Ross Greenwood speaks to AFR columnist James Thomson after NAB boss Andrew Thorburn and chairman Ken Henry have both stood down amid growing pressure to step aside following stinging criticism from Commissioner Kenneth Hayne.
Ross Greenwood: Good evening and welcome to money news here on Thursday, February, 7, 2019. The first senior scalps from the Hayne’s Royal Commission after the report was handed down just three days ago have been claimed in the shape of the Chief Executive Officer of the National Australia Bank, Andrew Thorburn, who will leave the bank in three weeks time and the chairman, Dr. Ken Henry, who will leave the company as soon as a replacement for Andrew Thorburn is found.
In the meantime, what will happen is that Phil Chronican, who is a director of NAB and also a former Chief Financial Officer at Westpac, former head of the retail bank at the A&Z will now take over from Andrew Thorburn until a new Chief Executive is found there. Now, I just want to take you back a little bit because it was only two days ago after the sharp criticism from the Hayne report.
Now, I’ll just read a part of it for you. “Having heard from both the Chief Executive, Mr. Thorburn and the Chair, Dr. Henry, I’m not as confident as I would wish to be that the lessons of the past have been learned. More particularly, I was not persuaded that NAB is willing to accept the necessary responsibility for deciding for itself what is the right thing to do and then having it staff act accordingly.
I thought of telling that Dr. Henry seemed unwilling to accept any criticism of how the board had dealt with some issues. I thought of telling Mr. Thorburn treated all issues of fees for no service as nothing more than carelessness combined with system deficiency. When Kenneth Hayne, elsewhere in the report, identified that information as having allowed the bank to deal illegally with people’s money.
As a result, they both go. However, as I said, I interviewed Andrew Thorburn here on this program just two days ago. Here’s just a little of that interview.
Do you feel any pressure to resign from the National Australia Bank after these recommendations came down from the Hayne Royal Commission?
Andrew Thorburn: Well, the recommendations overall were very comprehensive, Ross, 76 recommendations across the board. Their sound and they’ll be good for our profession. I feel more determined than ever to keep leading the change that I’ve been leading in the bank. We’ve got a lot more to do and I’m more committed, more determined than ever to be the leader of the takes that forward.
Ross Greenwood: You’re committed, determined. Did you offer your resignations to the board this morning?
Andrew Thorburn: No, I did not.
Ross Greenwood: Did the board at least talk about your future at the bank?
Andrew Thorburn: No, they did not.
Ross Greenwood: In that regard, it’s business as usual for the National Australia Bank and yet the Hayne Royal Commission indicates that it believes the National Australia Bank showed in particular when it came to fees for no service a disregard of the law. Would you agree with that assessment?
Andrew Thorburn: Well, the laws view expressed by the Commissioner that the gap between the culture that we say is important to us and we want and the culture we have, there is a gap. I actually agree with that statement, Ross. I can see every day that we’re not living up to the standard we want, we’re getting better. We’re closing that gap, but we’re not there yet.
Ross Greenwood: That was Andrew Thorburn two days ago. What happened in that interim period? Well, very shortly we’ll be speaking with representatives of shareholder groups that give advice to the major shareholders of these bank boards. Do bear in mind that just in December, 80% of shareholders voted against the National Australia Bank’s remuneration report. They’ve done the same thing this year, it could very well have been that the whole board had to spill.
One man who has been reporting on this for a long time, the Chanticleer columnist with the Australian Financial Review, James Thomson, joins me now. Many thanks for your time, James.
Interview with: James Thomson, AFR, Chanticleer
James Thomson: Hey Ross. How are you?
Ross Greenwood: It seemed as though they were really fighting an upward battle here. Didn’t it? Because after those damning criticisms you had then Scott Morrison and also Bill Shorten effectively telling Thorburn and Henry that they had to do the right thing and that they had to reflect upon their positions?
James Thomson: Yes, you really called it right. When we spoke on Monday night after the Commission that it did feel like it was a matter of time. I must admit, I thought Thorburn would hang on for a bit longer and probably make a slightly more graceful exit, but the pressure has just been too much. There’s a media conference maybe a call going on as we speak, a very sad Andrew Thorburn has revealed on that that the board asked him to resign today. He said he has no bitterness about that, but he is very sad about leaving the company and full credit to him and Ken Henry for fronting up. It was a much more somber mood than perhaps the defiant we saw on Tuesday.
Ross Greenwood: Well, let’s just pick up a little bit of that media call. It’s taking place now. He’s just a few minutes into that media call and a little of what’s taking place.
Andrew Thorburn: This week obviously, it’s been extraordinary with the Royal Commission report coming out in, leaving aside the 76 recommendations, which we believe a very sensible and doable which is important. There was obviously reference to NAB, to myself, to Ken, and it’s been an extraordinarily challenging and difficult few days for us, for our company, and for our people.
In speaking with Ken, there’s been a desire that there should be some change. I understand that. I was up for the ongoing commitment. I made that very clear, but I recognize the board’s desire for change and I offered to step down to help that process, the board accepted that. I just want to be clear that I accept that. I don’t have business about it. Today mainly I’ve been sad, but I don’t have bitterness. I accept that the board has the right to make that decision and they make it in the best interest of company.
I’m mainly sad today because I’ll miss the people I work with, the relationships, and friendships, the impact you can have on customers and helping people grow businesses, start businesses, buy homes, and the impact we make on a country.
I feel I’ve made a difference in this bank. I’m proud of what I’ve done. It’s not been perfect, but like every leader if you take on change in a big company, there’s always going to be some mistakes made and I except the ones that have been made on my watch. I am so grateful for the opportunities I’ve given. Whilst today is primarily a sad day, I accept it’s an important one. I accept the decision that’s been made and I look forward to this company going on and being greater in the future. I’ll hand to Ken Henry.
Ken Henry: Thank you, Andrew. Ken Henry here. This is indeed a sad day for the company, but it is also as Andrew said a very important day for a company. I’ve been on the NAB board for seven years. I’ve been its chair for three years. It’s been an honor. It’s been a privilege. I’ve had to reflect in recent times overwhelmingly on our inability as a company to meet community expectations and customer expectations in the manner that we would aspire to.
Andrew and I are deeply sorry for our inability to do that. That’s principally what has driven the decisions that have been taken today. I want to say today I have counted an enormous privilege and pleasure to work so closely with somebody of Andrew Thorburn’s character and integrity. I have nothing but the utmost respect for him including for the way in which he has handled the events of today.
Ross Greenwood: It’s oddly enough James Thomson, Chanticleer columnist with the financial review. It was less than two years ago that you wrote about the relationship between these two men, Ken Henry had said at a speech about Andrew Thorburn, “One day, I’ll have to throw Andrew Thorburn under a bus.” Well, today was a day he threw him under a bus.
James Thomson: Well, yes, but I doubt, Ross, whether Ken Henry would have thought that he’d be going under the bus too. That’s probably what makes this so extraordinary. Company strives to have orderly succession, even in pretty drastic times that you don’t often see the chair and the CEO go at the same time. We’ve said it twice now, first with A&P and now with NAB. This idea that the Royal Commission hasn’t claimed any scalps, there’s a couple of our biggest blue chip companies are certainly feeling the pain at the executive level.
Ross Greenwood: Well, Andrew Thorburn has been in the banking industry for more than 30 years. Of course, he was taking long service leave. He was planning, but he then has pulled back from that as this crisis basically engulf company. His pay last year trimmed by $2.1 million. He still made $4.3 million, but there were other incentives and shares that he’s sitting on that are worth quite a few dollars. He’s not going out without a bomb in his pocket, is he?
James Thomson: No, no. That’s probably commensurate with the size of the job he’s got. I’ll leave for others to say how much is too much in that area. I think for Thorburn’s done a reasonable job at NAB. Probably, we won’t be out a judge has successfully would have been or how successful his turnaround strategy would have been for a few more years. It’s about a 12 months into a 36 month journey.
Obviously, the Royal Commission just changed the game for so many of these guys. The relatively not easy, but that stable world they knew has been kept upside down and yes, there’s some survivors and clearly others are out the door.
Ross Greenwood: There’s no doubt will that that all today. It’s the chairman and the chief executive of the National Australia Bank, James Thompson. Chanticleer columnist with The Australian Financial Review. We’ll read your comments tomorrow morning. Thanks so much for that.
James Thomson: Thanks Ross