NAB's WMD Debate Overtaken by Events: A Governance Crisis Unfolds

Strategic Insights -

National Australia Bank (NAB) directors are at odds over the independence of an investigation into a $360 million currency trading loss, with some board members facing calls to resign due to concerns over improper influence. The controversy has escalated into a governance crisis, with director Cathy Walter proposing that shareholders vote to remove her and her boardroom opponents.

Key Takeaways:

  • The investigation into NAB's $360 million currency trading loss was conducted by PricewaterhouseCoopers (PwC), but its independence was compromised due to business links between the bank and PwC.
  • The board's risk committee, chaired by Graham Kraehe, should not have had oversight of the investigation, according to some board members.
  • Blake Dawson Waldron's report, which was tasked with ensuring the probe's independence, found no evidence of wrongdoing but only reported on what it saw.
  • Director Cathy Walter has proposed that shareholders vote to remove her and her boardroom opponents, citing poor governance and a desire to take revenge on the entire board.
  • The board will consider legal advice on the validity of Walter's proposals, which some experts believe may be unconstitutional.
  • The controversy has the potential to destabilize the board and lead to the resignation of several directors if Walter's proposals are put to a vote.

Statistics:

  • $360 million: the amount of the currency trading loss being investigated.
  • 1 year: the time since the debate over WMDs in Iraq was overtaken by the invasion of that country.
  • 7: the number of directors who may be facing calls to resign due to the controversy.
  • 1: the number of directors who have proposed that shareholders vote to remove her and her boardroom opponents.
  • 1: the number of reports by Blake Dawson Waldron on the independence of the investigation, which assert that PwC's conflicts were managed correctly and there was no wrongdoing.

Sources:

  • "NAB's Cathy Walter battles for board seat" by Malcolm Maiden (The Australian, 2006-09-19)
  • "Walter eyes boardwalk with query" (The Australian, 2006-09-20)
  • "NAB's Walter moves to have board resolutions voted on by shareholders" (The Australian, 2006-09-21)
  • "BDW report on currency probe released" (The Australian, 2006-09-22)