NO BONUSES FOR CEO IAN NAREV AND COMMBANK EXECS IN WAKE OF MONEY LAUNDERING SCANDAL
Written on the 8 August 2017 by Ben Hall
BONUSES for Commonwealth Bank CEO Ian Narev and senior executives have been cut to zero in the wake of the money laundering scandal that hit the bank last week.
As the Commonwealth Bank (ASX: CBA) moves into overdrive to repair its reputational damage, company chair Catherine Livingstone said the board had full confidence in Narev.
However, short-term incentives for the CEO and group executives will be slashed to nothing to demonstrate "collective accountability" for what the company is calling an "IT error".
The federal government's financial crime agency, AUSTRAC, launched proceedings in the Federal Court alleging CommBank engaged in 'serious' and systemic breaches of anti-money laundering and terrorism financing laws.
It's alleged the bank breached the law for a period of three years on more than 53,000 occasions and relates to its network of so-called 'intelligent' automated cash deposit machines (IDMs).
The IDMs used by the Commonwealth Bank accept deposits both by cash and by cheque and the transactions had a total value of $624million.
"The board recognises heightened public interest in executive remuneration, particularly having regard to the civil penalty proceedings initiated last week by the Australian Transaction Reports and Analysis Centre (AUSTRAC)," CBA chairman Catherine Livingstone said in a statement to the Australian Securities Exchange.
"In reaching this conclusion the overriding consideration of the board was the collective accountability of senior management for the overall reputation of the group."
Narev was paid $1.43 million in short-term cash bonuses in the previous financial year, with CBA handing out a total $8 million to the CEO and 11 executives.
The company's full year results for the 12 months to June 30 are due for release on Wednesday, while the remuneration packages will be included in next week's annual report.
The bank says non-executive director fees will also be cut, by 20 per cent, in the current financial year.
In the fallout from the scandal, CBA released a statement on Monday saying a coding error, which occurred following a software update to its IDMs in late 2012, was responsible for the required Threshold Transaction Reports (TTRs) not being generated.
CBA said the fault was fixed within a month of it being discovered in 2015.
Business News Australia
Author: Ben Hall