Paul Keating got on the blower yesterday
to set the record straight over his piggery investment in the 1990s.
Over 15 entertaining minutes, the former PM was happy to answer any
number of questions about the piggery as he rejected this inaccurate
line of mine from Tuesday’s Crikey edition:

David Murray’s own record on corporate governance and
disclosure isn’t that great. Remember that $7 million bonus for ten
years of good performance which wasn’t disclosed until the very end.
And what about personally doing that debt forgiveness deal with Paul
Keating over the piggery when Keating had personally intervened to get
him appointed CEO of the Commonwealth Bank ahead of Macquarie Bank’s
Tony Berg?

There was no famous Keating swearing or abuse, but his two main points were as follows:

  • While Keating did reject the board’s wish to appoint Tony Berg as
    CEO, he never spoke to David Murray or any of the Commonwealth Bank
    directors about his piggery investment. All his dealings were with
    regular line managers.
  • The Commonwealth Bank got all its money back from the piggery company, Brown & Hatton, plus penalty interest.

Fair enough, we accept his point and correct the record.

then tried to get an answer to this question that went unanswered at
the 1999 Commonwealth Bank AGM: “Why did the CBA never seek any
security over Keating’s personal assets when its exposure to Brown
& Hatton peaked at $26 million?”

Keating says that he
rejected requests for his personal assets to be offered as security
during meetings with CBA line officers when he was on the back bench in
1991. His reasoning was again good because the CBA had lent the
original two proprietors of the piggery, who weren’t exactly high net
worth individuals, $12 million on limited security at a high point in
the interest rate cycle.

Keating risked some of his net worth
investing in the piggery and wasn’t going to volunteer the rest of his
assets as security for the folly of bank lending policies well before
he arrived on the scene. Again, fair enough. The late Paul Lyneham was
the source of that AGM question and Keating also contested his figure,
saying that Brown & Hatton’s CBA exposure never got above $23
million as the penalty interest mounted up.

Then there’s the
question of Keating getting more cash out of the sale than his
estranged partner, Al Constantinidis. Keating says that Constantinidis
had illegally hocked his piggery shares in separate deals with Westpac
and NAB, so much of his share of the settlement went to satisfying
those debts.

And the 60 Minutes suggestion that Keating
heavied the CBA to forgive debts owed by Constantinidis as part of the
settlement? Keating says that Big Al’s involvement with the CBA was
deep and complex. There was an exposure through a business called
Taiwan Sugar, which was fully repaid, but the bank did reach a
cents-in-the-dollar settlement over a shopping centre development in
Maitland, although this had nothing to do with Keating.

Having listened yesterday and now gone back and read Keating’s big interview with Michelle Grattan responding to the 60 Minutes
attack in 1999, it does seem the former PM’s case against the late Paul
Lyneham and camp Packer is stronger than ever. How can you produce a
massive 50-minute prime time attack and only approach the target on the
Wednesday before it goes to air? Keating emphatically denies that he
did anything wrong and says his record on ministerial standards is
higher than John Howard’s when you consider issues like the conflicted
post-Ministerial ventures of Peter Reith and Michael Wooldridge.

Keating said that the CBA did indeed at one point make a $4.7 million
bad debt provision against its Brown & Hatton exposure, but the
hairy chested lads in the credit department ended up getting all their
money back, plus interest, plus penalty interest, even though the
original loan was highly risky.

As Keating said yesterday: “I should have been paid a fee as liquidator in possession for getting a full recovery.”

after five years of struggle, Keating did walk away with a handy $4
million, although the former PM believes he would have made much more
if he’d stuck with it.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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