ANZ governance slammed; BHP liable for dam disaster; Coalition's horror poll

ANZ governance slammed; BHP liable for dam disaster; Coalition's horror poll

News in brief

BHP has been found legally liable for one of the worst environmental disasters in the history of Brazil in a landmark case brought in the UK over the 2015 Mariana dam collapse. The High Court in London ruled that the risk of the structure’s collapse had been “foreseeable” BHP was “strictly liable for damage caused to the environment and to third parties”.

 

There was a big sell-off in the market on Friday, with the S&P/ASX200 closing down 1.4 per cent, which is the equivalent of $37 billion, to its lowest point since mid-July. Investors are grappling with the potential that interest rates in Australia and the US will not fall again this economic cycle.

 

The Coalition has launched a “technology agnostic” energy plan, which includes more gas but is not anti-renewables, according to Liberal leader Sussan Ley. She said renewables must be in the right place and be balanced by baseload power. Meanwhile a poll in The Australian Financial Review shows the Coalition's primary vote fell 5 percentage points in a month to a record low of 24 per cent, while support for One Nation rose 4 points to a record high of 18 per cent.

 

Australian graziers will be disappointed that President Donald Trump cut tariffs on beef as well as hundreds of other product categories including fruits, coffee, nuts and spices. Why? Australian beef exports to the US have surged 26 per cent last quarter as a result of a tariff advantage against rival producers, such as Brazil and New Zealand.

 

Scientists have discovered a new native bee species with tiny horns, naming it Megachile Lucifer. Researchers found the bee while observing a rare wildflower that only grows in the Bremer Ranges in Western Australia's Goldfields region, about 500 kilometres east of Perth.

Fear-o-meter

The McKinsey report into ANZ, released late on Friday, is highly critical and deeply disturbing. Has the bank not learnt from anything that’s happened in the sector during the past decade?

 

Many of the problems identified by McKinsey are very similar to those uncovered at Commonwealth Bank in 2018, in a prudential inquiry following a money-laundering scandal.

 

The issues were also raised in Banking Royal Commission which handed down its recommendations in 2019. Was ANZ not paying attention?

 

According to McKinsey, at ANZ there were governance failures and staff only gave their bosses the good news. The culture was insular. There was a failure to highlight the importance of non-financial risk. These failings were compounded by a failure of leadership to set the right tone.

 

The new CEO Nuno Matos said it will take time to change the culture. Given the depth of the problems, it might take a very long time.

Fear & Greed Q+A today

On the week ahead for the economy, including data on wages growth:

 

"These wage numbers that come out in the middle of the week are really important. And we were just discussing the availability of labour, labour shortages for the business sector. Arguably the most important benchmark on whether the labour market is tight or slack or somewhere in between is what happens to wages. Because if you're having trouble finding suitable labour and you desperately need that labour, that skill, that talent, to expand your business, you'll pay up. And by that I mean, you'll pay a higher wage. You'll headhunt someone from a competitor or you'll pay up for someone who's entering the labour market. And that of course is higher wages growth and for the individual, terrific. But as the business person, how do you recoup that extra cost? You put up your prices. What's that? That's inflation."

An independent review into ANZ is highly critical of the bank’s former leadership and culture since the banking royal commission, saying it is an insular institution where staff are reluctant to challenge and deliver bad news. The McKinsey report was prepared for ANZ after it was hit by a series of scandals which led to a $240 million fine for widespread misconduct. It was released on Friday afternoon. In a critical assessment of former chief executive Shayne Elliott, the report said ANZ lacked a “tone from the top” and found that it had failed to create a risk and customer-focused culture, and its employees were complacent when problems arose.

Greed-o-meter

President / shutdowns	Duration of shutdown (days)
Ronald Reagan
1981	2
1982	1
1982	3
1983	3
1984	2
1984	1
1986	1
1987	1
George H.W. Bush
1990	3
Bill Clinton
1995	5
1995–96	21
Barack Obama
2013	16
Donald Trump
2018	2
2018–19	35
2025	43

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Now that the US Government shutdown has ended, it's time to revisit this table of the various shutdowns under different Presidents. At 43 days, the latest was the longest by far - beating Donald Trump's previous shutdown of 35 days during his first term, and twice as long as the next-longest, which was under Bill Clinton. 

Listen to today's episode 🎧 

Source: CNN