A federal senator has questioned the integrity of the Commonwealth Bank’s chair, CEO and board of directors, accusing them of “manifest failure” to comply with legal obligations.
Appearing before a hearing of the federal parliament’s Standing Committee on Economics on Friday (20 October), CBA chair Catherine Livingstone and outgoing chief executive Ian Narev faced a gruelling cross-examination over the ongoing allegations of non-compliance with money-laundering laws brought by government agency AUSTRAC.
Inquiry chair and Coalition MP David Coleman pressed Ms Livingstone on why the bank did not raise the matter publicly prior to AUSTRAC’s intervention despite its board of directors reportedly becoming aware of the issue back in 2015.
Mr Coleman, a former McKinsey consultant and Yellow Brick Road board director before entering parliament, said that he was concerned that the “reputational issue” facing the bank, rather than its approach to compliance with money-laundering and anti-terrorism regulations, are the top priority for the board.
“Surely, the board has failed to act within its legal duty to act in the best interests of the company,” Mr Coleman said, pointing in particular to the share price drop that occurred in the wake of the AUSTRAC announcement.
“This was the largest example of shareholder destruction value in Australian history,” Mr Coleman accused.
In addition, he criticised Ms Livingstone, who was named as chair of the bank in January 2017, for omitting any reference to the AUSTRAC matter in the company’s half-yearly report to shareholders. The business leader and board director replied that the report was compliant with all relevant disclosure requirements.
Mr Narev’s performance also came under fire from the inquiry chair, with Mr Coleman questioning the lack of executive terminations relating to the AUSTRAC matter.
“Surely, you have turned your mind to who, at the group executive level, needs to be held to account… haven’t you been derelict in your duty as CEO if no group executive has been made accountable?” Mr Coleman said.
While Mr Narev said that he and Ms Livingstone needed to be “circumspect” about speaking too freely given the ongoing civil proceedings with AUSTRAC, the outgoing CEO admitted that he had considered the issue of executive accountability.
Ms Livingstone announced that there may yet be consequences for relevant staff members as the investigations continue.
“I can assure the committee that, as we do the work to understand the underlying causes and issues, there will be further accountability consequences as necessary,” the CBA chair said.
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