Addressing a senate hearing in Sydney yesterday – chaired by Labor Senator Sam Dastyari and joined by Liberal Senator Sean Edwards and Nationals Senator John Williams – Mr Kelaher reiterated there was no systemic failure at the $2.6 billion financial services giant that required it to inform ASIC.
“I am confident that I can confirm for you and the broader community that the company has an extremely strong compliance culture and claims of widespread wrongdoing have no basis in fact,” Mr Kelaher said.
“The issues raised were historic and have all been identified internally and are certainly not indicative of any systemic failure.”
Yesterday’s hearing follows allegations of front-running and insider trading at IOOF sparked by Fairfax Media news reports.
Mr Kelaher said the PwC report’s findings last year were “nil” and “there was no evidence of front-running detected”.
ASIC commissioner Greg Tanzer, who was also questioned at yesterday’s hearing, provided a defence for IOOF. He said while companies are strongly encouraged to report suspicions of misconduct to ASIC, it is not always considered a breach if they do not
“It depends on particular circumstances,” Mr Tanzer said.
The senators, however, raised concerns about how involved Mr Kelaher was during PwC’s investigation.
When questioned by Senator Dastyari, Mr Kelaher admitted he could not remember when he was first told about front-running allegations.
“I’m just saying I can’t recall specifically,” he said. “I’d have to check my recollection, but I take the matter seriously.”
Despite this, Mr Kelaher has now agreed to turn over the report by PwC to the committee.
Senator Dastyari suggested the committee call upon PwC officials to talk about the findings.
“It’s hard for me to have faith in a report being produced on the basis of claims by a whistleblower and the whistleblower hasn’t even been spoken to in the production of the report,” Senator Dastyari said.
“The whole thing reeks of a whitewash.”
IOOF recently engaged PwC again to carry out another independent review of its operations amid claims of misconduct by some of IOOF’s staff and to review the breach reporting procedures within its research division.
The senate committee also informed Mr Kelaher that it had received a 29-page transcript of a recorded conversation between the whistleblower and IOOF head of investigations Rob Urwin.
Senator Dastyari said to describe the conversation as “explosive” would be an understatement.
“It really does call into question your culture, your firm, how it conducts business and how it deals with whistleblowers. That would certainly be a matter for another day,” he said.
Yesterday’s hearing is just the beginning of a “lengthy process” with several more hearings to come, Senator Dastyari said.
IOOF head of advice research Peter Hilton, the man at the centre of some the key allegations, was unable to attend yesterday’s hearing for “good reason”, but will be expected to appear at another hearing at a later date.
Is it a coincidence that the smear campaign against professional financial advice is being led by a media employee, a union puppet, and a property spiv?
Given that they all stand to profit from a consumer switch away from professional advice to advertising/PR driven investment decisions, I think not.
Gee. Senator Dastyari is a regular firecracker. I have seen him erupt on Sky News. Loves his position of power has no respect for corporate heads. Needs to pull his head in and conduct an enquiry not as a Spanish inquisitor but as a level headed person. But I doubt that will ever happen.
He refers to a ‘whistle blower’ who had his position terminated because of poor character. Thank you Adele Ferguson. What a costly exercise in resources and time you have created due to your vexatious reporting. I wonder what you will be talking about at the Industry Super Conference?
My favorite part of the enquiry was when the senator accused IOOF of increasing its insurance premiums by 85%.
The senators didn’t know, and struggled to understand, that TAL and IOOF are two completely different companies and provide completely different products.
It’s amazing that these senators are allowed to head this enquiry, but don’t know the difference between an insurance company and an investment company, and are not capable of even looking it up themselves – they have to be informed that TAL and IOOF are different and separate as part of the ‘hard-hitting’ hearing.
“It’s hard for me to have faith in a report being produced on the basis of claims by a whistleblower and the whistleblower hasn’t even been spoken to in the production of the report,” Senator Dastyari said.
“The whole thing reeks of a whitewash”
1. The PWC report was investigating the front running accusations. That involves trades. There is no need to speak to the accuser, just investigate the trades and timings of them. Its a forensic based case, not an opinion based one.
Fair Work investigated the behavioural issues and ruled against the ex employee ‘whistleblower’ – who was confirmed to have stolen a lot of files and security had to be involved to ensure that no physical assaults occurred.
2. Mr Kelaher confirmed that the whistleblower refused several times to speak to them. How can they speak to him when he refuses to speak to them?!?!
“The senators, however, raised concerns about how involved Mr Kelaher was during PwC’s investigation.”
In an independent investigation, Mr Kelaher should NOT be actively involved in the investigation. It wouldn’t be independent if he was doing the investigation and determining the outcome. If he had of been actively involved, the senators would have accused him of ensuring the investigation was not independent. He can’t win either way.
the issues were “historic”, “not systemic”, dealt with “internally”.
How many times have we seen this sort of cover up, from highly paid management who don’t want a black mark against them on their watch?
How about the suspension of a license ASIC, or a banning order on management? You can’t keep crying “rogue” time after time and get away with it. Burn insto! Burn!