The NAB board drama in 2004 following the discovery of forex losses must seem like ancient history: I was talking to a
journalist recently about Societe Generale and mentioned the NAB events and
he’d never heard of it!
So in the interests of reminding ourselves how long 4 years can be and that risk management is still a critical issue for boards here’s a reprint of the chronology I previously prepared:
"The discovery of foreign exchange losses at NAB in early 2004 and
the way in which the Bank responded provides a good case study of an
organisation which had a breakdown in its compliance culture and what
it has done to fix it.
This note provides a link to key documents in chronological order.
2 February 2004:
National Australia Bank Chief Executive Frank Cicutto resigned following disclosure that the Bank could lose up to $360 million in foreign exchange trading losses. The Board immediately appoints a new CEO.
The forex scandal followed a number of losses at NAB which raised
questions about the effectiveness of its risk management systems,
controls and internal reporting.
16 February 2004: National Australia Bank Chair Charles Allen resigned and Graham Kraehe apponted as Chairman.
Other than stating "I believe that this action is in the best
interests of the Bank and its shareholders", no explanation was given.
24 March: APRA releases its report
26 March: 7 non-executive directors request general meeting.
29 March: Mrs Walter submits request for general meetings
1 April: Blake Dawson Waldron (BDW) advised
on probity and governance matters relating to the
PricewaterhouseCoopers (PwC) report into foreign exchange options
trading losses.
2 April: The Board of Directors of the National Australia Bank announced that it has approved the formation of a committee
to manage the proposed Extraordinary General Meeting and consider resolutions
submitted by Mrs Catherine Walter.
6 April: Board renewal program announced
7 April: The Board announces it intends to appoint a new external auditor.
19 April: NAB announced that it will hold General Meetings of
shareholders on Friday 21 May 2004.
"There
will be three separate meetings, as required to consider three different sets of
resolutions submitted by Directors in three separate Notices served on the
Company.
The first meeting will consider a resolution submitted by seven
non-executive Directors on 26 March 2004 to remove one Director, Mrs Catherine
Walter, as a Director of the National Australia Bank.
The second and
third meetings will consider two sets of resolutions submitted by Mrs Walter on
28 March 2004 to remove all the non-executive Directors of National Australia
Bank over time, to censure the Board, to request a search for a new Chairman and
to express views as to re-election of non-executive directors and retirement
benefits."
28 April: NAB announces it has received a request from one of its Directors, Mrs
Catherine Walter, to release a copy of working papers by
PricewaterhouseCoopers (PwC) that were part of its inquiry into
irregular foreign currency options trading earlier this year.
5 May: resignation of 2 NAB directors announced
6 May: Mrs Walter announces resignation
7 May: NAB announces cancellation of SGM’s.
21 June 2004: Michael Chaney appointed to Board and will be Chairman from September 2005.
2005: 17 June Jail Term for NAB Trader"
