Catherine Livingstone has plenty of work ahead at CBA

The benefit of hindsight is a wondrous thing.

CBA chairman Catherine Livingstone. Illustration: Sturt Krygsman

The benefit of hindsight is a wondrous thing, so yesterday CBA chair Catherine Livingstone was fulsome in her plans as boss but as a non-executive director failed to ask the questions or demand the details in the lead-up to the governance debacle that was the $700 million Austrac penalty.

Her hand-picked chief, Matt Comyn, was a star in the witness box but later was revealed to be a victim of the same hubris that brought the bank to heel in happily presenting the board with customer satisfaction figures that happily ignored the fundamental mistreatment of customers perpetuated by the bank.

These are not minor issues because, while Comyn was able to present himself as someone who tried to back the punter but was foiled by the bureaucracy, it seems he played the same game as head of the retail bank.

Some say he threw his old boss Ian Narev under a bus with his details of how he was denied plans to end credit card insurance scams.

The reality is it was Narev himself who threw himself under the bus through his own actions or, more to the point, inaction.

Former chair David Turner was not spared by either player but, then again, he has already copped a serve from the APRA committee so this was to be expected.

Livingstone by reputation is a details freak, so it was surprising how much of her time on the board last year was beyond “recall”. She did confide she was surprised at the “lack of challenge” on the CBA board when she joined.

Too few questions were asked, too much faith was placed on what management said and there was not enough challenge.

The former Telstra chair is one of the most experienced non-executive directors in the country and when she joined she was probably not unaware of the issues surrounding the board.

Just in case she had forgotten, counsel assisting Rowena Orr gave her the long list of snafus which, Livingstone conceded, didn’t sound great.

She figured banks have more snafus than most companies because “they are more highly regulated and have products which are very personal financial wellbeing products”.

Money is the other reason often advanced, which is a nice way of saying greed and, of course, there is the little issue of lack of competition.

She was slated to be chair when she joined and from the beginning of this year she took firm control.

When she first joined it seems Turner didn’t give her a full briefing so past issues were not raised and instead Livingstone was left to pick up the pieces herself. This surprised commissioner Kenneth Hayne, who noted that government and other organisations always make sure new bosses are fully briefed, but it seems that didn’t happen at CBA.

Livingstone confided that this was how it generally worked on boards: “It takes up to six months to work out the style of the board.”

She didn’t mention him by name, but CFO David Craig’s ­assurances that all was OK with Austrac didn’t make her feel too comfortable.

Yet, surprisingly, this detail freak didn’t bother to go back to look at audit reports on the matter over the past few years, and it seems like the rest of the audit committee was happy to sit back and let audit chair Brian Long brief the board.

Livingstone made clear yesterday she was concerned, but in ­reality did nothing about it.

The APRA committee expressed some misgivings about this attitude, but Livingstone was as guilty as the rest of the board just as Comyn played the one-sided customer satisfaction game as well as the rest of his colleagues on the executive committee.

When you have 16 million customers things can go wrong but, as long as the return on equity figures were good and the net promoter scores are fine, who cares about a couple of whistleblowers.

Surprisingly, Livingstone’s testimony on her early months was shaky; she couldn’t recall many things, nor had memory of others that didn’t appear in the board minutes.

Suffice it to say, governance at CBA was a mess, which is a tad surprising given it is the most highly valued company on the Australian bourse and has a strangle­hold on the home-lending market, which is also a national ­religion.

Suffice it to say, from the second she took control as chair life changed.

Asked what culture meant, she had the answers and discipline was high on the list.

Asked personally what she had done at CBA, Livingstone had all the answers starting with a cleanout of the board; waving goodbye to Narev; recruiting Comyn as chief (which with the value of hindsight has proved an inspired choice); installing remedial action plans; and instilling a philosophy of working through issues “to find the root cause”.

That way you don’t repeat the offence time and time again, as CBA has done.

She has personally taken a role in helping to design problem-solving so you know the solution before you implement it.

There is that detail again and CBA, she noted, was known to rush to answers before asking the right questions.

Livingstone wants to encourage people to speak up and, while Comyn said earlier he didn’t bother going to the board on issues because they would just revert to Narev, the new arrangements ensure access to the whole management team.

The revolution has started, but the first two days of this round of hearings focusing on what went wrong at CBA tells you there is a long way to go.

Pipeline blockage

Josh Frydenberg’s decision last night to formally reject the $13 billion CKI bid for APA leaves the Hong Kong company with few alternatives.

The Treasurer said two weeks ago that the bid was likely to be ­rejected because it was not in the national interests to have the east coast energy distribution in the hands of two foreign-controlled companies.

Aside from the Hong Kong-listed CKI, the other company is China-based State Grid, along with Singapore Power.

Frydenberg said the deal was “contrary to the national interests”.

CKI was exploring a range of potential alternatives, such as floating some of the assets into a separate company, a joint bid and other ownership alternatives were also being considered.

But given last night’s decision, none of those options are likely to meet objectives.