Westpac chairman promises urgent fix, as Frydenberg says board could be disqualified
|
Version 0 of 1. Lindsay Maxsted releases response plan to failings identified by Austrac and reiterates the bank’s ‘deep sorrow’ Westpac has released its response plan to the latest banking scandal to engulf a major Australian financial institution, just hours after the treasurer, Josh Frydenberg, announced the banking watchdog could disqualify its board. In a statement released on Sunday afternoon the Westpac chairman, Lindsay Maxsted, reiterated the bank’s “deep sorrow” for the failings identified by the financial intelligence agency, Austrac, earlier this week, which included potentially facilitating child exploitation. Maxsted said executive bonuses, granted through the bank’s ‘short term variable reward’ would be either partly or entirely withheld as the bank attempts to recover from one of its most damaging PR weeks since the banking royal commission. Austrac has levelled more than 23m breaches of Westpac’s duty to uphold anti-money laundering and counter-terror finance laws, in transactions topping $11bn. The board, including Maxsted and the chief executive, Brian Hartzer, have so far resisted calls to step down following the scandal, despite the widespread shock and condemnation in response to the Austrac allegations. Ahead of the bank’s annual general meeting next month, and following Frydenberg’s comments that the banking regulator was looking at using legislation to disqualify the board, Maxsted released the bank’s three-step response, referred to as ‘the plan’. “We are determined to urgently fix these issues and lift our standards to ensure our anti-money laundering and other financial crime processes are industry leading,” Maxsted said. “As a major bank we play a critical role in helping law enforcement agencies prevent criminals from carrying out illegal activity.” Maxsted said the bank was working on “immediate fixes”, which included closing the payment service alleged to have been used in some transactions identified as part of Austrac’s investigation, “lifting our standards” through cross-industry data sharing and “protecting people – including investments to reduce the human impact of financial crime”. Of the 23m transactions, it was a handful of relatively small amounts of money which have created the biggest shockwaves, with Austrac accusing the bank of allowing a dozen customers to send money to the Philippines, despite warning signs they were consistent with transfers made to people involved in child exploitation. Sign up to receive the top stories from Guardian Australia every morning One transaction was made by a customer who already had a child exploitation conviction, but is alleged to not have been properly monitored. Another is alleged to have paid someone in the Philippines who was later charged with “live streaming of child sex shows and offering children for sex”. Westpac has been accused of failing in its duty to ensure its programs detect transactions for illegal activity, as part of a global bid to shut down money trails. Both the government and opposition have walked the line in expressing shock and distress at the allegations raised as part of the Austrac investigation, while maintaining political distance at what the future should hold for the board. Frydenberg appeared on the ABC’s Insiders program on Sunday morning to say the independent regulator was looking at what mechanisms it could use in response to the investigation. “Now Apra has the ability – under the banking executive accountability regime – to disqualify boards and to disqualify executives where there’s a failure to appropriately enforce and uphold the duties under the legislation. “That legislation came into force in 2018. It’s not retrospective, and some of those alleged breaches date back to 2013. But the anti-money laundering laws are a proscribed activity under Apra, and I know Apra are looking at it.” Westpac has attempted to get ahead of the response by releasing a list of actions it has already completed, including correcting its non-reporting issues, consolidating its crime detective units, and developing a “financial crime strategic plan”, which included appointments from outside the bank. “However the allegations indicated that there are still unacceptable shortcomings in this area and the board understands the need for action and accountability,” Maxsted said. “We accept that we have fallen short of both our own and regulators’ standards and are determined to get all the facts and access accountability.” Westpac could also face fines of up to $500m for its failures, if proven. But it is the individual consequences, including job losses, which has gripped the national conversation in the days following the Austrac announcement. Frydenberg told the ABC he thought it too early to conclude who would or wouldn’t survive the scandal, but said he expected some action would result from the bank’s general meeting early next month. “They’ve got an AGM on December 12,” he said. “There’ll be some tough conversations between now and then. The board, management, they’re all seized on this issue and they’re now going through a process. But with Apra providing additional focus, as well as Austrac, certainly the heat is on the company.” The shadow treasurer, Jim Chalmers, said on Sunday: “These are extremely serious and concerning allegations by Austrac against Westpac. “The scale of the alleged breaches are astounding and appalling. “Money laundering finances international crime syndicates, child exploitation and terrorist organisations. The big banks must do their bit to ensure that they are not a part of it.” |