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Common Wealth or All for Self?

Tuesday, 3 May 2016  | Gordon Preece

After the recent ABC/Fairfax CommInsure exposé, we should ask: does our privatised, financialised society, which once ran a government bank called The Commonwealth Bank, still believe in a concept of Common Wealth or common care and responsibility?

The CommInsure case needs connecting (as media and our ADHD minds largely haven’t) to the relatively recent controversy concerning the similar savage exploitation and robbery of the savings of the elderly through shonky financial advice by the Commonwealth Bank, Macquarie Bank and others.

This raises broader issues about bank ethics, finance and superannuation industries, multinationals’ rampant tax avoidance and the recent BHP Billiton mining disaster in Brazil that destroyed a whole town and ecosystem. How should Christians, whose super is often invested in such companies, respond to our partial and often ignorant complicity in these corporate crimes?

The Commonwealth Bank’s insurance arm was exposed by The Age and ABC, whose ability for investigate journalism is being reduced due to budget cuts. They were aided by courageous whistle-blower Dr Benjamin Koh, CommInsure’s former chief medical officer. CommInsure, and also AMP and Zurich, were found to be using outdated, more restrictive definitions of severe medical conditions like heart attack, arthritis, depression and post-traumatic stress disorder (PTSD). ‘CommInsure delayed [in the hope they’d die and not claim – ‘justice delayed is justice denied’] or denied payments to terminally ill patients and claimants – including … its own employees – of total and permanent disability payments’ (The Age, 19/3/16, 6).

The Australian Prudential Regulation Authority (APRA) includes, like other financial institutions, the cardinal virtue of prudence or long-term measured judgement in its name, the very opposite of hubris, or pride-full, reckless pursuit of profit at all costs. It sees the CommInsure case as symptomatic of certain systemic, cultural corruptions rife in the financial industry. It is not enough for the Commonwealth Bank and co. to blame a few rogue employees or financial advisers. It’s not just bad apples but often a bad or biased barrow, leaning towards maximising profit at the expense of customers.

We can join the dots from CommInsure to the Commonwealth Bank financial advisers scandal. Here, untrained, unprofessional advisers hell-bent on maximising their earnings forced and even forged uninformed consent to high-risk investments for people only wanting retirement security. As APRA says, cultures of corruption are related to reckless and risky remuneration incentives.

Jesus rejected the hypocritical Pharisees’ encouragement of Corban (religious gifts) to enrich their coffers at the expense of the elderly, whose honorarium was guaranteed by the fifth commandment (Mk 7:9-13). One wonders what withering condemnations Jesus would utter about such pharisaical dodgy definitions and practices denying the sick and elderly their rights today.

The Global Financial Crisis was not a once-off event - it is a chronic condition. As one London trader said, we’re like goldfish: one lap around the bowl and we’ve forgotten any lessons learnt. This is even more so the case considering the slap-on-the-hand regulatory responses for ‘too-big-to-fail banks’, and the enormous unmerited rewards with which our system of golden parachutes - or socialism for the rich - rewards so many people.

The financialisation of the world economy - away from productive and job-creative industries in favour of the 1% speculative and rentier class now owning 60% of the world’s wealth - is super-charging global inequality (see Thomas Piketty, Capital in the Twenty-First Century, The Belknap Press, 2013). Traditional financial institutions have shifted from the secure managing of people’s money to risky, speculative financial maximisation, not firstly for their clients but for their corporate coffers. This gargantuan appetite for risky growth is unsustainable, both socially and ecologically. Witness BHP-Billiton and its Brazilian partner’s disastrous dam tailings failure – again an area where BHP has form. Remember also the Ok Tedi copper mine in Papua New Guinea that destroyed the area’s ecology and people’s livelihoods.

The limited liability covenant or social contract between banks, big corporates and society has broken down. In exchange for enabling capitalisation for responsible risk investment - without personal bankruptcy, so that jobs could be created, and taxes paid for the roads and for the education of workers - we now have irresponsible risk, without any sense of Common Wealth or commons, whether economic and ecological.

Further, multinationals shift earnings from one higher taxing locality to a lower one, and hide their profits. Last month it was revealed that one third of Australian listed private companies worth over $250million pay no tax. So much for ‘render unto Caesar’! And so much for any notion of Common Wealth.

What can Christian investors, benefitting from but also complicit in these financial services via government regulation, do to bring about change?

  • Get informed about where your super is invested, for example in ecologically destructive coal. Also, reduce church investments in such industries.
  • Argue for whistle-blower protections for people like Dr Koh in the case of CommInsure or Dennis Gentilin of NAB in the case of Forex Trading.
  • Support a financial services tax to put a handbrake on the rate of financial speculation.
  • Follow the lead of the Victorian and Tasmanian Uniting Church Synod, who successfully engaged with corporates like BHP over Ok Tedi; or of Christian Super who, as part of a group of Australian religious investors, engaged successfully with Wesfarmers on another issue. There is also the International Interfaith Investment Group 3iG. Mistakes happen, but the resolution to amend and make restitution is critical (cf. Zacchaeus in Lk 19).
  • Affirm positive models of Christian corporate leadership, such as George Savvides, the newly retired CEO of Medibank Private.
  • Demand the government drop its offensive plan to cut corporate taxes. How can you cut what is nothing in many cases? Revisit Mr Hockey’s plan, and that of many Christian and other justice groups, to stop global corporate tax evasion.
  • Support the Australasian Centre for Corporate Responsibility (www.accr.org.au) in its appeal against a court judgement that allows the Commonwealth Bank to continue preventing shareholder resolutions that call for the Bank to disclose its fossil fuel investment levels. Australian shareholders need similar rights to those in the US, which enable greater corporate democracy.

Gordon Preece is Director of Ethos: EA Centre for Christianity and Society, Chair and Executive of the Melbourne Anglican Diocese Social Responsibilities Committee and ethical advisor to award-winning Christian Super.

This article first appeared on 29th April 2016 at http://tma.melbourneanglican.org.au/opinion/common-wealth-or-self-290416. Reproduced with permission.


Ian Hore-lacy
May 5, 2016, 6:25PM
I dont know the specifics of Comminsure, but agree that there must be a social responsibility sense in any company, just as in any personal member of the community. Pursuit of profit or personal gain at the expense of others, without strong ethics, makes for a world which most of us would not want to live in. There is certainly much that needs fixing at the top end of town, and I am sympathetic to Gordon’s concerns - my 1985 book was Creating Common Wealth! 

But this is a very simplistic article, with sweeping generalisations which are unsustainable. The comments about BHP for instance ignore the main issues in those two instances. In Brazil, BHP had a major investment in a company it didn't control, with some shonky procedures, and I understand that policy will now change so that it exits or takes over such arrangements and applies proper standards. At Ok Tedi its investment was with the PNG government and the tailings-in-the-river policy was deliberate and a calculated cost set against the benefits, both financial and social from the project. There was a major environmental impact as expected, but (at least in about 1995 when I looked at it closely), not as great as often represented. (Due to seismic concerns, a tailings dam was ruled out.) So the issue was a cost-benefit balance arrived at in conjunction with the elected government.
The PNG government then had a 30% share in the mine, BHP had 52%. In 1995 export sales from the mine represented 29% of PNG's foreign exchange earnings. The royalty payments made by the company for the minerals all went to the Western Province government or to local landowners.

In 1983-84 attempts were made to build a dam on the Ok Ma river 30 kilometres south of the mine to hold all the tailings. However, heavy rain and landslides destroyed the dam after A$65 million had been spent on it. It also made it clear that any tailings dam in the area would be a real danger to people downstream if there was an earthquake. So from that time it was government policy and company practice to put the tailings straight into the Ok Mani river. The Ok Mani flows into the Ok Tedi river at Tabubil. In the Ok Tedi River at Tabubil this means that there is about one hundred times more sediment than before mining, which had a dramatic effect. But after the Ok Tedi River joins the Fly River, the increase in sediment load was about fivefold. Lower down the Fly River the mine added only 25 million tonnes per year of sediment to the natural level of 88 million tonnes. Thus the harmful effect of the mine on the river system diminished downstream.

Multinational tax avoidance has got some attention in the latest budget, and the question of tax in relation to assets or market cap is a cheap shot. Tax is paid on profits, not capital.
Gordon Preece
July 9, 2016, 3:19AM
I know the cases well - the CBA case was appalling, and the same means to an ends utilitarianism can be seen in both cases. This is hardly a radically left position, as CBA and others have been condemned by all comers, including conservatives.

Regarding BHP, I did write of the need to engage with them, not just write them off - though this does not deny that they have form before. People make mistakes, but Australian mining companies have been making quite a few recently in the developing world and not learning from them. And a utilitarian justification isn’t good enough from a biblical ethical perspective.

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