Putting the pressure on NAB in 2002

The Wilderness Society must have been absolutely delighted with their vote from yesterday's NAB AGM where they proposed a change to the bank's constitution to prevent it from investing in companies which clear fell old growth forests.

After a similar resolution was supported by an impressive 91.4 million shares worth $3 billion at the Commonwealth Bank AGM two months ago, the NAB resolution did even better with 125 million of the proxies in favour and 428 million against.

NAB started their AGM at 2.30pm and it finished at 6pm precisely. They went straight for a poll and as at midnight had still not revealed the result of the vote on their website as promised.

CEO Frank Cicutto really isn't a very polished public performer.

We particularly liked the way he made special mention of the 18 Indigenous and 24 disabled people the bank hired last year. Meanwhile, he continues to sack thousands of employees and rip-off hundreds of thousands of customers.

He was very curt with two later questions I raised.

On the question of Homeside warranties, he made the fanciful claim they were the same as in any sale. Like hell. NAB has given extensive and very detailed warranties and indemnities that stretch out for years, yet they refuse to give their shareholders even the vaguest of details in the annual report.

Cicutto is joking if he claims this is just another company sale. Homeside cost NAB shareholders $4 billion and chairman Charlie made the following point:

"We acted swiftly and openly to correct those problems and we completed the sale of HomeSide in a market of unprecedented interest rate volatility and a market where no equivalent mortgage portfolio has been sold."

Yeah, just another sale Frank. What strings were attached to the Washington Mutual sale and what risks remain.

Frank also rejected suggestions the disastrous ISI project with Deloittes was in an off balance sheet structure, claiming all was revealed at the full year profit result.

Chairman Charlie Allen revealed they had spent $294 million on ISI so far and it was only operating in New Zealand and parts of the UK. But he did say it was progressing well.

Crikey intern Kate Jackson gives her take on the 2002 NAB AGM

The Hyatt in Melbourne was the scene of this year's National Australia Bank AGM. The erratic Melbourne weather had reduced plummy Chairman Charles Allen to his shirtsleeves. But he didn't miss a beat. Using teleprompters and vigorous hand gestures he gave the audience a rousing pep talk to assure them of the safety of their shares.

He also raised the issue of a new package for the MD and spent some time justifying the board's position, before moving on to the self-congratulatory area of the National's social commitments.

Allen reeled off a litany of charitable organisations and community-minded endeavours in which the National was involved. These included the Community Forum headed by the Reverend Tim Costello, $1 million to the Australian appeal for Bali victims and the National's lawyers who volunteer their time to provide legal advice to the Homeless Persons Legal Clinic in Melbourne. He finished up with a good dose of corporate governance.

Frank Cicutto told the shareholders "a compelling story - The National Story - a story of solid growth in the past and in the future for you, our shareholders." Aside from describing Homeside as a "short term setback" the address was not quite as compelling as he suggested. But if you have the time you can check it out for yourself at the link below.

During question time Crikey's Stephen Mayne asked the Chairman the following questions:

"CLERP 9 has flagged a reform which would see external service providers wait for two years before taking up an executive position or directorship with the client company. Does the board plan to adopt this policy and will it be applied retrospectively to Mr Chris Lewis, who went from heading up a KPMG due diligence committee that recommended buying Homeside in 1998, to signing the accounts as KPMG's NAB audit partner in 1999 and 2000, to an executive position with the bank as global head of risk management in 2001. Does the board see any perception problems with this sequence of events in light of the $4 billion lost in Homeside which was not flagged by NAB's auditors?"

Allen's responses were not quite as slick as his earlier presentation, however, he managed to come up with some safe responses. "We will wait to see when CLERP 9 comes in," said Allen and in relation to Chris Lewis, Allen assured the audience that Mr Lewis' appointment took place some time before the Homeside debacle.

Stephen followed up with this question:

"A question for both the signing auditor from KPMG and Catherine Walter, chairman of the NAB audit committee. I understand that Blake Dawson Waldron partner Anne Dalton was the probity officer advising the audit committee on the tender process this year that saw KPMG reappointed as the company's auditor for five years with a two year option. Many people were disappointed that KPMG won the tender in light of the $4 billion Homeside debacle, which it failed to warn about. I understand that sensitive bid documents from rival audit firms were inadvertently sent to KPMG during the tender process and that the probity officer investigated this incident. What was the nature and the outcome of this investigation by Ms Dalton and are you confident there was no conflict of interest or process flaw which has left KPMG's reappointment compromised?"

Allen replied that he was quite comfortable that the tender process was appropriately managed, and maintained that it was a clear and open process. He then asked Catherine Walter to comment, who said in her deadpan auditor's style that the process was entirely satisfactory.

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