Wednesday 2nd September 2020:  AFR (Australian Financial Review):  Inside the AMP investigation

from Michael Roddan - Senior Companies Reporter, AFR

Dear subscriber,

Like many great news stories, the AMP story started with a tip. Well, half a tip. About a skeleton Boe Pahari had in his closet.

The London-based Pahari had just been promoted to lead AMP Capital, the second-highest paid and, arguably, most important job at the 170-year-old wealth manager.

The promotion had caused consternation inside AMP and dozens of phone calls later, it was clear that this tip had legs. Our reporting confirmed Pahari had been promoted despite being docked $500,000 for sexually harassing a female colleague in 2018.

Still, the story was almost dead on arrival. Australia’s tough defamation laws meant that without a mea culpa from Pahari or AMP, it was unlikely ever to be published. As Pahari’s first day in the top job approached, we sent AMP two dozen questions that were so detailed they forced the company to respond to the harassment scandal for the first time.

We published the investigation on June 30 and the response from AMP staff was fierce, immediate and unleashed a new wave of leaks. The leaks included the details of an explosive town hall meeting where female employees blasted the company for its cultural problems. One suggested Pahari's promotion would be AMP's #MeToo moment.

I was inundated by AMP employees who wanted to ensure the company’s top management took the problems with the company’s culture seriously.

In the first week of August, AMP Australia's chief executive, Alex Wade, abruptly left the company in unexplained circumstances that included allegations of explicit photos sent to female colleagues.

The Financial Review featured 17 stories about AMP and its culture on its front page in under eight weeks. In response, AMP issued denials, bunkered down and launched a crackdown on staff suspected of leaking.

In the end, it was AMP's own first response that was the turning point. Pahari’s accuser Julia Szlakowski was so incensed by AMP’s “misleading” attempt to downplay the seriousness of his conduct, she decided to speak out publicly.

Her revelations meant a big shareholder, investment group Allan Gray, delivered an August 20 ultimatum to the board; AMP’s most senior leaders would have to resign or investors would force an extraordinary general meeting that threatened to spill the entire board.

Half a tip eight weeks ago ultimately resulted in the resignations of some of the most powerful men in corporate Australia:

• Boe Pahari was demoted just two months after he was named the new AMP Capital boss.
• AMP chairman David Murray, the former Commonwealth Bank boss who also led the Abbott government’s 2014 Financial System Inquiry, resigned.
• AMP director John Fraser, the former Treasury secretary during the Abbott government, resigned.
• Alex Wade, the former Credit Suisse private banker and chief executive of AMP Australia, overseeing hundreds of billions in Australian superannuation savings, left the company.

While the fallout continues for AMP, the “Pahari effect” is reverberating across the ASX. The chief executive of QBE was sacked on Tuesday for inappropriate communications with a female employee after a complaint made just 10 days ago. The #MeToo movement has well and truly arrived in Australian boardrooms.

Michael Roddan
Senior Companies Reporter