||Issue No. 175||24 April 2003|
Interview: Picking Up The Peaces
Unions: The Royal Con
National Focus: Around the Grounds
Economics: The Secret War on Trade
International: United Front
History: Confessions of a Badge Collector
Politics: Stalin’s Legacy
Review: Such Was Not Ned’s Life
Poetry: Osama's Top Recruiter
Satire: Woolworths CEO Denied Bonus After Company Posts Profit
The Locker Room
Success Breeds Contempt
Join the Dots
Galoot in a Suit
The smirkin' merkin, Peter Costello tried to avoid being crucified over Easter by burying the HIH Royal Commission report on the eve of the holidays, but the largest corporate collapse in Australia's history has the Liberal treasurer's fingerprints all over it.
It comes as no surprise that Costello would wish Neville Owen's findings would go away as this wasn't the Federal Government's favourite Royal Commission over the last summer. That honour went to the Cole fiasco, but the names headed for the high-jump out of this one are all mates of the Liberal party establishment.
It was Costello who approved the takeover of FAI by HIH. FAI had a dubious history. As far back as the seventies FAI struggled to get approval to operate as an insurance company, until John Wisnton Howard became Federal Treasurer and FAI magically gained approval in 1978 - against the advice of the insurance industry regulator of the time. This, of course, had nothing to do with the fact that the then FAI boss Larry Adler was a major donor to the Liberal Party's 500 club.
Fast forward to 1996 and Costello, as the Federal Treasurer institutes a major "reform" of regulation of the financial sector. This is how the Australian prudential regulatory Authority (APRA) was born.
APRA is Costello's baby. In 1998 Mr Costello gave a speech to the 10th International Conference of Bank Supervisors where he said in relation to APRA: "They have boards of directors or commissioners responsible for operation and administrative policies, and are accountable through me as Treasurer to the Parliament of Australia." It replaced separate regulators for the banking, insurance, finance and credit union sectors - allowing Costello to slash 150 jobs in the process. It's brief was "soft surveillance of these institutions, with the emphasis on working with the industries on monitoring their financial condition". APRA has admitted in the year-long HIH royal commission to being under-staffed, under-qualified and under-funded. As early as 1999 staff were internally complaining that APRA was not acting as an effective regulator. It's "soft surveillance" approach was a green light for the corporate cowboys.
It was around this time that Costello approved the HIH takeover of FAI insurance. In doing so the Federal Government has been implicated in the HIH collapse, as the Howard-backed FAI has been seen as the "Trojan horse" that contributed so much to HIH's downfall. It is also the basis on which the HIH Liquidators are suing the Federal Government to the tune of $5.6 billion in a place that will be familiar to the sensitive Costello, the very generous ACT Supreme Court.
Costello, of course, used the same jurisdiction to sue Bob Ellis and his publisher Random House over allegations in Ellis's book "Goodbye Jerusalem". How ironic that he finds himself back there again, although this time I doubt he'll be smirking in the public gallery.
According to the Sydney Morning Herald, Costello's own hand-picked advisory panel, the Financial Sector Advisory Council - told Treasury in 1999 that "HIH had been sharply undercutting insurance premiums in a bid to win business and that the whole sector needed monitoring".
Even so, Costello persisted with his "softly-softly" mates at APRA:
"If I sought advice on solvency issues I would seek it from APRA which is the body which is responsible for solvency issues," said clown-prince Costello in parliament. "I acted in accordance with APRA's advice at all times." The authority was so incompetent that APRA's Craig Thorburn presented a slide on a key HIH report even though he had not even read it.
Now the galoot in the suit has cooled somewhat in his enthusiasm to be responsible for corporate governance in the financial sector; on the 7:30 Report Costello found somewhere else for the buck to stop: "Let me tell you where the buck stops. It stops with the enforcement of the criminal law against 20 people who have been referred to the Australian Securities and Investments Commission. That's where it stops. The buck stops with the company directors who, if they breach the law, are liable." APRA is obviously no longer "accountable through me as Treasurer to the Parliament of Australia".
A series of inevitable re-arranging of the deckchairs is now taking place, with the inferred blame being sheeted home to HIH executives and key regulatory mandarins, many of whom are now conveniently left the scene, such as Thorburn (who now is a honcho at the World Bank in Washington).
The Minister for See No Evil takes his place in the Tool Shed this week, where he can join his mates from the big end of town - some of whom will hopefully have somewhere else stay in the not too distant future.
|Search All Issues | Latest Issue | Previous Issues | Print Latest Issue|
© 1999-2002 Workers Online