What does it mean to be independent? The Shorter Oxford English Dictionary says: ‘Not depending upon the authority of another; not in a position of subordination; not subject to external control or rule; self-governing, free.’ The root of the condition is not being dependent. What does that mean? ‘To be contingent on or conditioned by.’
Can I retain a lawyer to examine my affairs and then express an opinion on them that can be presented to a third party, say a government office, as independent? Let us say that I am the only source of instructions to the lawyer; that I am solely responsible for paying the lawyer; and that the lawyer stands in a position of trust and confidence to me such that they cannot have an interest or duty that conflicts with their duty to me. They are all typical incidents of the relationship between lawyer and client.
If you look at the definitions set out above, you will see immediately that there are difficulties, to put it softly, in my retaining a lawyer to present to a third party an opinion, however called, that is in any sense independent. The lawyer depends on my authority, is subordinate to me (unless I want break the law), is subject to my control and rule and their opinion will be wholly contingent upon or conditioned by my instructions – and payment for services rendered.
So, when AMP and its lawyers, Clayton Utz, purported to present to a government agency, ASIC, a report or opinion of Clayton Utz that was in any way independent, they were chancing their arm, again to put it softly, but in cricket terms. The accounts in the press of the evidence before the Royal Commission suggest that their stratagem was doomed from the inception.
AMP could at any time have stopped the retainer and the process. The letter of instruction from the Chair of AMP asked to be notified of any ‘findings’ that mentioned members of the board or executive team. What does this mean except ‘You are free to say what you like – unless we don’t like it’? The wording is at best unfortunate. Lawyers are not usually retained to give a ‘report’ or conduct an ‘investigation’. They are certainly not there to make ‘findings’. They give an opinion based on the instructions they receive. Part of that opinion may relate to the findings that may be made by the court or other body that has the power to make them.
So, the problem was there from the start. The evidence I have seen does not reveal the extent to which this firm had acted for AMP. I gather it was substantial. The relationship was obviously close. The in-house counsel was a former partner of the firm. He liaised with the partner handling the matter to get a result satisfactory to AMP. One report says that he asked for the final say over the wording. The Chair was also actively involved, so we know where the buck stops here. She was also involved in protecting the name of the former CEO, who was paid $8.3 million. Another high executive was protected. The firm provided at least 25 drafts to the client, and the company now admits misleading ASIC on at least 25 occasions. It is preposterous to suggest that the final document was in any sense independent. It was an elaborate cover-up.
The law firm owed obligations of trust and confidence to the corporation. According to its website, the firm expresses that obligation as follows.
Our key obligation: We will perform the work with professional skill and diligence acting as your independent legal advisers. We will act solely in your interests in any matter on which you retain us unless you ask us also to act for other parties in that matter. We will not perform work for you if factors such as a conflict of interests prevent us from accepting your instructions.
There may be legal difficulties displacing that obligation. But how can those obligations of loyalty or fidelity stand against an obligation to give an ‘independent report.’ At what point does the lawyer say: ‘If I carry out my retainer according to its terms, you the client will suffer damage’? How does the law firm escape discharging that duty consistently it carrying out its key obligation?
The press reports are full of exclamations of shock. People expressing shock are naïve. Professional people commonly submit drafts of opinions to clients for a variety of reasons, some more pure than others. ASIC used to do with people under investigation. This Royal Commission will submit draft findings to targets.
What is shocking here is that a major corporate and a major law firm thought that such a crude stunt was worth a try on. In other words, they thought that they had a better than sporting chance of convincing ASIC that what it was receiving was ‘findings made in an independent report.’ Heaven help us if AMP and its lawyers were right about that. Is the reputation of ASIC so low in the business and legal fraternities? Does AMP not know that the cover-up is usually worse than the original crime?
We cannot the comparison with ball tampering. What is worse – the brazenness of the original act of cheating, or the inanity of the attempts to cover it up?
‘To both survive and succeed as Prime Minister in the coming months, Turnbull has to change. If he is to lead the Liberal Party and defeat Bill Shorten and Labor at the next election, Turnbull has to develop a more political character or be prepared to take advice from those who have one.’
Dennis Shanahan, The Australian, 9 April 2018
What did we do to warrant such perpetual banality – about opinion polls, no less?
Industry super fund Cbus has been ordered to apologise to more than 300 of its members after the Australian Privacy Commissioner found it breached their privacy.’
Australian Financial Review, 12 April 2018
Am I alone to wonder about ordering someone to apologise? What if they are in fact not sorry when they say they are?
3 thoughts on “Passing bull 145 – Bull about independence”
I only had to read the first three words and knew immediately what you were writing about!
Great to see this published in The FinRev on Friday. Congratulations
Thanks L. A true supporter!