SYDNEY (Reuters) - Australia's AMP Ltd AMP.AX denied allegations it had submitted a doctored report to a regulator and committed a criminal offense, saying an inquiry into the country's financial sector had overstated the wealth manager's involvement.
The rebuttal marks the strongest show of defiance yet by a financial services firm to the quasi-judicial inquiry, or Royal Commission, that has so far forced some of the country’s top lenders to apologize over damaging revelations of misconduct.
AMP CEO Craig Meller and Chairwoman Catherine Brenner have both quit in recent weeks following disclosures that the firm misappropriated funds of thousands of clients over a decade by charging them without providing advice, and that it repeatedly lied to the corporate regulator.
The inquiry alleged AMP - the country’s largest wealth manager - modified a report by law firm Clayton Utz and submitted it to the Australian Securities and Investments Commission (ASIC) as “external and independent”.
Their intention was to limit the report’s findings about the involvement of AMP’s senior executives in misappropriating customer fees, the inquiry heard.
Counsel assisting the commission said last week that, in doing so, AMP had breached provisions of the Corporations Act that carry criminal sanctions.
“AMP strenuously denies the allegation” by lawyers of the commission that they could find AMP has committed a criminal offense, the company said in a 27-page document on Friday.
ASIC is already investigating AMP over the alleged misappropriation of client fees, so there is no need for the Royal Commission to recommend criminal charges, AMP added.
Australia Treasurer Scott Morrison has described revelations of AMP’s misconduct as “deeply disturbing” and that this type of behavior could attract “penalties which include jail time”.
Hours after AMP published its defense, it said it had hired banking industry veteran David Murray, who has presided over a previous inquiry into corporate governance in the bank sector, as its new chairman.
The former chief executive officer of the Commonwealth Bank of Australia CBA.AX would preside over a process of board renewal and the appointment of an additional non-executive director in the near-term.
On the Utz report, AMP said the inquiry’s lawyer had overstated the number of emails exchanged between AMP and the law firm related to the drafting of the report.
The inquiry heard AMP and Clayton Utz exchanged some 700 emails during the law firm’s investigation, but many of those were automated responses to meeting requests, duplications and progress updates, AMP’s submission said.
The firm also said that the counsel assisting the inquiry was wrong to suggest that AMP’s board had intervened to remove the names of the CEO and chairwoman from the report.
It was the law firm, not AMP, which chose to remove the name of Meller on grounds that he was not culpable and that including his name “would attract unnecessary attention” from the regulator, the submission added.
There is no evidence any member of the board knew of this rationale, AMP said, adding that Brenner’s actions in relation to the report “were appropriate and consistent with good governance”.
The Royal Commission is just a couple of months into what is expected to be a year-long investigation. The Federal Government has said it may, however, extend the deadline.
The inquiry can make wide-ranging recommendations including legislative changes and on criminal or civil prosecutions.
AMP shares have plunged about 20 percent since the inquiry started in February, wiping off around A$3 billion ($2.3 billion) from the company’s market capitalization.
The stock, however, closed up 0.5 percent on Friday, while the broader market .AXJO fell 0.5 percent.
($1 = 1.3233 Australian dollars)
Reporting by Byron Kaye in SYDNEY and Rushil Dutta and Ambar Warrick in BENGALURU; Editing by Himani Sarkar and Stephen Coates
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