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‘Provocative references’: Email reveals icare’s Hayne moment

The email, sent to some colleagues in Treasury, said it seemed like “an easy area where removal would have improved the reaction from icare with no impact on the substance of the Review findings”.

The senior bureaucrat then remarked: “As far as I can see, the new version also fails to pick up two key points made by icare: There is no recognition of what icare view as the substantial benefits delivered by the reforms achieved to date. This misses the opportunity to provide balance and avoid the appearance of a one-sided report.”

The email was more telling in what it didn’t say and where the focus lay: on protecting icare’s reputation and continuing the spin that there was nothing wrong. This is a mess that has been hiding in plain sight for years.

The report highlighted serious mismanagement in icare, including plunging return to work rates, a strained relationship with the regulator, a high-risk investment strategy and deteriorating finances.

Instead of learning from the report, icare, the board and Treasury were more concerned about the decision by SIRA to retain the reference to Hayne, which they believed might send the wrong message.

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It was a telling statement that gives an insight into the pandering that has gone on inside Treasury and the Treasurer’s office to an entity that has been running off the tracks since its inception in 2015.

“As far as I can see, the new version also fails to pick up two key points made by icare: There is no recognition of what icare view as the substantial benefits delivered by the reforms achieved to date. This misses the opportunity to provide balance and avoid the appearance of a one-sided report,” the email said.

The report had been in the making since early 2019 with multiple drafts available but instead of trying to learn from the review, the focus was on trying to finesse the message and spin.

Indeed, a look at the board’s communique from June 2019 to February 2020 reveals the board didn’t meet in December or January, despite the release of such an important report in December.

There is no evidence the board even considered the fact of the review before the results were delivered and icare’s execs had their response ready in February 2020 for parliament.

“It is hard to believe that the board didn’t once consider the SIRA review throughout 2019,” NSW Green’s politician and former workers’ compensation barrister David Shoebridge said. “That damning review commenced in early 2019 and had multiple rounds of stakeholder input, but none of that ever troubled this board.”

In a statement, icare said the board holds numerous out of session meetings, joint board meetings with SIRA, and receives out of session updates.

Whatever the case, it isn’t a good look for the board, particularly given the revelations from a joint Sydney Morning Herald, The Age and Four Corners investigation into the country’s $60 billion workers’ compensation system that found systemic issues, mismanagement of which the regulator of the scheme held “grave concerns”.

The regulator’s independent report into icare, prepared by Janet Dore, said the lessons from the Hayne royal commission and the CBA capability review into its governance and culture needed to be applied across the financial services sector, including insurers and regulators.

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Given the problems inside icare, the board at the very least should have committed to an independent review of its own culture and governance structures. This is an organisation that is facing a looming financial crisis, has underpaid 52,000 workers up to $80 million, has senior executives that took trips without declaring them and despite this has paid its executives some of the highest pay packets of any NSW government organisation as well as paid them bonuses. The board also paid itself some of the highest fees of any NSW government organisation.

In the case of CBA, the capability review into its culture and governance found it was ruled by an incestuous mates club that didn’t challenge or escalate problems and the board failed to challenge the executive team which had a propensity to bury bad news. It found there were too many snouts in the trough taking generous remuneration packages despite serious customer failings.

If the board of icare chaired by Michael Carapiet read that CBA capability review it would have been staring at a mirror of truth of what has been going on inside icare.

Icare chairman Michael Carapiet.

Icare chairman Michael Carapiet.Credit:Peter Braig

In December 2019 SIRA recommended a similar report be commissioned by icare into its culture, governance and accountability but despite the gross underperformance of icare that recommendation is yet to be adopted.

The NSW Treasurer Dominic Perrottet appoints the icare board and is therefore ultimately responsible for what has gone on. Instead of trying to fix the mess he has been an ardent supporter of the organisation.

His close relationship with icare has created its own controversy. Political opponents have called on him to step aside after he announced his chief of staff Nigel Freitas resigned after revelations two ministerial staff, including senior policy advisor, Ed Yap, a former US Republican operative, were paid by icare in breach of regulations. Despite blaming it on an “administrative oversight” questions are being asked about what is going on.

The controversy engulfing icare has also claimed the scalp of chief executive John Nagle, who revealed to an inquiry last week that he was reported to the Independent Commission Against Corruption because of a failure to properly disclose a contract handed out to his wife.

The longer the board and Perrottet hold out on a radical overhaul at icare, including a board and management clean out, the worse it will get. This is a crisis that isn’t going away.

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