The buck stops here
Who will take the blame for the Commonwealth Bank’s latest scandal?
Talking about inequality is not exactly new. Almost a century ago the writers F Scott Fitzgerald and Ernest Hemingway were musing about it in their short stories.
“Let me tell you about the very rich. They are different from you and me,” declares Fitzgerald’s narrator. “Yes,” recalls Hemingway’s character, “They have more money.”
But as Bill Shorten could have told the revered author, it’s not quite as simple as that. Certainly the rich have, by definition, more assets than the rest of us. But, more importantly, they do not have to play by the same rules.
Not only do they gain generous concessions unavailable to the masses – the treatment of discretionary trusts is just the start of it – but when they break the few laws designed to constrain them, they usually escape any serious penalties. And if there were ever any doubt of this, the Commonwealth Bank – once the people’s bank, now just another raptor in the jungle – proved it last week.
Australian Transaction Reports and Analysis Centre, the financial intelligence agency and regulator dealing with terrorism and criminal abuse of the financial system, found that CBA had for several years turned a blind eye to some tens of thousands of money-laundering operations involved in terrorism, drug-dealing and organised crime. Moreover, they were warned to be careful in 2015 but apparently did nothing about it.
When the whistle was finally blown, it left the bank open to fines totalling about $1 trillion, which, if levied, would wipe out the assets of our most greedy and profitable institution many times over. But of course there is no chance of that – the major banks are too big to fail.
So whatever fine is imposed, if any, will be well within the bank’s capacity to pay, if necessary by ramping up the gouging of its customers. But what about the people who were involved in the industrial-sized scam? Surely they deserve some punishment.
The CEO, Ian Narev, says somewhat smugly that there was no deliberate malfeasance, which may or may not be the case, but it is hard to deny that there must have been criminal negligence on a grand scale. So who will cop the blame?
Well, so far, nobody. Some directors will lose a proportion of their fees, but just for a year, and they will survive pretty well in the trough until then. And the executives who run the business will, again for one year, forgo their bonuses – the rewards they demand for doing their normal work.
This is the equivalent of telling primary-school children that when they have vandalised the classroom and defecated on the floor they will lose their elephant stamps; they will not be suspended or expelled, or even made to stand in the naughty corner. At worst they might have to change desks for a while.
And remember we are talking millions of dollars here – at least 70 of them. Any ordinary employee who looked on as a small business was defrauded of a fraction of that amount would be out of a job forever and might well end up in the slammer, but then any ordinary employee would not be pulling down six- and seven-figure salaries in the first place. The rich are different.
Just ask Ian Narev, who will not even tell us whether he had contemplated resignation. What we know is that if he did he has now decided firmly against it: he will keep his obscene remuneration and press on until he – as reported this morning – retires at the end of the 2018 financial year. As the man says, the buck stops here – firmly in the overstuffed wallet of the CEO.
The view from Billinudgel