By Glenn Dyer and Stephen Mayne


In just under three
months time Peter Mason, the well known Sydney investment banker,
becomes chairman of AMP Ltd, once the centre of Australian business.
Although it’s a bit tatty and a faded blue chip, AMP is a powerful
voice nonetheless because of its tens of billions of dollars under
management.

These investments make AMP ripe for conflicts of interests and that’s
why eyebrows are being raised about Mason’s new job at UBS, the second
biggest player in Australian investment banking markets after Macquarie
Bank.

This short note
from the AMP website shows he was Australian chairman of US investment
Bank JP Morgan, while a non-executive director of what is still
Australia’s biggest life insurance company.

He’s left that post now to take up a “senior adviser’s” role at UBS
from 1 August. Not much difference some would argue except that UBS is
a major investor, market player, adviser (more so than JP Morgan) and
takeover adviser. As chairman of AMP – not just a non-executive
independent director – you have to ask if that’s appropriate,
especially given the estimated $150 million-plus that UBS has made
advising AMP on all sorts of financial acrobatics over the past five
years.

Never before has one investment bank made so much out of a financial services giant. yet now the two will be joined at the hip.

Peter Willcox, the present AMP chairman, did breach ASX Corporate
Governance guidelines by chairing another top 100 company in the Mayne
Group, but at least he stayed away from financial groups, as did the
two previous AMP chairs, Stan Wallis and Ian Burgess.

Axa Asia Pacific chairman Rick Allert, Westpac chairman Leon Davis,
CBA’s John Schubert and ANZ’s Charles Goode also take the view that one
prize gig in financial services is enough. NAB’s Graham Kraehe is
associated with Goldman Sachs-JB Were but he’ll be out on his ear in a
couple of months when Michael Chaney takes over.

Mason received a total of $124,000 last year as a director of AMP,
while Willcox scored $360,000 as chairman. Sydney house prices and
lifestyle might be expensive, but from his life as an investment banker
with the likes of Schroders and JP Morgan, Mason should have been able
to finance the appropriate living standard for an AMP chairman without
creating this untenable conflict of interest.

The days of a chairman working for the main financial or legal adviser
to the company are meant to be gone, but AMP is going straight back to
the bad old days by tolerating what is an obvious conflict of interest
for its new boss.