Why Is ANZ Slaughtering Its CEO?

By now, you’ve probably heard all about the departing ANZ New Zealand chief executive, David Hisco.

Ol’ Hisco recently lost his sweet job at the top of ANZ NZ…where he was making $3 million a year (one of the highest paying jobs in the country).

His crime?

He used the company chauffer for personal trips…and paid for wine storage in Australia by expensing it to the company.

According to the Herald, the costs run into the ‘tens of thousands of dollars’.

As a result, he’ll leave the company pronto and must ‘forfeit unvested equity worth around $6.4 million’. 

Ouch.

And to make matters worse for Hisco, ANZ and the mainstream press vultures have begun picking his corpse clean before his notice period is up.

Legal action predicted after top bank boss David Hisco departs ANZ

The New Zealand Herald

ANZ chief forfeits $6.4m over spending on cars and wine

The National Business Review

Duncan Garner: ANZ expenses debacle warrants independent investigation

Newshub

Union: ANZ staff who made Hisco’s mistake would have been instantly dismissed

Stuff

[It was] a day of shock and disappointment for more than 12,000 staff.

—Acting ANZ NZ CEO Antonia Watson

Let’s be honest: things aren’t lining up here.

For one, spending ‘tens of thousands of dollars’ is the millionaire equivalent to making personal copies on the office Xerox. Hisco could probably reimburse the company for those expenses with the loose change found between his couch cushions.

It’s ludicrous to suggest that this ultra-wealthy, ANZ-lifer would risk his reputation over chump change…especially because he was on the cusp of retiring.

That doesn’t make any sense.

Hisco is far too wealthy to be risking his name and career over things that cost less than what he makes in a single day. It’s not logical. [openx slug=inpost]

Secondly, there’s the issue of permission.

I tend to believe Hisco’s side of the story…where he claims that he had verbal approval for those expenses.

As ANZ chair Sir John Key said himself, ‘David is adamant he had authority for the expenditure that was undertaken. If he had authority, it was oral in nature, so it’s difficult to establish one way or another.

In other words, it’s plausible that Hisco did have permission to expense those expenditures to the company…it’s just not in writing.

If ANZ can’t properly prove that Hisco was the rogue big-spender that they’re making him out to be, why is ANZ going through with this very public humiliation?

I have a theory…which I’ll reveal in a second. Get your tinfoil hats ready…

But before I do, there’s one more thing that rubs me the wrong way…besides the trivial sums spent or the likelihood of expense approval.

The timing.

This ‘scandal’ just so happens to come right after ANZ was cast before the public’s eye for all sorts of transgressions:

  • ANZ has to pay AU$50 million in relation to the rigged Bank Bill Swap Market…and cartel-like collusion with other banks to keep it going.
  • The Australian banking royal commission exposes ANZ for unethical business practices and pushes them to compensate the two million fees-for-no-service victims.
  • The bank faces scrutiny for potential human rights violations in Cambodia after funding a sugar farm that displaced hundreds of uncompensated farmers.
  • The discovery that senior executives at ANZ have tripled their pay through a fat-cat remuneration scheme.
  • The Reserve Bank of New Zealand censured the bank and revoked their accreditation based on persistent failures to meet the regulator’s capital requirements.

But…oh no! David Hisco spent a few thousand dollars (potentially with permission) for things that could be deemed as personal.

Now it’s officially ‘a day of shock and disappointment’. Forget that other stuff. This is the real story…right?

Tinfoil-hat time

What if this whole Hisco ‘debacle’ is really a distraction?

Because if we add it all up, this whole thing pales in comparison to the other scandals rocking ANZ’s recent past.

And, honestly, a few mischarges on the company card (albeit extravagant to the layman observer) hardly warrant this public execution. At best, Hisco gets pulled into a meeting with the board. They tell him to reimburse the company and not to do it again. He shrugs and settles up with the petty cash in his wallet.

Done and dusted.

Plus, if Hisco was really as nefarious as everyone’s making him out to be, why is ANZ going to dish him out $2 million as a departing notice payment?

Wouldn’t they take him to court? Have him properly charged for embezzling or whatever you want to call it?

But if they don’t have a solid enough case to take him to court, why not handle this in-house? Why not let him leave without the humiliation? He was poised to retire any day…and was already on leave for health reasons.

A painless solution on a silver platter…but Key and board opted for the guillotine instead.

None of it adds up.

Perhaps there are issues regarding termination here that I, as an American, don’t properly appreciate. That this public ousting was a cleaner solution than the alternatives…thanks to NZ’s hefty termination protections. Could be…but I doubt it.

The sheer publicity of it, the emphatic condemnation, the odd timing…

Coincidence?

Or convenient red herring?

I reckon we’ll find out soon enough…

Regards,

Taylor Kee
Editor, Money Morning New Zealand

PS: On a completely different note, Simon and I would like to invite you to connect with us on LinkedIn (if that’s your thing). Feel free to shoot a connection invite to either Simon or me. We’d both appreciate the opportunity to connect!


Taylor Kee is the lead Editor at Money Morning NZ. With a background in the financial publishing industry, Taylor knows how simple, yet difficult investing can be. He has worked with a range of assets classes, and with some of the world’s most thought-provoking financial writers, including Bill Bonner, Dan Denning, Doug Casey, and more. But he’s found his niche in macroeconomics and the excitement of technology investments. And Taylor is looking forward to the opportunity to share his thoughts on where New Zealand’s economy is going next and the opportunities it presents. Taylor shares these ideas with Money Morning NZ readers each day.


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