ANZ 'should have disclosed' sale of house to Hisco's wife

Thursday, 22 August 2019

ANZ purchased a $7.5m home for former CEO David Hisco, which it then sold to his wife for a loss.

ANZ should have disclosed the sale of a house to its former chief executive's wife as a related-party transaction, the Financial Markets Authority says.

In June, Stuff revealed the bank paid $7.55 million for the St Heliers house in early 2011 for Hisco and his family to live in.

It was on-sold to Hisco's wife, Deborah Walsh, for $6.9m in July 2017. The property is estimated to have been worth $11m at the time.

The deal should have been noted as a related-party transaction in the bank's 2017 financial statements, the Financial Markets Authority (FMA) said.

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A company owned by ANZ NZ purchased this $7.5m St Heliers home for former chief executive David Hisco. It then sold the home to his wife at a loss.

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The FMA said its determination was primarily based on the nature of the transaction, which it said made the disclosure material for financial reporting purposes. It announced it would probe the deal in June.

It will require the bank to issue a corrective statement relating to its 2017 financial statements, the regulator said.

The FMA said it had not assessed the appropriateness of the sale price.

The luxurious 700 square metre ocean-view home, reached by a private driveway that runs off the main St Heliers Bay road, includes a heated swimming pool, tennis court and six bedrooms.

David Hisco's 'non monetary benefits' averaged $441,116 a year, for a total of $3.35 million across his eight full financial years in ANZ New Zealand's top job.

Hisco left the bank in June after an internal review of his expenses. Chairman Sir John Key said Hisco's characterisation of his expenses was of concern, including those for chauffeur-driven cars and wine storage.

In a statement, ANZ said the sale price to Walsh was determined following a process to ascertain the value of the property with reference to external, independent valuations.

The luxurious 700 square metre ocean-view home, reached by a private driveway that runs off the main St Heliers Bay road, includes a heated swimming pool, tennis court and six bedrooms.

It said the application of accounting standards for related-party disclosures required judgments to be made on what information is 'quantitatively or qualitatively material'.

'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.'

It said it disagreed with the FMA's finding as it didn't consider the transaction to be material.

The bank said it took financial reporting obligations seriously, and acknowledged the FMA had reached a different conclusion to that reached by ANZ and its external auditor.

The FMA has informed the Reserve Bank of its determination. The Australian Securities and Investments Commission, as the primary regulator of ANZ's parent company has also been informed, it said.

The FMA said it had engaged with the Chartered Accountants Australia and New Zealand as the front line regulator for auditors, for it to consider whether to assess the auditor's procedures in determining the disclosures in the audited 2017 financial statements.

It expected ANZ to review its internal financial reporting.