AMP’s chair Debra Hazelton must step up, and quickly

Goldman’s involvement with AMP leaves the position of longstanding investment banking adviser UBS unclear. PHOTO: RICHARD DREW/ASSOCIATED PRESS

AMP’s new chair Debra Hazelton has to emerge from the shadows, and the sooner the better.

There is no time to waste.

After another disruptive week at the beleaguered wealth group, it is now up to Hazelton to set the tone, outside the confines of AMP head office.

She needs to engage with shareholders and journalists to explain her views on cultural change, strategic transformation and provide as much transparency as possible on how AMP deals with sexual harassment complaints. The new allegations raised this week — by Labor Senator Deborah O’Neill under parliamentary privilege — were startling and shocking. The victim detailed groping, threats and a senior colleague rubbing his genitals against her.

Given former chairman David Murray resigned on Monday, it is up to Hazelton and chief executive Francesco De Ferrari to front up and answer the hard questions.

AMP is in the process of bringing in an external firm to help with cultural improvement, but we are yet to hear whether the appointment has been made and how it will aid the process.

There are obviously deep-seated issues in at least some parts of AMP that go back a long time.

But there is also is also an opportunity for real change underpinned by transparency and actions, rather than words.

As all this occurs, and the AMP board remains hollowed out after the Murray departure and that of former treasury secretary John Fraser, potential buyers of the $5.1bn group are keeping close tabs on the unfolding situation.

As The Australian revealed on Thursday, Goldman Sachs is understood to have joined AMP’s team of investment banking advisers, alongside Credit Suisse.

Sources said Goldman had emerged in the AMP camp in a role that was likely to involve assisting in any takeover defence, should a bid for the company or any of its units emerge.

AMP's new chairman Debra Hazelton. Picture: John Feder/The Australian.

Credit Suisse remains a key adviser to AMP as well.

Goldman’s involvement with AMP leaves the position of longstanding investment banking adviser UBS unclear. Former UBS Australia boss Matthew Grounds was heavily involved in work for AMP ahead of his departure from the firm late last year.

Macquarie Group was bumped off the mandate earlier on, when a potential conflict of interest emerged as it started to weigh up a possible tilt at AMP.

Large global private equity groups cannot be ruled out as possible buyers of AMP, but some may be deterred by the new COVID-19 foreign investment approvals that are required.

Credit Suisse’s advisory spot was set in stone when De Ferrari — who formerly ran a private banking division at Credit Suisse — joined AMP in late 2018. Murray had also been a senior adviser to the investment banking group, while fellow AMP board member John O’Sullivan was the former chairman of Credit Suisse Australia’s investment bank.

AMP’s well-documented challenges over the past two months have put the wealth group on the radar of several suitors, some of whom are waiting for the dust to settle or further potential share price declines before deciding whether to pounce.

AMP announced the departures of Murray and Fraser on Monday, after an investor revolt against the company.

Boe Pahari, who was controversially appointed to lead AMP Capital in July after being penalised three years ago for a sexual harassment complaint, was demoted as part of Monday’s changes.

Austrac’s radar

The tentacles of financial crimes regulator Austrac are spreading far and wide in the financial services sector.

Westpac’s battle with Austrac is the highest-profile and most disturbing matter, with the bank potentially breaching the law 23 million times and facing a penalty of up to $1.5bn.

Other players that are working through matters with the regulator include National Australia Bank and Bendigo and Adelaide Bank.

Last week, Suncorp became the latest financial institution to admit it was dealing with Austrac over what appears to be a misclassification of reported transactions.

The banking and insurance group made the disclosure in its annual report after notifying Austrac last month, and hasn’t made a provision related to the matter. Suncorp’s annual report said it was undertaking a “number of remediation activities”.

A spokeswoman told this column the issue with Austrac related to a “limited type” of inward card scheme receipts.

“Upon identifying the issue, we self-reported the matter to the regulator and are engaging with Austrac around reporting these historic transactions as International Funds Transfer Instructions (IFTIs),” she said. “The issue does not involve a failure to report IFTIs for customers sending money overseas, and these transactions were included in our ongoing transaction monitoring program.”

CBA had its own anti-money laundering sins to pay for in 2018 and stumped up a $700m penalty to Austrac.

Westpac, which is also navigating probes by the banking regulator and ASIC, would take some comfort that the latter this week dropped any action against CBA relating to its public disclosures on the Austrac matters.

While Westpac admitted to the bulk of the initial 23 million breaches of the law — alleged by Austrac late last year — the parties continued to bicker over outstanding issues.

The damning claims included that Westpac helped facilitate payments that funded child exploitation and paedophilia. The situation was exacerbated by the bank last month disclosing it had not reported a further 175,000 transactions to Austrac and that about 360,000 reports that were made may have included “incomplete or inaccurate information”.