This Report, comprising twenty six Chapters compended in twelve Volumes, is the first of three public reports that I will issue in answer to the Terms of Appointment of my inquiry into the State Bank Group.

This first Report answers only the Terms of Appointment as they relate to the State Bank. The two further reports will answer, respectively, the Terms of Appointment as they relate to Beneficial Finance, and Term of Appointment B regarding the adequacy and appropriateness of the external audits of the Bank and of Beneficial Finance.

In addition to the three public reports there will also be a confidential report. This confidential report will be issued at the completion of my Inquiry.

Clearly, there are some areas of overlap in the matters dealt with in the three Reports. Some matters of overlap not covered in this Report will be dealt with in my later Reports. A good example is the adequacy of the Bank's procedures for identifying assets in respect of which a provision for loss should be made (Term of Appointment A(f)). While this is clearly relevant to the Investigation of the State Bank, it is also directly relevant to the adequacy and appropriateness of the external audits of the Bank, and is a matter I am currently investigating. Accordingly, this particular matter will be reported on by me in the Report dealing with the external audits. There may also be other areas upon which it might be necessary for me to report in relation to the Bank at the stage when I complete my whole Report.

The Investigation has proved to be an enormous task. It has involved the review or detailed examination of several hundred thousand pages of evidentiary material, including over 17,000 pages of transcripted evidence taken to date during my Investigation. In addition to the formal examination, under oath, of numerous witnesses, some of whom gave evidence on a number of occasions, informal interviews were held with a large number of other persons.

The Investigation has touched on all relevant areas of the State Bank's business necessary to answer my Terms of Appointment. It has considered in depth those aspects of business management which are critical to the success of any substantial business, including strategic planning, management of human resources and information systems. It has also addressed activities which are specifically related to banking and the finance industry, including the management of lending processes, treasury and funding activities, and the assessment of particular transactions. Many of the matters addressed by the Investigation were of a complex and technical nature.

The volume of material considered by the Investigation has been dictated not only by the range of matters addressed, but also by the period of time covered by the Investigation. In a number of instances it was necessary to consider events which occurred at the very establishment of the Bank to seek to understand how the Bank came to the position it found itself in by 1991. Thus the Investigation has been required to consider events over a period of seven years.

The span of time covered by the Investigation has caused problems in obtaining and testing the evidence relevant to my deliberations. It is an unavoidable reality that reliance upon people's memories is fraught with danger. The passing of time also sees documentary evidence lost. Both of these considerations have contributed to the difficulties confronting my inquiries.

My Investigation has necessarily required that the actions and decisions of people associated with the Bank, acting individually and collectively, be scrutinised and critically assessed. It was inevitable that fault might be found with the acts or decisions of those people and that this process might lead to implied or actual criticism of those individuals or groups. It was inevitable too that they would, therefore, legitimately seek to protect their interests.

The conduct of the Investigation has, in my opinion, been made more difficult and time-consuming at various times by the attitude displayed by some parties, and by litigation. I have, however, received the co-operation of the Bank since mid 1992, and of the former non-executive directors of the Bank since December 1992. Mr Clark has generally been co-operative throughout.

I have provided in the first Chapter of this Report a summary of my findings and conclusions as they relate to each of the specific Chapters and areas of investigation. I have also brought together the findings from those specific areas of investigation to provide an overview and summary of my Investigation.

I have noted the limited tenure on the Board of the Hon D W Simmons, Mr K J Hancock, Mr A G Prowse and Mr K Smith. The Hon D W Simmons passed away on 28 August 1986. Mr Hancock resigned from the Board on 31 December 1986. Mr Smith resigned from the Board on 28 February 1987. Mr Prowse was appointed to the Board on 1 July 1990. Any reference in the text of this Report to the Board of Directors in relation to a period when those directors were not members of the Board is, obviously, not intended to include them.