By Pattrick Smellie
Aug. 22 (BusinessDesk) - In business, as in life, it sometimes pays to ask whether you want to be right, or be happy.
The ANZ Bank appears to have decided it wants to be right.
Hence its staggering insistence today that it disagrees with the Financial Markets Authority's finding that shareholders should have been told about the bank's 2017 sale - below market value - of a multi-million dollar home lived in by its former CEO David Hisco to Hisco's wife.
"No specific related party disclosure was made in ANZ New Zealand's audited 2017 financial statements, as the sale of the property was not considered by ANZ New Zealand and its external auditor to be material to an understanding of ANZ New Zealand’s financial performance and financial position," the bank says.
This suggests one of two things.
Either, that the bank has learnt nothing from the ignominious departure of Hisco, whose misdemeanours were - like the sale of the house - not material to the bank's fortunes or commercial performance, as defined by a 'letter of the law' approach, but were definitely out of step with public expectations that banks should act with higher standards of integrity and probity than almost any other kind of private company.
Or, alternatively, the bank's board and senior managers are so in thrall to their legal advisors that they have lost the capacity to see a massive public relations blunder when it's staring them in the face.
Sure, the ANZ Bank in New Zealand has more than $132 billion in loans on its books. Hisco's misreported expenses and the matter of a single house sold below market value are barely a rounding error in the bank's financial statements, which is the legalistic approach ANZ has taken in this case.
But both incidents go straight to conduct and integrity. While they've always very much been material matters for the banking sector, they're even more so following both the Australian royal commission into bank misconduct and the subsequent inquiries in New Zealand into whether similar behaviour is present in the financial sector here.
For the ANZ to respond to today's FMA finding that it must restate its 2017 accounts to declare the related party property transaction by saying that it "disagrees" with that finding creates a new benchmark for the expression "tin-eared."
The snippy rejoinder that it will now "consider the impact on its internal financial reporting processes and continue to enhance those processes, where necessary" is a triumph of wagon-circling hubris.
Blind Freddie can understand why the FMA reached its conclusion. After the pummelling it's taken in recent weeks, it's astounding that ANZ does not.
Frankly, it would have been far better to keep that view to itself, take its lumps and move on.
Instead, it has continued to defend the indefensible, pursuing the lost cause of trying to be 'right.'
A little humility might have allowed it - and its frontline staff who bear the brunt of the bank's reputational decline - to be 'happy.'
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