John McFarlane is surprisingly upbeat and positive about his new challenge as Westpac chairman.
He will be stepping out of a comfortable retirement to help Westpac deal with 23 million breaches of anti-money laundering law and shocking claims of links to paedophile activity in the Philippines.
“I’ve had about 27 years dealing with troubled companies,” he said.
“One of the things that’s attractive about Westpac is that it’s in really good shape apart from some sustained damage on the regulatory side,” Mr McFarlane told the ABC, in what some investors might see as an understatement of the crisis confronting Westpac.
But 72-year-old Mr McFarlane — often remembered as the guitar playing, folk singing Scotsman who led ANZ bank between 1997 and 2007 — is careful not to downplay evidence that Westpac allowed its payment platforms to be used by at least one convicted paedophile as late as June 2019.
“Well it’s a horrible thing, paedophilia,” he said.
“It’s the one thing that you don’t want to be associated with, and the one thing that you want to make sure is prosecuted and you don’t deal with them.
“But I was a little surprised actually that Westpac and the other banks did get caught on these matters because these are matters that have come up elsewhere in the world.
“But you know, these things happen.”
Peter Ryan on Westpac’s new chairman
Dealings with the regulator
Mr McFarlane, who spoke to the ABC alongside outgoing chairman Lindsay Maxsted, said he hoped AUSTRAC would take into account the circumstances of Westpac’s inadvertent links with paedophile transactions.
“There’s a big difference between not reporting something, and there being a big issue with an underlying genuinely suspicious matter.
“Hopefully the regulator will differentiate between those two categories.”
Mr McFarlane confirmed that while the deal for him to replace Mr Maxsted as chairman was not signed off until the share market had closed on Wednesday, he had spent recent weeks contemplating who Westpac’s board would approach.
“Because I wasn’t focused on looking to do something, it [being Mr Maxsted’s replacement] wasn’t really relevant,” Mr McFarlane said.
“Except as I learned more about it … it sort of occurred to me there was going to be an inevitability about this.
“That it was going to be someone like me like me, [AMP chairman] David Murray or [former Commonwealth Bank chief executive] David Morgan, or some who had successfully been running enterprises.”
Picking the next chief executive
Mr McFarlane permanently settled in Australia last October, basing himself in Melbourne where he ruled ANZ Bank for a decade.
But Mr McFarlane did not appear concerned that Westpac is headquartered in Sydney, citing his wife’s reluctance to make a permanent move north.
“I’m going to base myself in Melbourne but I’m not going to fly in and out,” he said.
“I’m actually going to spend real time in Sydney — I’ll be spending good weeks in Sydney.
“I could consider living in Sydney but that’s a more difficult negotiation with my wife than accepting the Barclays job [in London].”
Mr McFarlane’s biggest challenge when he becomes chairman will be to select a chief executive to replace Brian Hartzer, who was forced to resign after the scandal was revealed.
Lindsay Maxsted confirmed Westpac is working to negotiate a settlement or penalty with AUSTRAC with optimism that a deal could be struck by late March or early April.
However, AUSTRAC is expected to continue to play hard on reaching an agreed statement of facts amid expectations that a settlement could exceed $1.25 billion.
Follow Peter Ryan on Twitter @peter_f_ryan