Hayne not in vain as watchdog flexes its muscles in court

ASIC chair James Shipton. Illustration: Eric Lobbecke.

In an end-of-year flurry, ASIC has put to rest fears it has forgotten about litigation with a $6.9bn claim against NAB and a life insurance action against TAL.

The royal commission made 11 specific referrals to ASIC, but the regulator noted at the time it had 41 separate investigations under way from matters discussed during the commission’s tenure.

One of those was the fee-for-no-service and dodgy statements action against NAB, which it said was part of its wealth management — major financial institutions portfolio.

The same portfolio produced last month’s CBA settlement and $700,000 fine in a CommInsure criminal anti-hawking breach case.

The wave of litigation comes as deputy chair Daniel Crennan is in the US as part of a trip to talk with Canadian and US regulators.

The fee-for-no-service action was considered by many outside ASIC as a potential criminal case, but of the half dozen or so sections it is alleging NAB breached, only one — section 12 (DB) — has both criminal and civil penalties.

Whether to take a civil or criminal action is dependent on a number of factors, including whether the facts support a criminal action, the higher burden of proof in criminal cases and the question of whether it is better to have a head on a stick as a deterrent or to win the civil case.

In this instance, given 95 per cent of the alleged claims were covered only by civil provisions, the choice was easy.

ASIC tiger grows teeth; @John_Durie @australian John Durie column today https://t.co/3UpwsGEtr1 pic.twitter.com/ejjNbXwTTV

— Eric Löbbecke (@hthtdraws) December 19, 2019

Even in those cases where royal commissioner Kenneth Hayne talked up litigation or criminal action it is important to note he was not responsible for proving the case — just raising the matter publicly.

The whole royal commission exercise was based on material presented by the companies and documentation supported by ASIC and APRA in matters where the companies had behaved badly.

For the counsel assisting the exercise was like shooting fish in a barrel, and for ASIC it is a little bit tougher because it actually has to prove the matter in court — not just play to the public gallery.

Given cultural change is the aim of the exercise, it is important to litigate and to win in court to show corporate Australia bad governance and not obeying the law have consequences.

ASIC has proceeded to tick a number of boxes on Hayne’s to-do list, like bans on cold calling on consumer credit and short-term loans and completing a memorandum of understanding with APRA to co-ordinate actions by the corporate cops. The end-of-year litigation blitz, so delightfully timed on the eve of the NAB annual meeting, served as a reminder ASIC had not forgotten Hayne’s “why not litigate” admonition.

Going, going, Gonski

ANZ chair David Gonski is likely to step down from the bank’s board at next year’s annual meeting after six years as a director, giving up one of his last seats on the board of a publicly listed company.

Gonski has yet to decide formally on the move. He is also on the Sydney Airport board, which he joined last year.

Trevor Gerber has served for four years as Sydney Airport chair and has been on the board for 19 years, with his term due to run till 2021.

Gonski is up for re-election at next year’s ANZ annual meeting, and with Shayne Elliott into his fifth year as chief executive it would make sense for the new chair to choose the next chief executive.

This would mean Gonski would not nominate for another term, which in any case under ANZ rules would be his last.

The news comes as the AICD confirmed women have finally gained 30 per cent of seats on ASX 200 boards even though smaller companies are still playing catch-up with 27.7 per cent representation. The AICD’s Angus Armour said it was clear Australia’s largest companies saw the value of board diversity, and “a diverse mix of views and perspectives increases board performance and reduces the risk of group think”.

Still, the battle for female participation has only just begun and the need for more ethnic and professional diversity remains a priority. There are seven ASX 200 companies with no women, including TPG.

While it is too early to declare victory, Gonski and Elliott have so far managed to avoid the worst of the Hayne royal commission fallout that has beset CBA, NAB and Westpac.

However, ANZ does have a list of legal claims against it, including one from the ACCC alleging cartel behaviour on an equity raising.

News of a possible Gonski retirement comes as the bank acted as expected and appointed Antonia Watson as its New Zealand boss. It’s a role she has served in on an acting basis since June, when former boss John Hisco left amid an expenses scandal.

Watson, who has worked previously with Morgan Stanley, is highly regarded within the bank and would be a candidate to replace Elliott when he steps down from the top job.

She is the first New Zealand-born woman to take the role and confirms the number of women on the bank’s executive team at five out of 10 roles.

The ANZ board has three women out of nine, mirroring the ASX 200 average of 30 per cent female directors on boards.

The real drive now is to boost female participation in senior executive ranks. Women now fill 25 per cent of the senior executive teams on the ASX 200, up from 21 per cent in 2017.

There are nine females as chief finance officers including ANZ’s Michelle Jablko, and 12 female chief executives, representing 6 per cent of the ASX 200’s companies. According to Chief Executive Women, of the 461 women in senior executive ranks, some 117 — or 25 per cent — hold “line” roles and are in charge of a profit and loss statement. The other 344 are in functional roles which include legal, HR and corporate affairs.

FMG boss Elizabeth Gaines said: “C suite diversity is stalling and on present trajectories we will not see equal representation of women in CEO roles until the turn of the century. The gender pay gap position has not improved.”

FMG has equal gender representation on the board and 26 per cent of senior executives are female. The theory is more women on the board will result in more women in senior executive ranks, which in turn will drive more representation at board level. Gonski has been a noted supporter of women.