CBA money-laundering scandal

“Organisations are defined by how well they overcome challenges,” embattled Commonwealth Bank CEO Ian Narev wrote in his chairman’s report for the Sydney Theatre Company, in its 2016 Annual Report.

Narev ought to know. The challenges of making high-end theatre pale in comparison to those currently facing the Commonwealth Bank, of which Narev is the outgoing CEO.

That’s not to say the STC hasn’t faced a few challenges of its own. However, despite significant government funding, STC’s financial position is only just OK. The company made a surplus of $263,000 last year, on revenue of $31.2 million. STC is losing money on its operations (not that surprising in an arts organisation), and making up the difference from philanthropic income. Inevitably, STC would be vulnerable to a sudden cut in funding (which happened to smaller arts organisations in 2016) or a downturn in ticket sales.

It’s therefore an interesting exercise in corporate governance to consider whether Ian Narev remains the right person to oversee Australia’s largest and best-known theatre company.

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After six years with Narev in the top job, CommBank is currently the subject of three separate investigations: by ASIC, by APRA, and a Federal Court action by AUSTRAC over no fewer than 53,000 charges of money-laundering. The bank has been the scene of a seemingly endless procession of scandals in recent years, from the financial planning debacle, to the CommInsure life insurance scandal and, of course, the money-laundering charges from AUSTRAC. Finally, investors aren’t pleased either: there’s also a class action headed up by law firm Maruice Blackburn on behalf of shareholders. 

Narev has paid the price, with Livingstone announcing in August that the CEO will retire in June 2018. Although Livingstone painted the move as part of the bank’s “succession planning”, it didn’t take long before journalists like Adele Ferguson were using scare-quotes around the word “‘retire’”.

But there is one group of corporate Australia that appears extremely happy with Narev’s performance: the directors of the Sydney Theatre Company.

Crikey asked the Sydney Theatre Company if Narev still retained the support of the other directors, particularly in light of Narev’s recent issues at the Commonwealth Bank. The answer? Complete support.

The STC board is a who’s who of corporate and philanthropic Sydney. As Andrew Crook explored in 2012, membership of the Sydney Theatre Company board is a trophy directorship that signals that you’ve made it to the top rank of the Emerald City’s great and powerful. Among this group, at least, Narev appears to enjoy unstinting backing.

The Sydney Theatre Company issued two detailed replies to our enquiry, one from the company’s artistic director and general manager Kip Williams and Patrick McIntyre, and one from the board itself.

In a lengthy reply, STC’s Kip Williams and Patrick McIntyre backed their chairman, pointing to his management consultancy background and describing him as a  “stimulating, thoughtful chair who has encouraged us to think big and to back vision”.

“As a leading business figure, he has given us the confidence to take the kinds of risks that are important to the vibrancy of an arts company — to back idiosyncratic works, accelerate the development and promotion of new works and artists, to resist conservative and lazy choices that many others might have considered ‘safe’.”

The board’s statement* echoes these sentiments, praising Narev’s managerial capacity.

“As a former management consultant, Ian is a creative, challenging and agile thinker,” the board statement reads. “As the CEO of a major institution, he has deep knowledge and experience of the complexities of doing business. As the chair of STC, he has been generous with time and networks. He has, for instance, been instrumental in progressing the thinking around, and funding for, our upcoming, transformative renovation of The Wharf.”

Crikey attempted to contact all of the Sydney Theatre Company’s directors independently. Only venture capitalist Daniel Petre of AirTree Partners got back to us. He was wholehearted in his support for Narev.

“I can’t speak for the STC board but personally I can say Ian has my full support,” Petre told Crikey in an email.  

“Of course CBA has had some major issues and they need to address some major issues, and as CEO Ian has clearly articulated his response to these issues … but to suggest that Ian is somehow no longer capable as chair of STC is ridiculous.”

“Ian is a very good man — in fact one of the smartest and most ethical men I have met in the senior circles of Australian business — who has given an amazing amount of time and energy to STC and the company, in my opinion, is all the better for his help.”

But the questions is, now that Narev is on the way out at CommBank, is the reputational risk he poses atop STC’s governing body worth the donations he either makes, or pulls in?

*Read the full response from STC here.