Innocence lost: ANZ New Zealand demonstrates poor tone at the top

Photo by Eva Caprinay

Suzanne Snively
TINZ Chair

From the Chair, July 2019

New revelations about the conduct of ANZ New Zealand Bank’s CEO, David Hisco, have emerged almost daily since the end of May.

While its Australian parent bank was caught out for inappropriate conduct by last year’s Hayne Review, it looked like ANZ New Zealand might be different.

Sadly, we are now looking at a failure at the top of ANZ.

The ANZ, along with the three other major Australian banks with subsidiaries in New Zealand, stood out as a trusted bank during the global financial crisis. They sustained high credit ratings while many of the world’s banks ratings plummeted.

ANZ Australia made it onto Ethisphere’s select list as one of the World’s Most Ethical Companies prior to 2012.

ANZ New Zealand does many things right

ANZ New Zealand actively promotes its social license through support of local teams including for the Olympics and Cricket as well as supporting local charities.

Turning specifically to its tone at the top:

  • It has a strong code of conduct for its employees. that provides a set of guiding principles about making the right decisions.
  • The ANZ has an Anti-Bribery and Anti-Corruption Policy. It defines unacceptable behaviour and activity relating to bribery and corruption. Mandatory training is conducted with additional specific training tailored to individual roles.
  • Its Board has an Ethics Committee.
  • ANZ was responsive to the 2015 legislation that strengthened New Zealand’s anti-money laundering processes.
  • It has been showing leadership in gender diversity with woman appointed to its Board and Senior Management Team.

Tarnished reputation – poor tone at the top

As Warren Buffet says, it takes years to build a reputation and 20 minutes to lose it.  Over the last month, the ANZ’s reputation has been severely tarnished.

With each revelation about ANZ New Zealand’s CEO and Chair, tone at the top has moved from being an abstract compliance-based concept to becoming a much discussed and analysed missing attribute.  And this is about New Zealand’s largest registered bank, with over 40% market share.

The attributes where the ANZ appeared to be in a leading position to prevent and protect against corruption now look designed to provide a veil to inappropriate conduct at the top.

Everything that the ANZ has been doing right has been undermined by revelations that:

  • Its attestation, which the RBNZ trusted the ANZ to calculate its level of capital internally, has been incorrectly carried out since 2014.
  • Its CEO has been charging very large business expenses since he took the position, many of which appear to be for personal rather than business purposes.
  • Multiple whistleblowers have come forward since 2014 only to be rebuffed by compliance officers unwilling to challenge top management. Some lost and or chose to leave their jobs as a result.  The protective disclosure process has been undermined.
  • And then there is the process of the bank selling one of its properties to the CEO for less than market value and then paying for some of the renovations.

What is the tone at the top of New Zealand financial organisations?

Are our other New Zealand-based financial sector organisations any better? Is there a distinction between the New Zealand based organisations and those with international ownership?

Transparency International New Zealand’s Financial Integrity System Assessment (FISA) provides a framework to define what ‘doing the right thing’ means, and to annually carry out a comprehensive good-conduct check.

It’s easy to do. It just requires that the CEO talk with his or her Board and key managers. In doing so, a robust tone at the top can be established.

Suzanne Snively, ONZM

Chair

Transparency International New Zealand Inc.

Transparency International New Zealand, PO Box 10123, The Terrace Wellington, 6143 New Zealand admin@transparency.org.nz. Copyright © Transparency International New Zealand 2009 - 2019.
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