AMP
Dr Andrea Howell and Mike Bengough
Introduction
In August 2020, media headlines in Australia named and shamed AMP as a corporate
bully and warned it is “a company that kills careers”. The vehicle for this reputational
crisis is a culture of sexual harassment and sexual discrimination, which has dogged
AMP for over 20 years and continues to do so in 2021.
The spotlight on AMP’s culture and leadership was red hot in 2020 after a public outcry
by staff and shareholders on the appointment of Boe Pahari to the top job of CEO at
AMP Capital (AMPC). In 2018, Pahari allegedly sexually harassed a former employee
at AMPC, Julia Szlakowski, and was penalised by AMP with a 25 per cent reduction in
his annual bonus, which amounted to $500,000 (Khadem, 2020). But despite that
transgression, Pahari’s promotion was sanctioned by the AMP Board, which was
intent on driving up profits, after the disastrous Royal Commission of 2018. (NB: The
Royal Commission found AMP had misled the corporate regulator multiple times over
the charging of customers for “no advice” (Gardner, 2018), and the company’s
profit/dividends plummeted in 2019).
To staff and shareholders the issue around Pahari’s promotion was not money, but
morality. Industry analysts savaged the company’s choice stating it was indicative of
the way AMP operated: “The company went from being an inward looking mutual that
existed for customers, to a profit-hungry beast focused on expanding globally” (Grieve
& Knight, 2020). And according to Schmulow (2020) its focus on money over trust is
central to the failures and scandals that have trashed its reputation and share price.
Schultz (2020) argued that for AMP “cash is key” and its response to the outcry against
Pahari revealed the board’s narrow focus. “They were managing the shareholder risk
but not the rest of the risks … In their minds, it’s all in the dollars and cents,” said
former executive director of the Australian Institute of Employment Rights, Lisa Heap
(Schultz, 2020).
The problem is not just one of strategy, it is also AMP’s organisational culture. To
understand AMP’s systemic cultural problems, Grieve and Knight (2020) provided
some context. In 1998, the then CEO, George Trumbull told his top ten male
executives at a lunch meeting, that a recent delegation of women executives had
nominated sexual harassment and sexual discrimination as the biggest problems in
AMP, and “five of the biggest offenders were seated at that table”. And in 2003, as his
three-year reign as AMP chairman was drawing to an unceremonious end, a bitter
Stan Wallis complained to close associates that “this company destroys people”.
Company Structure
Founded in 1849, AMP is a wealth management company with a growing retail
banking business and an expanding international investment management business.
It provides retail clients with financial advice and superannuation, retirement income
and banking and investment products. AMP also provides 1) corporate
superannuation products and services for workplace super and self-managed
superannuation funds (SMSFs); and 2) institutional clients with investment
management services across a range of asset classes, both in Australia and globally.
A brief summary of AMP’s divisions is provided below:
AMP Wealth Management (AMPWM)
AMPWM assists clients to save for, and live well in, retirement. It facilitates
this through extensive retail and workplace superannuation products, and selfmanaged superannuation funds services, as well as retirement income
solutions and investments for individuals.
AMP Bank (AMPB)
AMPB provides clients with residential and investment property home loans,
deposit and transaction accounts and SMSF products. It also provides loans to
AMP-aligned financial adviser practices. AMPB clients have access to AMP
Bank products via a variety of channels including digital and online, phone,
through AMP financial advisers and home loan brokers.
AMP Capital (AMPC)
AMPC is the investment arm of the AMP Group of companies. As part of the
AMP Group, it shares a heritage that spans almost 170 years. It has more than
250 investment professionals in 19 locations around the world (with a large
presence in Australia) working collaboratively to share the latest insights and
discover the best possible investment opportunities for its clients. AMPC’s
strength in Australia and New Zealand has facilitated growth internationally,
and today it operates in Dubai, China, Hong Kong, Singapore, India, Ireland,
Japan, Luxembourg, the United Kingdom and the United States. Working with
a network of global investment partners, AMPC leverages shared capabilities
to provide greater access to new investment opportunities. It operates across
all major asset classes, with a particular focus on real estate and infrastructure.
Its asset class specialists, investment strategists and economists manage
AUD$189.8 billion in funds under management across a range of single sector
and diversified funds.
Background
The key players in this case study are as follows:

The controversies
Pahari
The most recent example of AMP’s poor behaviour centred around the case of former
executive Julia Szlakowski, who in 2017 bought a sexual harassment complaint against
Pahari who was then AMPC’s Head of Equity and Infrastructure. AMP hired
employment law specialist Andrew Burns QC to oversee the matter in 2018, and he
concluded Mr Pahari’s conduct constituted a “relatively modest breach” of the
company’s code of conduct. The independence of this report was questioned by legal
experts as AMP refused to provide key documents before releasing it publicly.
Following the investigation, a confidential settlement was reached with Szlakowski
(who then left the company) while Pahari was penalised $500,000.
Despite an acknowledgement of serious wrongdoing, in 2020 the AMP Board decided
to promote Pahari to one of the company’s highest-paid and most strategically
important positions as CEO of AMPC (Roddan, 2020a). His promotion signalled AMP’s
single-eyed focus on future profits of the business and also recognition that Pahari
had generated much of AMP’s fortunes. AMP Group CEO, Francesco De Ferrari, who
had been appointed in late 2018, formulated a strategy to halt the deteriorating
operations of AMP in response to the structural changes in the wealth management
industry because of the decline in the financial advice and superannuation businesses
(Roddan, 2020b). However, in the 9 months that followed his appointment, AMP
continued to hemorrhage with AMP’s share price losing nearly 70% of its value in 2019
(Letts, 2019).
Pahari’s financial acumen paled against the public outrage at his promotion and some
commentators labelled his appointment as ‘corporate kryptonite’ because he and the
AMP Board neglected to pay attention to cultural change sweeping through corporate
Australia in the wake of the #MeToo movement1 (Hewett, 2020).
1 According to Gordon (2020), the #MeToo phrase was first coined in 2006 by Tarana Burke, an
advocate for women in New York. Burke wanted a way to empower women who had endured sexual
violence by letting them know that they were not alone—that other women had suffered the same
experience they had. The phrase was reintroduced in 2017 by actress Alyssa Milano as a way to
encourage women and men to share their sexual harassment stories across many different social media
platforms, accompanied by the hashtag #MeToo.
Media outlets were flooded with commentary from staff, shareholders, industry
analysts, and other corporates calling for change while De Ferrari, AMP Group’s CEO,
stayed in the background and was conspicuous by his silence on the issue. It was left
to AMP Director, John Fraser, to justify Pahari’s promotion but his interview was
universally hailed as one of the great train-wreck interviews of Australian corporate
history. Fraser declared the AMP board had made a unanimous decision to promote
Pahari because he had ‘‘made a lot of money for the company and its employees’’.
The comments left corporate Australia aghast. ‘‘They handled it very badly, in talking
about how valuable he was,’’ said one highly regarded chairman. ‘‘That’s a shocking
message. It suggests there is a trade-off between doing the right thing and making
money” (Maley, 2020). On August 24, 2020 both AMP chairman David Murray and
fellow Board member John Fraser resigned. Despite the negative publicity Pahari has
received over the past two months (which has been like no one else in corporate
Australia), he survived the purge and obligingly returned to his previous and lesser
role as Head of AMPC’s infrastructure equity business.
There was widespread astonishment in the industry that Murray and Fraser quit the
AMP Board. However, a high-profile board member of AMP believes it was telling that
the two directors that felt the most commercial pressure to deliver were the ones who
departed. Murray’s failure to appreciate why he and the board made a mistake is,
arguably, symptomatic of AMP’s management for at least two decades.
Simon Mawhinney, managing director of asset manager Allan Gray, which holds
almost 7 per cent of AMP, said Mr Pahari would be unable to carry out the role, to
which he was promoted on July 1, and hit out at Mr Murray’s board for failing to come
clean over the harassment allegations. “Given the continued lack of transparency from
AMP, it is difficult to know whether AMP’s cultural and moral compass is on a
sustainable footing,” Mr Mawhinney said (Roddan, 2020b).
Wade
Ironically, just weeks before Pahari’s demotion back to Infrastructure Equity and while
he was still AMPC CEO, there were further explosive allegations made against the CEO
of AMP Australia Alex Wade. Wade was the subject of several complaints regarding
his conduct including sending explicit photos to female colleagues. A number
of AMP staff have relayed complaints about Wade (both personally and
through AMP’s whistleblower function) to AMP’s senior management.
Those allegations were taken to Francesco De Ferrari, AMP Group CEO and
the AMP board. Pahari was extricated from a scheduled board meeting to join an
emergency meeting with the rest of AMP’s global leadership team to discuss the
matter. Following a further meeting between De Ferrari and Wade and AMP’s Head
of People and Corporate Affairs Helen Livesey, Wade was given 24 hours to submit his
resignation (Roddan, 2020d). ‘‘I arrived at my decision to resign from AMP in the
interests of all parties,’’ a spokesman said on behalf of Wade in response to a lengthy
list of questions. ‘‘My focus now is on a period of personal reflection and the
relationships that are most important to me.’’
Despite several AMP sources confirming that multiple complaints had been made
about Wade, and that AMP had previously discussed matters of conduct with Mr
Wade, AMP elected not to answer any questions about the matter and associated
issues. This lack of explanation about the departure of Wade, who only joined AMP in
January 2019, left staff feeling frustrated.
Senior staff in internal AMP meetings have since refused to comment on employee
questions, including one senior employee who told staff the situation was ‘‘like our
last matter [Mr Pahari]; they’re sensitive issues’’ in response to questions (Roddan,
2020d).
This debacle has once again turned the spotlight on AMP’s handling of employee
concerns.
Toxic corporate culture
JANA (investment consultants) chief executive Jim Lamborn stated: ‘‘The marketplace
looks to the board and senior management to set the culture, values and behaviours
of quality companies, and in this instance it appears the board has seriously misjudged
the expectations of staff, clients and the market (Roddan, 2020c). There is no doubt
that the AMP affair has exposed major fault lines in corporate Australia (Maley, 2020)
and the silence from the male-dominated ranks at the top of corporate Australia
remains deafening (Roddan, 2020d). Both Male Champions of Change, a group of 230
business and government leaders established to advance gender inequality, and
former Australian Sex Discrimination Commission Elizabeth Broderick, who launched
Male Champions of Change, declined to comment on the AMP matter.
So it is left to the current leadership group in AMP and their collective conscience to
right the perception that the AMP Board and senior managers appear to be tone deaf
to the cultural issues at play (Roddan, 2020b). To add weight to this perception, staff
were only informed of Pahari’s appointment and the allegation of sexual harassment
through a news article published by the Australian Financial Review (Roddan, 2020a).
Following its publication, Head of HR Helen Livesey hosted her weekly virtual town
hall meeting, which normally is a general question-and-answer session for about 100
staff, many working remotely. The meeting focused on Pahari’s appointment with the
majority of staff expressing their displeasure. One staffer wrote:
“The press today surrounding Boe has been very upsetting and demotivating.
We are all focusing on building a great culture in AMP, however the fact that
Boe being promoted to CEO and that we have only found out about this
through an AFR article says to me, as an employee: culture kind of matters, but
if you are making the big bucks then you can still get ahead in this place, even
with serious accusations of misconduct. How does this make you feel as a
senior female leader in the organisation and how should we position our
culture when we are dealing with external talent knowing this out in the
market?”
These comments and others were leaked to the press and suggest staff didn’t feel
their concerns would be acted upon by management. JANA said it was concerned
about the ‘‘reflection on the AMP Group’s culture from the multiple leaks of
information including the details of internal meetings to the media’’, which it said
‘‘may be an indication that some staff believe that internal mechanisms for expressing
views and ‘being heard’ are inadequate’’ (Roddan, 2020).
Several senior AMP employees said they felt compelled to speak out because of their
concerns about the perceived mismatch between AMP chief executive Francesco De
Ferrari’s public commentary about improving culture, and the company’s internal
response to the crisis. AMP had responded by threatening its employees with possible
‘‘termination’’ if they were found to be leaking information to the press, which the
company stated was damaging its ‘‘reputation’’. AMP chief risk officer Phil Pakes sent
all staff an email warning them against leaking information outside the company. ‘‘It’s
a commitment we take extremely seriously to ensure we protect AMP, our clients,
staff and our reputation and to ensure we are doing the right thing with data,’’ Mr
Pakes said.
One employee said there was a ‘‘huge’’ program aimed at identifying people leaking
to the media. ‘‘I think this is a battle for the heart and soul of AMP, in my view. It’s
moving from a culture of harassment to a culture of fear. They are telling us they’re
trying to take it seriously, that we have set up all these organisations, and at the very
time they’re saying that publicly, really the focus is to try and find out who is leaking,’’
the employee said (Roddan, 2020e).
‘‘The difference between their public response and their internal response – it’s
incredible,’’ the employee said. ‘‘Who is interested in the good of the firm? Who is
operating in the good of the firm?’’
At the same time in July 2020, investment consultant Jana placed all AMPC’s products
on “watch” meaning the firm would not recommend any AMPC strategies to clients
or recommend that clients add to any existing investments (Kemp, 2020). The asset
manager claimed AMP had more work to do on culture, and it was concerned over
AMPs decision making and culture. The ‘watch’ notice continued in August despite
resignations from Murray and Fraser because JANA was disappointed with the length
of time taken to redress AMP’s poor culture.
AMP’s response
Following internal outrage and pressure from shareholders, Mr De Ferrari established
a taskforce on inclusion; a board-directed cultural working group; a review into
workplace conduct; and a revamp of its procedures for whistleblowers (Yeates, 2020).
He has also flagged he would appoint consultants to help them achieve the goal and
said at AMP’s half-year results, reported on in August 2020, that culture would be his
‘‘number one priority’ (Vickovich & Roddan, 2020). True to his word, AMP in
September 2020, appointed diversity consultant Symmetra to review AMP’s conduct,
policies, leadership, governance and behaviour in order to accelerate cultural
transformation. However De Ferrari’s position remained tenuous. Following the Board
coup in August 2020, where David Murray resigned as Chairman, together with nonexecutive director John Fraser (some believe in protest against Murray’s removal),
Mayne (2020) suggested “De Ferrari isn’t out of the woods yet either as he was
responsible for Pahari’s appointment as AMPC CEO, as well as recruiting his old Credit
Suisse colleague Alex Wade to run the company’s Australian advice business”.
Mayne (2020) flagged part of Debra Hazelton’s stewardship of AMP would be to
oversee the departure of both De Ferrari and Pahari before the next annual general
meeting in May 2021. And in March 2021, Mayne got his wish with De Ferrari’s
resignation to take effect on July 1. For the first time in AMP’s history, it will have both
a female CEO – AMP’s new chief executive is 25-year financial services veteran Alexis
George, who is currently deputy chief executive at ANZ – and chair, Debra Hazelton
(Ryan, 2021).
[NB: Information was sourced from AMP’s annual reports, news and internet
sources, and industry analysis].
References:
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