financial advice business and accusations it has ripped off customers of its insurance business.

But the review’s high-powered panel of John Laker, Graeme Samuel and Jillian Broadbent criticised him implicitly by taking aim at CBA’s “slow, legalistic and reactive, at times dismissive, culture also characterised by many of CBA’s dealings with regulators”.

“This adversarial approach appeared to put strict legal interpretation above risk or customer outcomes,” the panel said.

Mr Cohen also features in a cache of documents obtained last year by The Australian under Freedom of Information laws that show the corporate regulator ­allowed the big banks, and AMP, to edit its press releases about their misconduct (something the Australian Securities & Investments Commission now insists no longer happens).

In 2006, while general counsel at AMP, he was intimately involved with the group’s response to a draft ASIC press release dealing with an enforceable undertaking the institution had agreed to enter, following misconduct by its financial advisers (some things never change).

Responding to a two-page draft media release, Cohen sent back a detailed response that took up just as much room.

He complained that the draft said AMP had failed to disclose trailing commissions (another issue being dealt with by the royal commission).

However, Cohen said, the undertaking itself talked only about failure to disclose the broader management expense ratio, or MER, of which trail commissions were just one component.

ASIC changed the release.

Cohen popped up again in relation to a May 2014 press release in which ASIC announced it would impose new licence conditions on two of CBA’s shonky financial ­advice subsidiaries, after the bank misled a senate inquiry.

He was by then group general counsel at CBA and dealt directly with senior ASIC executive Greg Kirk.

At the time, ASIC was internally debating whether to reveal CBA misled it over the saga.

But, in an internal ASIC email, Kirk backed off the idea, “having just spoken to David Cohen”.

One mystery still remains around Cohen’s role in this episode.

Across the top of one draft press release is scrawled the phrase “Version 15 D Cohen 15/5/14”.

Was this a draft prepared by the bank’s legal svengali, or was it just something showed to him during a meeting?

ASIC has never told. And, unless Cohen gets called back after today for yet another stint in the stand, don’t expect the royal commission to find out, either.