There are some lines in AMP’s announcement of chairman Catherine Brenner’s resignation on Monday that will have many sharp experts climbing all over them.
Referring to the notorious ‘independent’ report undertaken by Clayton Utz into the issue of charging clients for advice they weren’t getting, the AMP release stated: “The board is satisfied that the former chairman Catherine Brenner, former chief executive Craig Meller and the other directors did not act inappropriately in relation to the preparation of the Clayton Utz report.”
It goes on to push group general counsel Brian Salter under a bus by stating: “The board, including the former chairman, were unaware of and disappointed about the number of drafts and the extent of the group general counsel’s interaction with Clayton Utz during the preparation of the report. The board commissioned and received the report. It was not a matter for the board’s approval.”
In which case, ladies and gentlemen, why did the board sack Meller and why did the chairman quit?
The major problem seems to be that, while they may not have been aware of how there were 25 email exchanges in the lead-up to the report being given to ASIC in October 2017, they did get involved in trying to change the wording of the report, according to evidence AMP executive Anthony “Jack” Regan gave on Tuesday.
It’s worth going back over the fact that Salter used to be a partner at Clayton Utz – where he no doubt wishes he had stayed – and for months in 2017 he was doing a great deal of tictacking with current Clayton Utz partner Nick Mavrakis, who prepared the report. About 700 emails were exchanged between AMP and the law firm.
Whose idea was it to hire Salter’s old firm, by the way? It’s not a good look.
Indeed, it all harks back to the dark days of the HIH royal commission, which noted in its 2003 report that there was far too much cosy hiring of professional mates. The late and unlamented accounting firm Andersen was all over HIH like the proverbial Kelly Country suit. The highlight of that practice was when HIGH chief executive Ray Williams hired an Andersen partner who had just audited HIH, Dominic Fodera, as finance director.
A frustrating trick of the corporate world was (and apparently still is) that, if you wanted to make something smelly look better, you commissioned a professional firm to write a report and, most importantly, you withheld information where possible but didn’t divulge that to the report’s writers.
What’s that got to do with AMP? After the Clayton Utz report was written – and it’s worth noting that at the first draft level Nick Mavrakis did do a good job – a gem of information emerged from the AMP vaults. It had previously been missed because of some real or imagined problem with a change of server.
In 2013, a Mr Magellan, of AMP, wrote an internal note that blew apart the subsequent official AMP line that there had been an “administrative error” that caused some clients to be charged for advice they didn’t get.
“…these clients are currently paying for a non-existent service and issuing an FDS (Fee Disclosure Statement) may trigger the client to cancel both the ongoing fee agreement and the policy, lodge a complaint with AMP and/or ASIC and possibly request compensation on the advice fees or dialled up commission for the previous 12 months. This would be a very negative customer experience”, he wrote.
By the way, that communication is one thing for which we can thank FoFA. Demanding that customers be given the right to opt into paying for advice every two years, or not pay for it, meant AMP had to do something about the scam in 2015, not that they told customers.
Coming back to the resignation announcement, that line about the Clayton Utz report that stated, “The board commissioned and received the report. It was not a matter for the Board’s approval” stands in stark contrast to Regan’s pretty candid evidence.
Regan agreed that Brenner had added a number of comments that she would like to see incorporated into the final version of the report, which was about to be handed to ASIC in October last year, most particularly one that read: “Include a statement to the effect that Craig Meller was unaware of the practices or their illegality.”
I have no view as to whether that’s correct but should add that another lighthouse revelation at the HIH royal commission was that emails are what will sink you. People tend to write them in less formal style, almost conversationally, and, unlike statements designed by lawyers to bamboozle customers, they are clearly expressed.
So something about the resignation announcement doesn’t add up. Salter was all over yesterday’s press saying he had done nothing wrong, and that was after the board threw him under the bus in the same announcement.
What it looks like, and this too is familiar territory, is that the company’s defence is now using the “angels dancing on the head of a pin” strategy.
For instance, Clayton Utz stated last week that its report was designed to be independent of the management of the advice business, but that it had been under Salter and the board’s “instruction”.
I don’t remember that being made clear before the royal commission began.
And how about Monday’s “The board, including the former chairman, were unaware of and disappointed about the number of drafts and the extent of the group general counsel’s interaction with Clayton Utz in the preparation of the report,” from the resignation announcement?
From that, we have to wrestle with the suggestion that it’s all right for the board to make a few changes to the report before handing it to ASIC, but it’s “disappointing” that Salter made so many changes to it as well.
Bear in mind that he wasn’t just working off his own bat. Several emails that were tendered about requested changes to the report came to him from his chairman, Brenner.
Don’t take it from me. The commissioner’s closing statement on Tuesday ran as follows:
“In view of the evidence given by Mr Regan, there may be some question about what conclusions, if any, I may reach about the extent to which senior management or others associated with AMP sought to influence or did influence content of the report by Clayton Utz apparently submitted to ASIC as an independent report.”
The company’s barrister, Philip Crutchfield, will respond to all of this shortly, for the commission.
TOPICS: AMP, Catherine Brenner, Craig Meller, royal commission into banking and financial services