True to form, when blanket publicity has highlighted banking malpractice, the duo of Judith Sloan and Gerard Henderson have simply acted as flunkeys for the banks and blamed the victims. Dr Evan Jones investigates.
Media pundits cover for bank malpractice
Sloan’s article is essentially an attack on Malcolm Turnbull. Rather than taking it up to the Opposition on his own terms, says Sloan, Turnbull is playing defensively on “away” turf.
Most of Sloan’s article takes as example current publicity over the behaviour of the banking sector. In response to Labor’s call for a royal commission, Turnbull has parried with the proposition of bank executives appearing annually before a parliamentary committee.
'This is just lame, reactive twaddle.'
Well, she’s correct there, but on nothing else.
Sloan as self-professed banking expert
Sloan proceeds to claim that the banks are already well regulated by the competitive process itself and by a stack of regulators. Besides, being a profit-oriented private sector concern, some bank detail is necessarily “commercial-in-confidence” and none of parliament’s business.
Specifically, Sloan takes aim at the Bankwest borrowers defaulted by the CBA after the CBA took over Bankwest from HBOS in December 2008. A clutch of these borrowers had established the Joint Parliamentary Committee inquiry into ‘The Impairment of Customer Loans’.
'… it turned out that in several cases the foreclosure was justified and the CBA had acted appropriately and honestly.'
The ‘in several cases’ qualification is a strange concession from the supremely arrogant Sloan. However, in no cases did the CBA act ‘appropriately and honestly’. On the contrary, the mass foreclosure of Bankwest customers (particularly developers and hoteliers) was a large-scale criminal endeavour.
How could Sloan confidently make these assertions about foreclosed Bankwest borrowers without evidence? She would certainly not be privy to documentation surrounding purchase and foreclosure decisions, as these have been closely guarded (hence the need for a royal commission).
More generally, Sloan hasn’t the faintest clue about the banking sector in general (or, indeed, about other sectors in which she has been elevated to responsible positions). Totally ignorant. As are most of the comments on the aforesaid Sloan article that refer to the banking subject matter (the general thrust of the comments giving vent to Turnbull hatred).
Sloan’s mindset finds influential backers
Judith Sloan came to prominence in the late 1980s as a labour economist working for Flinders University’s National Institute of Labour Studies (NILS). NILS, having to chase funding, found its major client and beneficiary in the Business Council of Australia (BCA). The BCA, in conjunction with the Federal Treasury and the “intelligence” of NILS, pressured long for a dismantling of the arbitration system that regulated wages and conditions. Fred Hilmer was another gun-for-hire with the BCA.
The workplace was said to be hampering business competitiveness and productivity in an increasingly globalised and deregulated environment, characterised by inflexibility and (union-driven) disputation. Thus was produced the 1989 BCA document ‘A Better Way of Working’, devoted to decentralised wages/conditions determination under the rubric of “enterprise bargaining”.
Simultaneously, the Federal Department of Industrial Relations was engaged in formulating and enacting an unprecedented large-scale survey of the Australian workplace, titled the Australian Workplace Industrial Relations Survey (AWIRS). Appearing in 1991 (under Ron Callus et. al., Industrial Relations at Work), the AWIRS authors claimed much greater diversity, flexibility and less disputation than was claimed by the BCA collective. The BCA operatives claimed in turn that AWIRS supported their own claims.
With support for decentralisation from ACTU Secretary Bill Kelty, who, in turn, influenced close mate Treasurer/Prime Minister Paul Keating and the Department of Industrial Relations captured from within, the BCA agenda enjoyed considerable success.
Subsequently, Sloan became the public face of the “labour market reform” agenda. She was hired as a weekly columnist with the Australian Financial Review in February 1993, pushing (along with myriad other columnists) the Fin’s constitutional “dry” line on economic policy. Sloan maintained that column until mid-1995, after which she moved to The Australian, and has been a staple of Murdoch’s “flagship” ever since.
Even in her specialty of “labour economics”, Sloan has shown herself ill-informed on how worklife is constituted, remunerated and regulated. But, being a favoured columnist, one doesn’t have to make sense — the point is to push the correct line repeatedly so that the insecure and anxious-to-be-informed reader imbibes the message.
With so much exposure and reinforcement from establishment circles, it is not surprising that Sloan considers herself competent to issue obiter dicta on the banking sector without doing any homework. No wonder the BankWest victims are affronted.
By chance, I found a parallel to Judith Sloan’s remonstrations in an article by fellow traveler Gerard Henderson.
Gerard Henderson as self-professed banking expert
Rifling through a pile of newspaper cuttings from the Hawke-Keating era, prelude to dispatching them to recycling, I came across a piece by our Gerard in the Sydney Morning Herald, 14 July 1992, titled ‘Bank-bashing: a sign of the times’.
Gerard saw himself fit to review a new book by Paul McLean and James Renton, titled Bankers and Bastards. Curiously, Henderson’s first blooper is that he attributes authorship solely to McLean.
Co-author McLean was, of course, a Democrat senator, from 1987 to August 1991.
It all began by accident. Amongst his multiple portfolios, McLean found himself small business spokesperson and someone said: “have a look at this”. Thus did McLean, the then innocent, discover bank corruption in the madcap era ushered in by financial deregulation.
McLean started collecting information and background documents, became a focal point for victims, and proceeded to make speeches and table documents in the Senate. There were 52 such occasions between 8 December 1988 and 15 May 1991. Needless to say, McLean was not much loved for this endeavour. Indeed, he was despised by most of his fellow parliamentarians for rocking the boat.
Henderson paints McLean as a complete dropkick, learning from and, in turn, reinforcing the lunar right and the lunar left regarding bank sector practices.
Ironically, one purported piece of evidence for McLean’s stupidity, according to Henderson, was:
'His assertion that banks create money makes it possible for him to allege that “by the exercise of that power banks determine who sinks and who swims, who eats and who starves, who lives in luxury and who in poverty”.'
A little exaggerated perhaps, but McLean is not too far off the truth, more so as ‘financialisation’ of the economy has proceeded apace since that was written.
As for McLean’s assertion of the axiom that banks create money, Henderson counters:
'In fact the role of banks is somewhat mundane — they borrow from one section of the community and lend to another.'
What? What an embarrassment.
More from Henderson:
'While a senator, McLean devoted considerable resources to waging a one-man war against Australian banks, accusing unnamed "major banking administrators" of "malpractice, corrupt practice, perjury, deception, lying and dishonesty".'
All completely accurate. Remember that this is the era of foreign currency loan (FCL) victims fighting for justice in the courts, accompanied by massive publicity in the media. McLean himself emphasised more widespread dimensions of bank incompetence and corruption, with the FCL saga adding support for his cause.
'In the event McLean came a cropper before the bipartisan House of Representatives Standing Committee on Finance and Public Administration, which was chaired by the Labor parliamentarian Stephen Martin. Put simply, he could not provide evidence to support his allegations of widespread fraud and corruption.'
What a gigantic whopper! McLean submitted thousands of pages of documentation to the Martin Committee. This material was complemented by submissions from and testimony by some select victims (and whistleblowers). Martin ignored it all.
The Martin inquiry was set up by Treasurer Keating in October 1990, precisely to head off McLean’s revelations and his activism. The November 1991 Martin Committee report, A Pocketful of Change, was a complete whitewash, essentially proposing no turning back on deregulation and promoting bank self-regulation as substitute.
McLean had himself proposed a Senate inquiry into bank malpractice on 5 May and 27 October 1989. The Bulletin magazine issue of 2 May 1989 gave extended coverage to the issue behind an iconic cover page, blaring ‘Why the banks are bastards’. It sold like hot cakes.
Where was Gerard during this time? The print media (the Sydney Morning Herald’s Anne Lampe as exemplar) was covering the FCL debacle on almost a daily basis. Lampe disclosed the existence of the two ‘Westpac Letters’ (26 November & 11 December 1987) from Allen Allen & Hemsley to Westpac re the bank’s floundering subsidiary Partnership Pacific (PPL) on 29 January 1991. Westpac got a court order against publication. The Communist Party of Australia’s Tribune newspaper printed the text in its edition of 20 February (quickly subject to an injunction previously applied to Fairfax).
McLean/Reston note (p.21) that A, A & H was telling Westpac that:
… there was a strong possibility that officers of their wholly-owned subsidiary [PPL] could be guilty of fraud, breach of fiduciary obligations, tax evasion and breach of their statutory obligations to the Reserve Bank, and then going on to suggest ways of minimising the damage from any litigation which might follow from action by customers. …
The bare bones were clear: [PPL] sold its customers a ‘product’ which, effectively, enabled PPL to gamble on the foreign exchange market with its customers’ money, and pass all the risk and the withholding tax to the customers, while taking the lion’s share of the profit for itself.
Henderson, the consummate media junkie, missed all this?
Here’s a taste of what Westpac had to hide, courtesy of some McLean files that ended in my hands.
Thomas Booker, PPL manager Qld, sends a memo to Garth Carter, PPL Group Treasurer, 5 June 1987. Booker and staff are trying to head off FCL client rebellion by managing their loans (a big number in Queensland because of a fraudulent hard sell) in the face of fluctuating currencies (and make an extra quid in the bargain), with clients are losing gobs of money. It’s chaos. The problem is systemic. There are conflicting accounts of whether or not the loans are “pooled” and profits/losses spread amongst all borrowers or allocated differentially.
Booker is particularly scathing of one Agnes Wong, then an employee of Westpac not PPL. How was she selected? What are her qualifications and track record as a FX dealer? And so on.
A meeting takes place to deal with the Booker memo, 12 June, involving Westpac’s Treasury personnel, Stan Davis and Peter Clarke.
Notes of "points made" at that meeting include:
- T Booker alledged (sic) that A Wong, a Westpac employee, was “managing the PPL loans pool, and was doing so without authority (legal)” or knowledge of clients. …
- If this memo goes into customer’s file (and many other copies or replies or recounts of similar conversations will go into various customers’ files), and if one of these customers bring PPL or us to court 5 years later, under the Freedom of Information Act, the customer’s file will be brought to the Court of Law, when the memo will unearth, and it will implicate the Bank. Neither the Bank nor A Wong will stand a chance. …
- Now that the memo is written, it may be too late to destroy every copy. So Davis to ask Phil Deer [PPL CEO] to speak to all State Managers and tell them not to use the memo as official file.
And so on. And here is Henderson claiming that the so-called hapless McLean doesn’t have an evidentiary leg to stand on.
McLean was subject to the most extraordinary pressure and abuse during this period. The CBA was at the centre of McLean’s allegations and, of course, the bank was still then publicly owned. Keating was planning the bank’s privatisation, so its “reputation’ and its assets had to be sustained.
The CBA’s CEO Don Sanders (previously deputy governor of the Reserve Bank) issued statements to deride McLean’s claims, but the statements ran contrary to the bank’s own disclosed documentation. John Stone, then National Party senator, sometime CBA board member as Treasury secretary, and friend of Sanders, subjected McLean to withering condemnation. The Federal Police closed down investigations. McLean and a staffer were also subject to harassment by the Tax Office regarding their personal income and tax details.
Thus McLean quit prematurely, during the Martin inquiry charade, under such pressure, moving to deepest Tasmania to recover his equanimity.
That Henderson should choose to vilify McLean in his July 1992 column is beneath contempt.
And what did Henderson know about the banking sector? Nothing at all. As with Sloan, the man was given to confident assertions regarding an arena of which he was totally ignorant.
Henderson’s mindset finds influential backers
As with Sloan, indeed more so, Henderson has had a privileged exposure to print media readers over the years.
Henderson wrote for The Australian in the late 1980s. He was then hired by Fairfax, and his first weekly column appeared in the Sydney Morning Herald on 9 January 1990. Remarkably, he waited until his third column to treat his long time obsession — bias at the ABC. Fittingly, his last two columns at the SMH, 19 & 26 November 2013, were also about ABC ignorance and bias.
Henderson thus graced the pages of the SMH for 14 years. Nice work if you can get it. His columns were less of an irritation (one could ignore them) than the fact that much space on the precious letters page was given over to letters denouncing the gist of Henderson’s last column.
Alas, Henderson was immediately replaced by ex-Howard Government minister (and sometime leadership aspirant), Peter Reith — a purely political animal with brains only for opportunism. God help us.
Henderson himself immediately moved to Murdoch’s Oz, where he belongs, joining Judith Sloan.
Thus we have a vignette each from two media stars, 24 years apart, on a common theme, driven equally by ignorance. Leave the banks alone!
Bankophilia is a bipartisan thing
The Labor Government smothered the public reaction against bank malpractice facilitated by its own uncritical deregulatory agenda. But it had support from the other side of Parliament (including, bizarrely, the National Party).
On 14 October 1991, two Queensland Westpac FCL victims, Lionel Potts and Tony Lanza Volpe, had an arranged half-hour meeting at 11.30am with John Howard in their local Liberal Member’s Parliament House office to air their case. Howard was then shadow minister for industrial relations but a Party heavy. Moreover, Howard, as treasurer under Prime Minister Fraser, established the Campbell Committee inquiry into the financial sector, from which issued the 1981 Campbell Report recommending comprehensive deregulation.
Howard arrived at 11.50am, was handed documents with an attempted explanation of their background, but Howard immediately put them down on a table, saying forcibly:
"This bank bashing has to stop!"
Howard turned to leave, with Potts and Lanza Volpe protesting.
Before rapidly departing, Howard opined (in effect):
"The Westpac Letters are privileged documents between Westpac and its solicitors and you have no right to them."
Potts and Lanza Volpe went in search of sympathy along the corridors. They buttonholed Alexander Downer, a member of the Martin Committee, who told them to buggar off. By default they ended up at the office of Ted Mack, then Independent MHR. Mack told them (in effect):
"Get on an aeroplane and forget it. Westpac flew into town the other night; an entourage. There was much wining and dining with members from both sides of Parliament. You’re wasting your time."
(The subsequent experience of Potts is told, at great length, here).
It is not irrelevant here to bring in the trajectory of one David Morgan. David Morgan, 1980s Treasury deputy secretary who gave us the recession we had to have (compounding bank casualties), slid through the revolving door into the corrupt Westpac in 1990 (at the same time being married to a Labor Government cabinet minister). On his way to the top and, finally, as CEO of Westpac in 1999, Morgan steadfastly ignored Westpac FCL victims’ ongoing attempts to gain redress for their losses and treatment.
And of course, John Howard’s run for office in 1996 was heavily funded by the NAB under Don Argus, who was desperate to get support from a Coalition government for the end of the "four pillars" policy.
Flunkeys for power
Henderson, as visceral conservative, should have been forensically pursuing the character and sources of this disintegration of a sector fundamental to a functioning economy and society — and, indeed, of the associated corruption of the political sphere itself. Menzies, Henderson’s hero, never trusted the banks. Instead, Henderson chose to attack Paul McLean as whistleblower. A craven act.
The mindsets of Gerard Henderson and Judith Sloan conveniently coincide with that of powerful vested interests. Don’t look for chicken and egg causation. Give them a platform to strut their stuff and an open-ended brief. On the banking front, on occasions when blanket publicity has highlighted the corrupted character of the banking sector, this duo have chosen to blame the victims.
Both Henderson and Sloan, key “opinion-makers” foisted on us by the “quality” press, are simply flunkeys for power.
Dr Evan Jones is a retired political economist.
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License
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