Samuel defends blind trust in conflict over DFO

GRAEME SAMUEL has defended his handling of a perceived conflict of interest that forced him to step aside from the decision on NAB's failed $13.3 billion bid for AXA Asia Pacific.

By InvestSMART · 22 Oct 2010

By InvestSMART ·
22 Oct 2010

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GRAEME SAMUEL has defended his handling of a perceived conflict of interest that forced him to step aside from the decision on NAB's failed $13.3 billion bid for AXA Asia Pacific.

The Australian Competition and Consumer Commission chairman had excused himself from its decision on the bid in August, after it emerged DFO Group, in which he held a stake, was in crisis talks with a syndicate of banks that included NAB.

Appearing before Senate estimates in Canberra yesterday, Mr Samuel defended his use of a "blind trust" - an arrangement that meant no member of his family was involved in the day-to-day affairs of the business.

Some lawyers have criticised blind trusts as inadequate in managing conflicts of interest, but Mr Samuel said it was more than the law required of him as a public servant.

"The voluntary step was taken to separate myself from the day-to-day activity and the management of the DFO Group," he said.

Mr Samuel said did not recollect exact dates, but said he was not aware of DFO's position or NAB's involvement until June or July. There were no records of exactly when he had become aware of the issues because he had been informed verbally, he said.

"The communication was that my family interests had no relevance at that point in time to the discussions [between DFO and the banks]," Mr Samuel said.

As soon as he became aware that his family interests in DFO were a potential conflict in August, other ACCC officials were informed and he excused himself from the NAB decision soon after.

NAB dropped its bid for AXA last month after the ACCC rejected its competition undertakings.

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Frequently Asked Questions about this Article…

Why did Graeme Samuel step aside from the ACCC decision on NAB’s $13.3 billion bid for AXA Asia Pacific?

Samuel stepped aside because he held a stake in DFO Group, which was in crisis talks with a syndicate of banks that included NAB. That created a perceived conflict of interest, so he excused himself from the ACCC decision.

What is a blind trust and how did Graeme Samuel use a blind trust to manage his DFO Group stake?

According to Samuel, a blind trust is an arrangement that separates the holder from the day‑to‑day affairs of the business — in his case no family member was involved in managing DFO. He said he used a blind trust as a voluntary step to separate himself from DFO’s management.

Were there criticisms of Samuel’s use of a blind trust to handle the conflict of interest?

Yes. The article says some lawyers have criticised blind trusts as inadequate for managing conflicts of interest, although Samuel defended the arrangement and said it was more than the law required of him as a public servant.

When did Graeme Samuel say he became aware of DFO’s position and NAB’s involvement in the talks?

Samuel said he did not recollect exact dates but believed he was not aware of DFO’s position or NAB’s involvement until June or July. He also said there were no records of the exact timing because the information was given to him verbally.

What steps did Samuel take once he realised his family’s interest in DFO could be a conflict?

The article states that as soon as Samuel became aware in August that his family interests in DFO were a potential conflict, he informed other ACCC officials and excused himself from the NAB decision soon after.

What was the outcome of NAB’s bid for AXA Asia Pacific?

NAB dropped its $13.3 billion bid for AXA Asia Pacific last month after the ACCC rejected its competition undertakings.

Did the ACCC reject NAB’s competition undertakings in relation to the AXA Asia Pacific bid?

Yes. The article reports that the ACCC rejected NAB’s competition undertakings, and NAB subsequently dropped the bid.

Does the article say Samuel’s blind trust met legal requirements for public servants?

Samuel said the blind trust was more than what the law required of him as a public servant. The article notes lawyers criticised blind trusts as potentially inadequate, but it does not report a legal finding against Samuel.