When one operates an illicit or somewhat immoral business they are usually well advised that publicity is not their friend. The mob, narcotics dealers or moonshine liquor sellers are well aware of this fact, preferring to conduct their business quietly, avoiding public comments. One would think therefore that the millionaire CEO of an institution whose earnings are underpinned by taxpayer backing and legally dubious penalty fees would be advised to avoid debates such as those concerning executive pay.

Alas, ANZ’s bombastic chief, Mike Smith, is not concerned about appearances, criticising recent “bank bashing” and “irrational and uninformed debates” regarding executive remuneration. Smith last week made the keen observation that “when you compare salaries to the US or to Europe, Australia is actually well positioned.”

Perhaps Smith was speaking from the point of view of an executive who was last year paid almost $13 million to run a bank whose share price slumped by almost 50% since October 2007, rather than the point of view of shareholders. In fact, Australian banking executives have, in recent times, been very well paid, even compared to their trans-Pacific rivals.

Recipients of TARP monies in the United States have had limitations placed on their remuneration. Further, Goldman Sachs head, Lloyd Blankfein and six other top Goldman executives agreed to forgo their bonuses for 2009, JP Morgan boss, John Mack gave up his bonus for the second year straight while Merrill Lynch executives also agreed to forgo 2008 bonuses. Despite ANZ (and its fellow oligoploists) benefiting from a taxpayer guarantees on deposits and wholesale funding, neither Smith, nor any executive appear to have discussed substantially reducing their remuneration this year or forgoing bonuses.

Smith himself received a $9 million “sign-on” bonus when he joined ANZ from HSBC in October 2007. The money was paid to compensate Smith for salary he would have received at HSBC. Exactly why the ANZ board weren’t able to locate an executive who didn’t require a $9 million dowry is unclear. Of course, when it comes to selecting executives, the ANZ board has not exactly covered itself in glory.

ANZ’s immediate past CEO, John McFarlane, was paid more than $26 million during his last four years as ANZ head, but conceded he had never heard of Opes Prime. ANZ’s exposure to Opes margin lending business is likely to cost is several hundred million dollars and tarnished the bank’s already shaky reputation. During McFarlane’s reign ANZ also accumulated a $500 million (unsecured) exposure to Centro, a $150 million exposure to collapsed US lender Countrywide and a $226 million exposure to monoline insurer, ACA Capital (as well as exposures to Hedley Lesiure, Pubboy and Tricom). Fortunately for McFarlane, ANZ’s woeful performance did not prevent him from receiving 95 percent of his potential short-term bonus in 2007 (totaling $2.09 million).

Smith did not only defend executive largesse, also taking aim at those spoilsports who dared criticise the competition, or lack thereof, in Australia’s financial sector. Smith stated last week that “this whole issue of ‘are banks being competitive’ is crazy. People have a choice.” Perhaps Smith was referring to the choice between the various big four banks who all failed to pass on the Reserve Bank’s most recent interest rate cut in full. Or maybe Smith was speaking of the competition between the big four whom appear to be competing as to which can charge customers the highest level of penalty fees, despite their apparent illegality under basic common law principles.

Smith did note however, that ‘in his experience’, bank competition is strong. He is probably right in a sense — banks are fairly competitive about obtaining clients who earn upwards of $10 million a year. It is usually those pesky pensioners, single mothers and the unemployed who tend to find things a bit more difficult dealing with the allegedly competitive banking sector.