The Royal Commission's two defining moments
In his final summary after an exhausting 68 days of public hearings, 134 witnesses and 6,500 exhibits, Commissioner Kenneth Hayne identified one phrase, six words long - "Can I show you a document?" - that had entered the vocabulary over the course of the Commission. It was usually followed by Rowena Orr or Michael Hodge demonstrating an embarrassing mistake.
I consider the two most impactful words of the Commission were dissembling and criminal.
It was Michael Hodge who accused CBA's Marianne Perkovic of dissembling. In Marianne's defence, I thought she had a right to provide context, as most answers are not black or white. Dissembling means 'to conceal or disguise one's true beliefs'. Kenneth Hayne issued a warning:
"We will get along much more quickly and efficiently and if I may put it quite bluntly, it will be safer for you, if you attend to counsel's questions. If you need to stop and think about your answer, take your time."
Safer for you! What did he mean by that serious threat?
Michael Hodge said: "Is the reason why you are dissembling in the way you are dissembling because you are trying to pre-emptively explain why it took more than two years to notify ASIC of this breach?"
Kenneth Hayne later added: "Ms Perkovic, I do not regard that as answering counsel's question. Please ask the question again. I want you to listen to it and I want you to answer it as directly as you can."
Little wonder Marianne completed most of her subsequent evidence with one-word answers. This was in April 2018, near the start of the Commission, and it set the rules. It was a warning to everyone, and the QCs hired by banks stepped up their witness training intensity.
Giving evidence was probably the most intimidating experience in the careers of most of the witnesses. Put this to your 'inverted bucket list' of things you never want to face ...
Similarly, a collective shiver hit witnesses when Hayne asked Nicole Smith, the NULIS/MLC trustee, if she had ever contemplated that:
" ... taking money to which there was no entitlement raised a question of criminal law?"
It was one thing to give evidence that might result in a corporate fine, but Hayne was suggesting financial services staff might go to jail. The Royal Commission had become dangerous.
Garry Mackrell's opinion on what went wrong at CBA has already received almost 10,000 views, and it's well worth reading if you missed it.
Many important articles this week
Would you change your portfolio if you could take a genuinely long-term view and ignore the daily market noise? Chris Cuffe explains how managing a charitable portfolio gives him freedom to look to the future and generate returns to build the money for charitable giving.
Phil Graham shows how balanced fund performance comparisons are flawed by using short time periods and different asset allocations. Given the Productivity Commission recommendation to push default superannuation contributions into a 'best in show' shortlist of funds, these comparisons may have major policy and business implications.
Dr Rodney Brown lectures on SMSFs and financial planning, and he describes a technique for SMSF trustees to continue to utilise their franking credits under Labor's proposal. It hangs on the entire SMSF being treated as a single tax entity, and the ability of some trustees to emulate what the large funds can do in co-mingling pension and accumulation money.
The latest report on commercial property in Asia Pac has just issued, and Adrian Harringtonchecks how Australian cities are faring. In another sector, John O'Brien says we tend to overlook the enduring quality in consumer staples, worth a look in this highly volatile market.
Then Phillip Richards reminds us of the value of appointing an enduring Power of Attorney, perhaps something to fix up over the coming holidays, and Aaron Binstead warns of the impact of sequencing risk on retirement outcomes.
Two big news items in the last week - the students going on strike to protest against inaction on climate change, and David Attenborough telling leaders at a UN summit that "we are facing a man-made disaster of a global scale" - make Colonial First State Global Asset Management's White Paper on climate change highly topical.
Welcome to two new sponsors for 2019, OpenInvest and Regal Funds Management.
Graham Hand, Managing Editor
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