By Peter V O'Brien
Thursday 5th February 2004 |
Text too small? |
The bank told the Australian Stock Exchange (ASX) on January 13 it had identified "irregular trading losses."
NAB's statement read: "The National has identified losses relating to unauthorised trading in foreign exchange options. Four employees have been suspended in relation to this trading.
"Immediate action has been taken to close out the losses and to minimise any further losses from being incurred. The losses involved are not expected to exceed $A180 million (pre-tax) and have occurred after the end of the completion of the National's accounts for the year ended September 30, 2003.
"No customers of the National have been affected by the trading activities which generated the issues."
There was no personal attribution for the statement, although recipients were told to contact "Robert Hadler, Group Corporate Affairs" for further information.
Mr Hadler is doubtless a hardworking NAB employee, who probably performs a worthwhile function for the bank, while, equally doubtless, receiving handsome remuneration for his efforts.
It is a worldwide phenomenon. The well-worn path of journalism/public relations/corporate or political spin-doctoring (or any other trek) has led to gamekeepers becoming poachers.
Thoughts of the next pay packet probably let the practitioners lie straight in bed.
NBR knew a bland reference to Mr Hadler had no hope of escaping an aggressive Australian media's demands on top management.
Someone from "group corporate affairs" would have organised the TV and radio interviews with NAB chief executive Frank Cicutto, who defended the bank's procedures.
Eventually, but slowly, it came out. Chairman Charles Allen wrote to shareholders on January 21 assuring them the matter was "confined to a small part of the bank's operations and would not affect overall business, nor our customers."
Fair enough, given the bank had net profit of $A3.9 billion for the year ended September 30, 2003. Mr Cicutto backtracked on January 27 when he said there was a pre-tax loss of $A360 million from the unauthorised trading.
Comments attributed to him had a curious element.
"The foreign currency traders exploited weakness in our internal procedures. We have identified those weaknesses and closed them.
"We are conducting a comprehensive investigation into the matter and we will take whatever other action is necessary."
Mr Allen, in the same announcement, was attributed as saying the board was closely "monitoring the investigations into the unauthorised foreign currency options trading and will ensure a comprehensive and transparent assessment.
"We will provide the fullest possible account of the outcomes of the internal investigations when they are completed towards the end of February and ensure full responsibility is identified for the unauthorised foreign currency options trading."
Australians can look after their own interests, although NAB has many New Zealand shareholders. But the currency trading saga was another example of attempts to dress unpalatable news in corporate speak.
References to "weakness" often appear in company announcements when things go wrong. There is rarely any public description of the weakness, nor an explanation of failure to detect them.
Assurances that a company will identify "full responsibility" for unauthorised actions are legitimate when they relate to matters such as theft.
They are hollow when linked to weak internal procedures. Company shareholders are not fools who lack the capacity to see through spin doctors' verbosity.
Full responsibility for weak procedures and for unauthorised exploitation of them eventually lies with senior management and, in some cases, with the board.
They are the people who are handsomely rewarded for the burden of having to take full responsibility for running the company. NAB chief executive Frank Cicutto resigned as a result of the foreign exchange trading debacle, but he and Mr Allen, like so many others in companies around the world, did nothing for their cause when their announcements failed to use plain language about foul-ups.
New Zealand has had many examples of spin doctor disease, historical and recent.
Everyone has a natural desire to present things in the best possible light.
Executives are no exception but shareholders are entitled to think senior management would learn from what happened in other companies.
Company shareholders are not fools who lack the capacity to see through spin-doctors' verbosity
No comments yet
Second St John withdrawal of labour takes effect tomorrow with further strikes likely
Sanford Appoints Independent Director
CRP ADVISES CLOSURE OF SHARE OFFER TO EXISTING INVESTOR
Devon Funds Morning Note - 14 August 2024
OCR 5.25% - Monetary restraint tempered as inflation converges on target
Consumers still need due diligence as new deposit takers emerge.
Woolworths strike: staff asked to dress up in Disney costumes for a week on their own dollar
Turners Invests in Quashed Online Insurance Platform
PGW Reports on Challenging Year
Arvida Announces Executive Team Changes