Westpac CEO Brian Hartzer today came under intense questioning at a parliamentary hearing over whether his bank supports a proposal to publicly name senior executives, and any consequences for them, when there are breaches in its banking licence.
Among the bank CEOs appearing during the House of Representatives Economics Standing Committee hearings in Canberra, only the ANZ’s Shayne Elliott has agreed in principle with naming senior executives responsible when problems are uncovered.
Westpac’s Hartzer today agreed it was a good idea to increase transparency on the accountability of senior executives, and agreed in principle about reporting a significant breach, but he stopped short of fully supporting the committee’s recommendation, saying it was impracticable and complicated.
“I understand the frustration that the community has with its perception that significant things have gone wrong and executives haven’t been held to account,” Hartzer told the committee.
“As CEO of Westpac and on behalf of my group executives, we all feel extremely accountable for everything that goes on.”
A key theme of questioning at the parliamentary hearings has been why no senior executives have lost their jobs despite a series of “rip-offs” being exposed at the banks.
Hartzer has issues with the exact drafting of the recommendation of the committee.
“For example, reporting withing five days of the breach,” he says. “In our experience that’s not practical.
“We have a culture where we encourage people to stick their hand up if they see something that has gone wrong and report it to ASIC (Australian Securities and Investments Commission).
“Many times we identify something, ASIC comes in and investigates and determines that there hasn’t been a breach. These businesses are complex and it can take quite a long time to get to the bottom of whether something has actually gone wrong.”
Committee chairman Liberal MP David Coleman: “Is your position, subject to the number of days, that you are supportive of that (the recommendation) or not?”
Hartzer: “I am supportive of working on something that achieves that. I am not sure exactly what the form of that would be and I think that’s worth thinking about … the principle around reporting of a significant breach, I have no problem with.”
Cameron: “I am not asking you what you would be interested in talking to the government about, I am asking you: Do you object to this explicit, specific recommendation or not? I am not asking you for a sort of philosophical statement on executive accountability.”
Hartzer: “I am trying to be clear. We are supportive of the direction of what your saying about increasing transparency and talking about consequences for executives. I am not sure … that we would agree with exactly what is written in the recommendation but we are very happy to come up with something logistically that achieves what you are trying to achieve.”
Cameron: “Why would you not support that on each occasion when there is a significant occasion, when there is a breach, the relevant executive being named and the consequences for them?”
Hartzer: “I suppose I distinguish between the clarity of who is accountable, and we are very supportive of things that increase that transparency of who’s accountable for what. The point I suppose I am making is that when you get to the issue of consequences in some cases where something is massively significant you might take action at that time. In other cases, issues are not black and white.
Cameron: “Sure, that’s what you would say in a media release: We have determined there are no consequences for this executive.”
Hartzer: “We may not have decided that until the end of the year.”
Cameron: “We are not asking for a negotiation, we are asking for a response to a recommendation.”
Hartzer: “My response is that it is complicated and we have to work through some real examples to come up with something that is practical.”
Cameron: “You do not accept the recommendation in its current form. Is that a fair summary?”
Hartzer: “Yes, although we think something could be achieved to get to what you are trying to achieve which is increased transparency and we would support that.”
Later, just before the close of the hearing, Hartzer agreed in principle to the public naming of executives.
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