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.