AUSTRALIA - In the wake of a public outcry prompted by ill-informed media reports, the guardians of Australia's A$51bn Future Fund have been forced to defend their recent appointment of a US bank as global custodian.
The Future Fund announced at the beginning of May it had appointed Northern Trust as its global custodian after what was described as a “comprehensive and rigorous process”.
The selection process was led by Gordon McKellar, head of operations for the Future Fund, who commented at the time: “Throughout the process we focused on the ability of the custodian to deliver global best practice and innovative solutions with minimal risk to the Fund; the organisational alignment of the custodian from a business strategy and people perspective; and a quantitative assessment of the capabilities and services offered.”
However, it was mistakenly reported by the Australian media that Northern Trust would actually be taking over management of the Future Fund, leading to uproar over the appointment of a foreign bank over an Australian one.
The public reaction was such that Paul Costello, general manager of the fund, was forced to speak out on national television.
Speaking on ABC’s AM programme on 22 May, Costello explained the role of a custodian, adding: “Northern Trust will partner with a local bank, the ANZ, for all settlements of securities in this country and they will partner, as is indeed the model, with banks all around the world for settlement of shares in each country around the world."
Public feeling has been so strong that the management of the Future Fund was moved to put out a press release “clarifying” the custodian’s role, in which it stressed the fact that in the tender process Northern Trust had offered “an appropriate price representing value for money”.
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