Strange how business calls for “economic reform” are always aimed at everyone else, and never at the worst forms of rorts, incompetence and scandals, which cost millions of Australians billions in lost income.
Take AMP. It was a corporate hero in the recession of the 1990s, coming to the aid of a near bankrupt Westpac. It helped in the float of the Commonwealth Bank. It owned 10% of Macquarie Bank (now Macquarie Group). It was perhaps the most important investor in the country, the bluest of blue chips, with more than $90 billion in total assets.
The old AMP Society was demutualised in 1998. Shares in the new company were valued at $6.19 in that deal and quickly soared, touching $15.87 in November of 1998. Since then it’s been a long slide punctuated with repeated managerial and boardroom unrest and scandal.
When AMP demutualised it had an excess of capital. It soon went on a spending spree, picking up UK funds manager Henderson, National Provident Institution and then GIO. GIO was a $3 billion investment that lost $1 billion.
By 2003 AMP’s share price had hit a record low $2.72, having lost shareholders 73% in value since listing. It recovered briefly above $10 a share in 2007, but has rarely been above $6 since.
As the Hayne royal commission unfolded and revealed a remarkable array of misconduct and egregious rorting by AMP, it fell below $5, the $4, then $3, then $2. Last week it closed at $1.50.
Across those two decades some of the biggest names in Australian corporate history have come and gone from the board and senior executive positions. Ian Salmon, Ian Burgess, Paul Batchelor, George Trumbull, Stan Wallis, Catherine Brenner, Craig Meller, David Murray, John Fraser.
In 2020, the company is now a by-word for sexual misconduct and out-of-touch old male directors. The departure of Murray and Fraser and Alex Wade, and the demotion of Boe Pahari, isn’t the end of the story of the company’s mishandling of the sexual harassment complaints of Julia Szlakowski.
Indeed, AMP seems determined to keep exposing its own inadequacies. In what looks to be another half-smart attempt at media management, the company last week released, without the approval of Szlakowski or her lawyers, the final section of the investigation into Pahari’s harassment of Szlakowski. That investigation found that all of her claims were credible, though it did not find all of them to constitute “harassment”.
The problem is, AMP CEO Francesco De Ferrari is reported to have told AMP staff by internal emails that “many of [Szlakowski’s] claims were not substantiated by the external investigation”. This statement was repeated publicly by an AMP spokesperson.
How can AMP maintain that Szlakowski’s claims were “not substantiated” when their own report found all of her claims were accurate? And why, if reports are accurate, did De Ferrari make such an extraordinary claim about Szlakowski, who by the company’s own admission was the victim of misconduct by one of its senior executives? How can De Ferrari credibly remain CEO?
AMP’s boardroom and executive culture has been profoundly flawed for decades. It has destroyed billions of dollars in shareholder wealth, wrecked the lives of many of its clients and rorted tens of thousands of them. But the business community prefers to focus on the alleged sins of trade unions, lack of workplace flexibility, iniquitous regulation, and corporate tax rates as the real problems of the economy.
I reckon AMP epitomises what’s wrong with Oz biz – ever ready to point to other’s failings to attach blame for things going wrong : and too arrogant to look at the possibility that they have theirs, let alone address them.
Unions of employers that would rip off and pillory unions of workers in the blink of an eye.
[Last week “Skroo” Turner was lamenting the closure of borders for what that was doing to his Flight Centre and his “poor” staff : the same Flight Centre that was accused of underpaying, as well as withholding penalty rates and leave loading, and shortening breaks like meals that employees were entitled.
Coal miners cry from behind “poor employees” that their industry be allowed to carry on unimpeded and even subsidised – “poor employees” that they’d put out to “pit-pony pasture” as soon as a more economical device that would do the same work became available, or a short cut in OH&S would profit.]
These coal mining corporations you mention, who weep buckets over the plight of their poor workers, are of course the same ones who have restored the old mining tradition of death by black lung disease. Nice.
I well remember the fashion for organisations that had been customer owned mutuals for a very long time, being de-mutualised. I could never get what the argument was that some people apparently thought this was a good idea. Now we are further down the track, can anyone name any organisation that was de-mutualised, where that benefited the customers? I remain ropable about Nick Whitlam’s role in flogging off NRMA insurance.
De-mutualising threw all the customers to the sharks. So either we can imagine that the policy was undertaken in good faith by tragically naive politicians who now regret their folly… or we can see that in the class war this was another victory for the sharks. As that notorious left Warren Buffet explained
The NRMA is perfect example – when this is raised Great Gough’s shameless scion usually jumps onto these threads to claim that his actions made everyone better off.
Correction: The figure of $6.19 is the current adjusted cost base not the cost base at float time. This figure was $10.43. There was a demerger in 2003 which removed about 29% from the cost base and three subsequent capital returns of 40 cents each, which gives $6.19 as the current adjusted cost base.
Money doesn’t just talk, it swears.
“Fool me once, shame on you, fool me twice, shame on me” – Why do the major shareholders continue to put up with the ‘BS’ excuses when it’s costing them money? If it was a questions of ethics, I can understand the reluctance to call the directors to account. That takes guts. But the incompetence is costing people their super and more.