Gather round NAB shareholders, come closer to the fire and I will tell
you a story. No, I’ll tell you several stories that will help explain
the difference between fact and fiction and its composite, faction. Or,
the difference between an annual report signed by a departed chairman
and CEO, and reality.

But first, Noddy and Big Ears have been Day Trading again. They will go
blind if they are not careful- but they tell me that that nice chap
Richard McKinnon, the chief financial officer of the National, is
taking early retirement.

He tells us shareholders that he was going anyway when he turned 55
next year but after a chat over some tea and bikkies with that very
cute Scottie, Mr John Stewart, Richard has decided that the lure of an
early break is better than hanging around for all this nasty board and
shareholder ruckus over those forex trading losses. Really, if Richard
had known what was going on, he would have stopped it!

But remember children how you all received the red-covered annual
report in the mail late last year. As catalogues go, it wasn’t there with
those from Myer or David Jones, but it did represent tangible evidence
of all those nicely-franked dividends the NAB had resumed paying last

Ahh, you exclaimed as you tipped open the plastic wrapper and flicked
the pages. That smell of good quality coated paper, lots of numbers,
nice sounding statements such as the cover note, “Growth through
excellent relationships”.

Children, if you are like me, it re-affirmed your faith in the solidity
and probity of good money. Melbourne money, earned from 3.4 million
customers in Australia and hundreds of thousand more in New Zealand,
and Europe. A record result, allowing for the recovery after that
unfortunate adventure in the US called Homeslide, sorry, Homeside.

And, of course, gentlemen bankers do not talk about their mistakes,
such as the $130 million or more lending money to the King Bus company
on the NSW north coast. It was, in reality, just lending millions on
the security of air. But don’t tell the shareholders anything more than
we have to. They might not understand.

And, reading through the report, so many pages, so many numbers, where to start, what to read, what to believe?

Well, children, if you go down into the woods today. Sorry, that fairy tale is for the Annual General Meeting.

No there is a lot to read and absorb, but in view of this
unfortunate publicity attaching to the bank in recent weeks, wasn’t it
prescient of the bank to highlight what a good job it was doing in risk

We all know, children, don’t we that lending money can be risky. Why
those naughty King Brothers didn’t repay anything we gave them.

So Risk Management was one area we looked for in the annual report and
we looked, and looked and looked. In fact, children, I had to take a
hamper from Myer, such was the volume of information in the bank’s
annual report, signed by that nice, Charlie Allen, the chairman, I
think he was at the time, and his faithful offsider, Frankie Cicutto.

And I found it, on Pages 51 and 52 of the NAB annual report. What an
enlightening read. Do you know children that the bank last year
established a Risk Management Committee whose members were shared with
the Audit Committee.

Now that Committee, the audit one is important. I know because those
nice directors, Mr Graham Kraehe and that Nice Mrs Cathy Walter (love
her pearls) were both involved. I like them. They look safe and
reliable. I would trust my money to them if I was a forex drinker or a
Buddhist forex options dealer. Sorry children, I diverted.

Some of those, err, fine words. Inspiring stuff. Take this, “The group
has a comprehensive market risk control framework”, or” Prudential
Control is responsible for approving and monitoring trading results and
the application of new products by the markets unit.” This was kept
separate from Corporate and Institutional Banking ” to ensure
independence… and to satisfy regulatory requirements.” Whew Kids,
that’s plastic wrapper stuff, I’m afraid to say.

“A Risk Management Committee has been established to review in greater
detail the Group’s risk and return appetite and to oversee the Group’s
overall control framework. This Risk Committee will have cross
membership with the Audit Committee.”

Well, children, they are all very ‘cross’ now on the board, thanks to
that nice, safe-looking Mrs Walter, Mr Kraehe, Mr Duncan and Mr Moss
don’t liker very much because she has pointed out that while she was
demoted from the audit committee, those boys got promotions.

And there she was on Friday, chatting gaily to that safe chap, Ronnie
Walker on a flight to Sydney, where she posed so nicely for Mr
Murdoch’s Sydney Telegraph newspaper. And those boys on the board say
they can’t get on with her. Don’t believe them, do we, children?

Dear, Dear, Dear. If only they would have a Horlicks and a good sit
down and think about where they now find themselves. Noddy and Big Ears
can tell them all a thing or two about finding themselves in difficult
situations and having to come up with believable explanations of what
seems errant behaviour.

You know children, if I had written a book like the National’s annual
report, knowing now what has happened, I would have been accused of
misleading all you gentle shareholder readers. Those nasty trolls from
ASIC folk would leapt up from under the bridge and put me in court, if
I had have done a NAB.

Really children, isn’t it horribly unfair when grown-ups start acting like children.

They all need a good talking to from you shareholders and I hope this
Committee of senior managers announced on Friday comes up with the
goods. Otherwise everybody will remain very unhappy and that nice Mr
John Stewart might have to make arrangements about returning to the
lowlands of Scotland.