Commonwealth CEO and MD Ian Narev

Just in case there was any conjecture as to which Australian companies are the most appalling institutions, last night’s Four Corners once again did a fine job of allaying those doubts. In a scene reminiscent of Clarke and Dawe, Commonwealth Bank’s multimillion-dollar CEO, Ian Narev, with a straight face, repeatedly claimed that customers were the bank’s highest priority all the while the bank was dubiously refusing to pay insurance claims to terminally ill customers. CBA even allegedly refused to make a payment to a former employee it deemed too ill to work, but not ill enough to receive their claim. This kind of incompetent corporate behavior could almost be funny if, you know, people’s lives weren’t being ruined and all.

To be sure, Four Corners and Fairfax almost certainly highlighted the most egregious cases, but this is hardly the Commonwealth Bank’s first offence. Two years ago Australia’s largest financial institution was embroiled in one of Australia’s worst ever corporate scandals: a gigantic financial advisory fraud that lasted a decade (and that the bank spent years denying, covering up and lying about). Meanwhile, earlier this year, former CBA employees were charged with a $76 million fraud involving an alleged Ponzi scheme at the bank that was ignored for five years until the police got involved.

Narev has been paid a great deal to look after the bank’s customers; in just four years, Narev has been paid $29.7 million.

In fairness to Narev, he isn’t the only highly paid bank CEO whose bank is making headlines for the wrong reasons. New ANZ boss Shayne Elliott has retreated from long-time CEO Mike Smith’s legacy of a pan-Asian financial institution.

Within weeks of his appointment, Elliott quietly backed away from Smith’s much-vaunted Asian growth story. By February, Elliott stated that Asian trading was “difficult” and that the bank’s bad debt charge for Asia would be $800 million (above market estimates). Analysts warned that the bank might even be required to undertake a dilutive capital raising if asset quality continued to deteriorate. The Asian expansion was Smith’s legacy, and he spent almost his entire tenure growing ANZ’s Asian business. CEOs of large institutions, like banks, are essentially paid to efficiently allocate capital and define a culture — a role that raises questions for both Smith and Narev.

Fortunately for Smith, the strategy seems to have fallen apart after his departure, and not before he was paid $82 million by ANZ shareholders (who have now seen the bank’s share price slump by 19% since October 2007, when Smith was appointed).

The performance of the large Australian banks like CBA and ANZ is even worse when you consider they are essentially backed by Australian taxpayers, courtesy of an implicit government guarantee (the big four banks are most certainly too big to fail). As The Australian’s fantastic Adam Creighton explained, virtually all of CBA’s $9 billion profit last year came courtesy of Australian taxpayers.

So just to sum up — bank shareholders and taxpayers pay bank executives literally hundreds of millions of dollars — and what do they get for it? Nice work if you can get it.