Sir John Key explains the expenses scandal that cost ANZ's Hisco $6.4 million
Monday, 17 June 2019
David Hisco was not there to speak for himself at the press conference to explain his departure from the chief executive's seat at ANZ New Zealand, so chairman Sir John Key spoke for him.
On at least four occasions, Key spoke for Hisco on the internal expenses investigation that cost him his job, and around $6.4 million in ANZ equity, including saying Hisco would accept that he had not met the high standards he set for ANZ bank staff.
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Why has the best-paid chief executive in the country stepped down?
Key said an internal investigation begun three months ago in Australia by group chief executive Shayne Elliot in Australia covering multiple senior executives had revealed 'anomalies', which the ANZ New Zealand board were told about three months ago.
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'This related to the long-term personal use of corporate chauffeur cars, as well as charging the company for storage without proper disclosures,' Key said.
The items stored were cars, and wine, Key said. The cars in New Zealand, the wine in Australia.
'The amounts in dispute are in the tens of thousands of dollars,' Key said.
'We have a sense of the overall number.'
Asked whether it was closer to $10,000 or $99,000, Key said: 'It's somewhere in the middle would be more accurate.'
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The expenses were incurred over about nine years and 'because they were mis-characterised, they were difficult to pick up', Key said.
Has Hisco paid the money back?
'We are not requiring him to pay the money back,' Key said.
'David is adamant that he had authority for the expenditure that he has undertaken. If he did have that authority it is oral in nature. It's difficult to establish one way or the other.'
This issue was about how the expenses were characterised by Hisco, Key said.
'It looked like a business expense when in fact it was a personal expense.'
Are Police involved?
No.
'We are not contesting the actual expenditure of the money. In other words David is adamant he had authority. We accept he had authority,' Key said.
What was at the heart of the issue was how the expenses were reported to the bank, he said.
'It was not about the money itself.
'We have to be able to have trust in what people are recognising in our records. And in that regard David would say he did not meet the standards he set for the rest of our staff and for himself.'
Was Hisco fired?
'The way we characterise it is we parted company, and it was mutual,' Key said.
'From the moment we had this discussion with him, David was very firmly of the view that we should part company, and that was the view the New Zealand board had.'
'It was a pretty simple decision on both sides that we should part company.
'We are disappointed David is leaving ANZ under such circumstances.'
Was this pay-back for the Reserve Bank censure?
Key denied there was any link between the expense investigation, and the embarrassment the bank and board suffered when it got a dressing down from the Reserve Bank in mid-May over failings in the way it managed its capital adequacy.
'No, they are very separate issues,' Key insisted.
But 'David would also say, if he was here today that he would take some responsibility for that as the CEO of the organisation,' he said.
Is Hisco really ill?
At the end of May Hisco went on long-term sick leave.
Key denied the Reserve Bank censure, or the expense investigation, were the real reason for Hisco going on leave.
'He genuinely had some health issues. They sit alongside this issue, if you like,' he said.
'The things were pretty similar in terms of timing.
'I have no doubt that the stress of this situation added to this, but he does have some health issues,' Key said.
What has this cost Hisco?
'David has forfeited his rights to around $6.4 million in equity,' but he would be paid a year's salary, Key said.
'It's about $2m.
'His departure demonstrates that when people don't do the right thing, we hold them to account no matter the status or position in the organisation,' Key said.