Catherine Livingstone brings integrity, fine record to CBA

Catherine Livingstone has this week dramatically changed the state of play at the Commonwealth Bank.

Catherine Livingstone is trying to transform the CBA culture. Picture: Renee Nowytarger.

Let’s have a closer look at Catherine Livingstone, the woman who has this week dramatically changed the play at the Commonwealth Bank.

As chairwoman of CBA, she has led the board to retire Ian Narev, by the end of 2018. The move has been criticised in some quarters of the media but I think she’s made the right move.

And to those who have criticised it, I’d ask them, well exactly what would you do as a fairly fresh chair of the bank which has just received a massive third strike with the public over trust — the Austrac money-laundering scandal comes on top of CommInsure and the ­financial planning issues.

Indeed a third strike so damaging that the governor of the Reserve Bank Philip Lowe felt the need to be highly prescriptive in his comments. “Banks should not be doing money laundering and they should know who is operating the accounts that they open, they are very important laws and they need to be respected.”

That ASIC’s Greg Medcraft is investigating is unremarkable. Everyone knows his position on big bank culture. But Philip Lowe? Decisive action had to be taken and seen to be taken.

Livingstone is one of the few business leaders in Australia whose personal brand radiates ethics and governance. She has built it the hard way, up through accountancy, then becoming the first female CEO of a top 100 company with Cochlear.

From there it was a jump to chair the CSIRO and it is at this stage that people start talking about how she impacts culture in organisations. She took on a national science body under great pressure itself from the Howard government’s threats, and with few friends at universities.

Her legacy is the flagship programs which were brought in and scored government funding. Her impact there was surely the reason she was chosen to take over the chair of Telstra in 2009, after a ­tormented period under the provocative CEO Sol Trujillo and chairman Donald McGauchie. Livingstone paired up with new CEO David Thodey, and set about repairing relations with the government and drive a new culture. The output for all this groundwork was the river of gold that Telstra secured from the NBN, which put Telstra shareholders in dividend nirvana land for many years. Only this week has the Telstra board had to manage shareholder expectations, and the investor reaction was one of shock: a 10 per cent hit to the share price of a massive company.

Where Livingstone fell out of step was in her role as president of the business lobby group, the Business Council of Australia. There, a crucial task at hand, lobbying and influence, was not at all her strong suit. In fact, she actually misstepped by stating publicly that “the BCA doesn’t want to campaign, it should not have to campaign because the integrity of its policy positions should speak for themselves”.

This was pounced on by Liberal powerbroker Michael Kroger, who described the BCA as being breathtakingly arrogant and naive. Adding insult to injury, Financial Systems Inquiry chairman and former CBA chief executive David Murray also accused the BCA of naivety, and took the opportunity to get stuck into Livingstone on Telstra customer service. Ironically it was the current Telstra chairman John Mullen who later came to her defence, labelling David Murray’s comments disgraceful and saying that her time at Telstra spoke for itself.

In any event, Livingstone probably rues the day she took the BCA presidency on. An intensely private person, with fastidious dress, and fastidious mind, she rarely gives television interviews and far prefers operating behind closed doors.

Yet in the chairmanship of CBA, the task at hand — of long-term cultural overhaul — is surely what she has been trained for all her career. If any business leader in corporate Australia can restore trust in Australia’s biggest bank, it is probably Livingstone.

The slight niggle I have is how the regulator ASIC might see the board’s handling of its own knowledge of the Austrac affair. The board knew some of the concerns back in 2015 though Livingstone only joined as a director in March last year. But ASIC’s Medcraft is clearly troubled. And in particular, troubled that the CBA chairwoman didn’t see the ongoing Austrac issues as important enough to raise at a meeting with him and the CBA risk committee just before the Austrac action hit.

He told me on Sky News Business: “My concern is that I’d met two days before with Catherine and the chair of the risk committee and the chair of the audit committee. And Catherine’s great because she, like me, is a former chartered accountant and I know she gets into the detail.

“Basically in those discussions, what I’m there for is to know what sort of risks are they concerned about, right, that’s why we do this engagement and I must say I was stunned two days later.”

On Friday, Austrac made further stunning allegation that six transactions by five customers made through the bank’s IDMs may have financed terrorism.

The last thing Livingstone would have wanted to do this week was a call with the media. She would not acknowledge any causal link between Austrac and Ian Narev’s departure. It was a strange call. As to the qualities she looks for in a CEO (and she is looking), she told us she was a very strong believer in the importance of values, not tokenistic but real, personal values; someone who demonstrates complete transparency, particularly in operating with the board; and someone with a strong moral compass, when judgment calls can be very challenging. And she then added, “those are the qualities we have currently in Ian”.

How much we will ever learn about the relationship between Livingstone and her CEO Ian Narev will be interesting. It is a relationship that will have to withstand a fair amount of pressure yet, as we all learn more about Commonwealth Bank.

Ticky Fullerton presents Ticky on Sky News Business weeknights at 6pm.