ANZ chief executive David Hisco has stepped down by mutual agreement over an expenses row. (Photo: Getty.)
One of the country’s highest paid chief executives has lost his job after an embarrassing brouhaha over personal expenses. Business editor Maria Slade tries to make sense of the mess.
Who is David Hisco?
David Hisco was the CEO of ANZ New Zealand from 2010 until Monday. He started out working for a local branch of the ANZ in Australia and rose through the ranks. A significant point in his career was overseeing the merging of the National Bank brand into ANZ. Last year he earned a salary of $2.8 million including fixed pay and bonuses, and was one of the highest paid CEOs in New Zealand.
Why has he lost his job?
After an internal review ordered by ANZ group chief executive Shayne Elliott, concerns were raised about Hisco’s long term personal use of corporate chauffeured cars in New Zealand and storage of wine in Australia. The expenses go back over the nine years he was in the job and amount to tens of thousands of dollars, bank chairman John Key says.
Hisco thought he was entitled to the expenses, Key says. “If he had authority, it was oral in nature, so it’s difficult to establish one way or another.
“What is at the heart of this matter is the way this expenditure was recognised in our books. He was aware it wasn’t in the form it actually took place. It looked like it was a business expense, whereas it was a personal expense.”
The expenditure hadn’t been picked up earlier because it involved charge-back invoices, not credit card spending, the bank says. Hisco doesn’t accept all the concerns, but does accept accountability and agrees the “characterisation of the expenses falls short of the standards required”, the board says.
Does he have to pay the money back?
No. Key says the expenses in question were either “mischaracterised or there was a lack of transparency”, and ANZ won’t be seeking reimbursement from Hisco.
Does he suffer any other penalty?
John Key say Hisco’s departure is “a mutual parting of company”. He is forfeiting $6.4m worth of shares he would have otherwise been entitled to, but he leaves with a full year’s salary and any leave entitlements he’s accrued.
Wasn’t he already on leave?
Yes. Hisco went on leave in early May. On May 30 the bank announced he was taking extended sick leave and head of retail and business banking Antonia Watson would be temporarily filling in. As of today Watson has been appointed acting CEO. In its formal statement to the stock exchange ANZ says Hisco’s departure “follows ongoing health issues as well as Board concerns about the characterisation of certain transactions following an internal review of personal expenses”.
Has this got anything to do with ANZ being stripped of the ability to manage its own capital reserves?
Last month the Reserve Bank placed ANZ New Zealand on the banking naughty step for potentially lending to New Zealanders without enough capital to protect deposits. It revoked ANZ’s accreditation to model its own operational risk capital requirement due to a “persistent failure” to properly calculate risk, and ordered it to increase the capital it holds as a safety net.
John Key says these are “very separate issues”, and blamed the capital requirement breach on an error by a junior staffer. But the timing of Hisco’s departure just a month later is curious.
How big a deal is this?
It’s a very big deal. Acting CEO Antonia Watson says it’s been a “day of shock and disappointment”. The bank says it holds its staff to account no matter whether they’re a junior teller or the chief executive, and it’s been open with the banking regulators and the public about this. Hisco “has not met the standards and expectations of the organisation”, she says.
It’s also a bad look for a sector which is already feeling the heat. The Reserve Bank is proposing increasing the amount of capital all the banks must hold, a move the industry argues is over-cautious and will cost shareholders billions. Meanwhile former BNZ chairman Kerry McDonald has called for a commission of inquiry into our banks, similar to Australia’s Royal Commission which exposed widespread wrongdoing.
Does today’s announcement answer all the questions?
Hisco’s departure was apparently mutually agreed but you don’t relinquish a top role like that without good reason. He’s given up $6.4m worth of shares, after all. The bank’s explanations seem to raise many more questions. In the grand scheme of things, tens of thousands of dollars over nine years is not that much money and there appears to have been an element of misunderstanding – so why couldn’t ANZ have slapped Hisco over the hand and come to some agreement about repaying the money? Did he go on leave partly because of the expenses issue, or did it come to light when he went on leave? It would not be at all surprising if there were more revelations in the coming days.
The $800 per ticket, council-funded festival of ‘creative collisions’ has been cancelled and the company behind it has gone bust. Alex Casey reports.
The first problem was that nobody knew how to say it. Without any discernible vowels, pronouncing WLG-X, the name of a five day festival of “creative collisions” planned for September of this year, quickly became a creative collision of its own. “We started off calling it ‘Wellington X’,” explained organiser Terri van Schooten. “Then it evolved to ‘Welly X’ and now some people are just calling it ‘Well X’.
“We wanted it to find its own name.”
However you say it, the festival – which received significant council funding – will never happen. The company created to run it has gone into liquidation, owing at least $186,000. The announcement came after a postponement in 2018 and has disappointed many in the broader events community, raising questions over the council’s investment strategy in future big ticket events in the capital city.
Billed as encompassing tech, film, music and design, WLG-X was self-described as the first of its kind in New Zealand. Organised by Terri Van Schooten and business partner Ray Salter, the festival was charging $799 for a five day ticket. “We’re not just expecting people to show up, watch a film or go to a gig and then go home,” a press release read at the time. “They’re going to meet with new people, make amazing connections and have a complete experience.
“It’s why we’re saying that WLG-X will be filled with creative collisions.”
With over 20 years in events and experience running the Wellington Sevens in its infancy, Van Schooten said she was inspired by the convergent media festival South by Southwest (SXSW) in Texas. “Around the world there are festivals that span multiple topics, different areas, play host to leaders in a range of fields and bring people together, South by Southwest is the pinnacle of these. New Zealand will be getting its own version in November this year,” she said in the 2018 release.
An “extensive” feasibility study was run in 2016 to test the market against the idea. It was paid for in part by WellingtonNZ, the economic development agency 80% owned by the Wellington City Council and 20% by the Regional Council, tasked with “advancing the prosperity, vibrancy and liveability” of the region. Van Schooten was encouraged by the initial response to the study. “It was a very positive outcome… the study came back saying that everyone was excited and saw it as a great opportunity.”
Wellington City Council has refused to say how much it has invested in the failed “signature event” of a festival, citing confidentiality, but did confirm it had made two of the five allocated payments.
“WLG-X would have showcased Wellington’s innovative creative sectors of tech, design, film and music,” said a Wreda spokesperson, explaining that a “successful, cutting-edge event” would have added greatly to Wellington’s reputation for creativity.
Ian Jorgensen, who lectures in event management at Massey University and has run over 600 events in New Zealand, was initially intrigued by the WLG-X concept. “I thought it was going to be a hundred or so people from different industries connecting over a weekend,” he recalls. “I was quite keen to get involved.” It was only at the launch event at a local bar that he became wary. “I heard they were expecting thousands of people and had these crazy-priced tickets. I just thought ‘wait, what?’
“It felt to me like they were pitching it at about the fifth year of an established event – even South by Southwest started expecting about 100 people over 30 years ago.”
Consistently cited as the key inspiration for WLG-X, SXSW launched in Austin, Texas as a small local music showcase in 1987. The organisers, who had been expecting 150 attendees, were shocked when over 700 showed up. SXSW has since evolved to be one of the largest and most important festivals in the world, bringing together interactive, film and music industries and providing agenda-setting keynote speeches from the likes of Elon Musk and Barack Obama.
“I always say that SXSW is one of those things that you can’t really explain until you go,” says van Schooten, who has attended the festival multiple times. “We wanted those serendipitous moments where you are standing in the queue with somebody and you can’t get into an event so you go and get a coffee, the kind where you get exposed to content and people you wouldn’t normally engage with.”
In the initial press release, WLG-X’s headline speakers were Mark Moore, ex-NASA engineer and the director of Uber’s flying car division and Aly Ehlinger, talent buyer for C3 presents who produces music festivals including Lollapalooza. “We’ve got big names from Sundance and Amazon to announce soon,” the 2018 press release teased. “More and more names will be announced closer to start-date. We can’t wait.”
A month after The Spinoff received the first WLG-X press release, it was reported that the festival would be postponed for a year, until 2019. “It’s an ambitious concept and one that is important we get right for WLG-X’s first year,” van Schooten told Stuff at the time. “Shifting the event back to 2019 will allow us to deliver an event that will attract top speakers and commercial partners to deliver an amazing event experience for ticket buyers.”
Over the next six months, van Schooten says that they worked on “considerably” building up WLG-X. An open call for talent to speak or perform had over 70 responses, and she says met with over 50 potential commercial partners – including The Spinoff. “We were really excited on the content side, but the sponsorship just wasn’t there,” says van Schooten, before noting that Wellington’s 2019 Round the Bays doesn’t have a headline sponsor for the first time in 40 years.
“We get pretty close with a number of sponsors, and then the same week that we made the decision to cancel the event it was because we had three of them decide not to sponsor us. At that point it was too hard – as responsible business people if we had continued it could have ended up being a far worse situation.”
Ticket holders were notified on June 4 via Eventbrite that the event was cancelled and they would be fully refunded. Van Schooten wouldn’t comment on how many tickets sold, but said the majority were purchased during their 2 for 1 launch offer. Massey’s Ian Jorgensen says that the lofty ticket price was undermined by their open call for talent. “To me, that clearly states that you don’t know who you want,” he says. “You simply can’t do that for such a highly-priced event.”
Van Schooten rejects the criticism, saying the ticket price was “inexpensive” and “very reasonable” given their target market, and the fact that the festival was planned to span five days. “When compared with a tech event of two days, or a headline music event, the ticket price is very reasonable,” she says. Anyone who performed in the festival or provided an installation was going to receive a free ticket as payment.
Much of the WLG-X social media presence has since been removed, but the official website remains. A large animated graphic depicts a glitchy X through a flickering television screen, exploding into binary-like code before reiterating the nebulous mission statement: a festival of creative collisions. “We really wanted the name to make it clear that it was a New Zealand festival that was based in Wellington with a global focus,” says van Schooten.” As for the X?
“The X is all about creative collisions, the unexpected, the serendipitous.” Van Schooten paused. “Of course now everyone is using X, which pisses me off – they used to all be using I.”
While van Schooten chalks up the lack of commercial interest in WLG-X to changes in the sponsorship environment, people outside of the event have other theories. “It didn’t seem like it knew who it was or what it’s target market was, it was just projecting this ideal of an event,” says Massey’s Jorgenson, who pulled out of organising several events for the festival. “There was no brand, all it was was a dream – and a dream takes years to achieve.”
“Any brand develops over time,” says van Schooten. “The brand essence is set out on the website. It was about the creative collisions between a number of different but related creative genres… I imagine Xero’s brand was unclear to start with too.”
WellingtonNZ said that it was “disappointed” the event was no longer going ahead, but understood the call. “We support the organisers’ decision to cancel the event early enough to minimise the impact on ticket holders and participants,” its statement read. “That was the right thing to do, given the circumstances.”
Robert Appierdo, a video producer who left the WLG-X advisory board after six months due to work commitments, said that there are “several levers” that were pulled either too late, or not at all. “It had the potential to be really cool, but their processes should have been different because everything was happening too late.” His perspective, echoed by several others who spoke anonymously to The Spinoff, was that WLG-X was trying to run before it could walk.
Simon Velvin, who has run the design festival Semi-Permanent for over 15 years, was also disappointed to hear that WLG-X was no longer going ahead. “It’s really sad when these things collapse because it erodes the trust in the industry. There are so many people doing such good stuff but these things live and die on partnerships. The more they collapse, the more nervous sponsors get.” He says WLG-X would have benefitted from starting at a smaller scale.
“That’s the legacy of this,” says Jorgensen. “Someone might be wowed with a big presentation but you really just have to start an event in a community hall with five people and trestle tables. I’m just frustrated because, had this been a successful event, it would have helped everybody here. Instead all that happened is it that took up two years of oxygen with people talking about an event that didn’t happen.”
Of course, the cancellation has taken a significant toll on van Schooten. “It felt like I had lost a baby. It was gut-wrenching – not just for me but for all the people who had been involved.” With her and co-director Avery having invested a “significant” amount of money in the project – “far more than WREDA [WellingtonNZ]” – she admits they perhaps may have been too ambitious. “If you want to be big and bold and brassy then you’ve got to be prepared to take some risks, which we did.”
She remained optimistic about the future of events in Wellington, however. “Look, I’m a new bright shiny thing type of person, so I’m sure there’ll be something else in the pipeline – just not at that scale. Watch this space.”
Meanwhile the first report from liquidators Grant Thornton says WLG-X Ltd owes at least $186,000 to mostly unsecured creditors. Also on the list of creditors are government innovation agency Callaghan Innovation and national museum Te Papa.
