Ongoing culture of “toxicity” and “corruption” within Australia’s Financial Markets and lack of Ministerial accountability continues to jeopardise financial integrity and compromise economic security and global Anti-Money Laundering / Counter Terrorism Financing efforts.
“Confidence and trust in government and public institutions is at an all time low. When this confidence and trust is diminished, pessimism, divisiveness and conflict increase, and social cohesiveness is harmed. As a result, the economy and the welfare of all Australians suffers. Ultimately as International experience has shown, democracy itself is threatened and may be irreparably damaged. Governments ignore at their peril demands by citizens to combat corruption.”
The Australia Institute
Open letter on the establishment of a National Integrity Committee.
Australia’s Royal Commission into financial misconduct has revealed a culture of widespread systemic corruption, fraud and toxicity. Revelations made by a handful of witnesses chosen from over 10,000 complaints horrified and angered Australians and sent shockwaves throughout the international community. The Royal Commission lifted the lid on decades of fraudulent practices neglected and concealed by regulatory agencies and Government inquiries. It also uncovered a trail of consequential destruction ranging from broken marriages, bankruptcies, homelessness, suicides to ongoing human rights abuses by banks.
Whilst the Commission’s Terms of Reference were specifically designed to limit the damage and embarrassment to Government, the revelations by those chosen to give evidence highlighted that a fraudulent and corrupt culture is deeply entrenched within Australian banking. These cases were just the tip of the iceberg. The testimonies brought to the forefront what is destined to become one of Australia’s biggest financial scandal.
Government failed to act, despite being aware of the endemic and systematic problems that plagued Australia’s financial markets. The case presented has been ongoing for a decade and highlights the difficulty for victims of fraudulent banking practices to get cases investigated. (Attachments 9(i), 9(ii) &15). It paints a picture of Australia’s weak governance, lack of commitment to AML/CTF legislation and systemic failures to adhere to ‘Rule of Law.’
The case centres around offences perpetrated by an institutional banker employed with ANZ National, an ANZ subsidiary in New Zealand.
In mid 2009, a complaint was lodged with ANZ’s Group Investigations concerning nearly a decade of unauthorised share trading occurring over a decade, identity theft, tax fraud, privacy breaches and money laundering offences relating to the unauthorised sale of a share portfolio 1997.
Despite the Australian Taxation Office data-matching program, the unauthorised share trading remained undetected until 2009. Whilst the fraud was reported to the Treasurer, Assistant Treasurer (Attachment 9(i), (ii), 11, 15 &16) and the Taxation Office on numerous occasions, no action was taken to address the alleged offences.
In order to substantiate the allegations, ANZ’s Group Investigations was provided in 2009 documentary evidence that included a forged E-TRADE CHESS Sponsorship Transfer dated 6/6/2006,
(Attachment 1), as well as evidence relating to multiple identities which ANZ Group Investigations acknowledged. (Attachments 2, 3 & 8). Group Investigations were also reminded of ANZ’s obligations to lodge a Suspect Activity Report (SAR).
In November 2009, the ANZ Group investigator dealing with the complaint advised that the matter was under investigation and, as such, details of the matter were to remain confidential. Then in early 2010, ANZ Group investigations advised that the matter had been investigated and no criminal offences had been identified.
At no stage did ANZ Group Investigations advise that an Internal Investigation would be undertaken in lieu of referring the matter to authorities. However, a letter received by ANZ’s Office of the Customer Advocate dated 12 January 2016 confirmed that Group Investigations had in fact undertaken an internal review in 2009 and that if I was experiencing difficulties I could contact “Lifeline” for assistance. (Attachment 4)
On 29 October 2018, a reply was received from the ANZ’s Office of the Customer Advocate addressing concerns raised in an email dated 3rd October 2018. It was again emphasized to ANZ, the security ramifications posed to the international community, as well as, ANZ’s actions potentially breaching US Foreign Corrupt Practices Act (FCPA) (Attachments 5, 6(i) & 6 (ii)).
In addition to complaints made to ANZ, a complaint was also lodged with the Commonwealth Bank in 2009. The complaint centred around the identification of fraudulent banking practices, malfeasance and CBA’s failure to comply to “Know Your Customer.”
A further complaint was lodged with CBA in March 2018 (Complaint Ref CF-5958263C / Customer Advocacy Ref CF-7007458C).
Letters were later forwarded to CBA’s CEO Matt Comyn and each Board Member advising of the case, in addition to the national and international security ramifications. (Attachment 13) However, despite both verbal and written requests to meet with CBA’s CEO and Board Members, CBA’s Customer Advocate remained steadfast in refusing to either refer the matter to, or arrange a meeting with, CBA’s CEO or its Board as was evident in Customer Advocates email dated 10 January 2019: –
“..we are unable to find any information to confirm that CBA has breached its obligations to you as you alleged. For this reason we are not in a position to review your complaint further and will not be arranging a meeting between yourself, Matt Comyn and the Board of Directors as you requested.” (Attachment 14)
Despite ANZ and CBA being advised of offences in both jurisdictions, both banks suggested that the matter should be referred to Australian Financial Complaints Authority (AFCA), (previously the Financial Service Ombudsman (FOS)) for resolution.
Although both ANZ and CBA had been advised on numerous occasions that the complaint could not be escalated to, or resolved by, the AFCA, they remained insistent that the matter be escalated through that avenue. The AFCA’s role in dealing with customer complaints against banks was as an independent mediator with no legal mandate to either investigate or prosecute criminal offences.
The ongoing mismanagement of this complaint raises serious concerns about the qualifications and expertise of those handling malfeasance complaints. Correspondence received from both banks (Attachments 4, 5, 6(i), 6(ii), 14) confirms those dealing with such complaints are ill-equipped to do so. CBA staff dealing with the complaint, confirmed that neither held any formal legal, accounting or forensic qualifications, they did however undertake AML/CTF training.
One of the major contributing factors leading to a decline in expertise within this area, has been decades of discriminatory recruitment practices which has seen recruiting practices failing to short-listed candidates based on “age” “knowledge” and “expertise” discrimination.
The ability of recruiters to recruit for such specialised positions needs to be questioned, as many in this field have little or no understanding of the value of transferrable skills that take years to accumulate.
These ongoing practices have downgraded an area of “specialist forensics” that has led to many in the area seeking alternative positions offshore. This has ultimately lead to a to decrease in the availability of such a valuable commodity to the Australian workforce which now having to be rebuilt.
In 2016 after a series of scandals, the Government established a House of Representative Standing Committee on Economics Annual Review of Australia’s Four Major Banks. The scope of the Review was to inquire and report on the Australian banking sector, with one of the main foci being prudential regulation.
The Review highlighted serious concerns in the way in which misconduct was dealt with. In ANZ’s case, Shane Elliott, previously the Head of ANZ’s Institutional Banking (2009 – 2011) and now its CEO was asked by the Chair of the Committee:-
“..and you do not think it is prudent to stand them down pending the outcome of the allegation by an independent arbiter—a court—as opposed to your own internal investigation”
“Isn’t it quite a standard practice, when employees or officers of other bodies are the subject of serious allegations, for them to stand aside pending the resolution of that allegation?” [i]
Shayne Elliott responded: –
“I think that takes us down a very difficult road that says, just because a regulator is investigating something, we should stand down all the people that are potentially involved in something. It takes us down to quite a difficult employee relations issue.”[ii]
The response appeared to confirm that allegations of misconduct against ANZ employees continued to be handled internally in lieu of referring such complaints to the appropriate authorities, as had been the case in this instance.
Despite these ongoing practices also breaching a bank’s “fiduciary duties” to its customers, the Committee was also at fault as it failed its due diligence to the Australian public, as ANZ’s actions were in breach of the Corporations Act and the Directors responsibilities to its shareholders.
Despite previous Government Inquiries identifying problems of misconduct, Banks did little to restore community confidence and trust in the way in which they dealt with customer complaints. Recently the Banking Royal Commission highlighted that the banks’ actions in dealing with misconduct were often associated with greed and:-
“… the pursuit of short-term profit at the expense of basic standards of honesty…when misconduct was revealed, it either went unpunished or the consequences did not meet the seriousness of what had been done”[iii]
Whilst ANZ acknowledged that there was a responsibility to “work closely with government to detect and disrupt those who seek to break our laws,”[iv] there was still an inertia when ANZ came to dealing with complaints involving misconduct of its employees.
A number of past Government Inquiries into the Financial Markets such as the Senate Inquiry into the Performance of ASIC, whilst tasked with identifying and addressing issues pertinent to undermining of public confidence, did little, to either address systemic fraud or corrupt practices, hence failing to quell public concerns about Australia’s financial integrity.
Despite a submission to the Senate Inquiry into the Performance of ASIC provided the Inquiry with serious misconduct issues in relation to this case, the Inquiry failed to the matter for investigation, this was despite being advised that the matter also compromised New Zealand’s financial and AML/CTF. Given the seriousness of the case, the Inquiry denied me the right to present evidence prior to making the submission 273 “Confidential.”
The Inquiry also denied numerous requests to make the submission public under “Public Interest” with neither the Economics Committee or the Secretariat being able to advise who would be responsible for advising the New Zealand Government (Attachment 7).
The lack of accountability at the highest echelon of Parliament raised two questions. Firstly, who is responsible in cases such as these, and secondly, what is the purpose of having Parliamentary and Senate Inquiries if submissions raising social, economic and national security concerns are ignored.
The ability of bureaucrats to conceal and dismiss offences, engage in Rule of Law breaches, mislead Parliament and make decisions which they are neither legally mandated or qualified to make, continue to pose ongoing social, economic and national security risks to the Australian community.
This case also highlights systemic failures within bureaucratic process, which have seen cases like this one failing to be investigated due to the actions of negligent, incompetent and corrupt bureaucrats failing to comply with Section 13 of the Public Service Act. (Attachment 10 & 12)
Whilst Section13 requires bureaucrats to act with integrity, diligently, ethically and honestly in addition to ensuring compliance with all Australian laws, this legislation is not only often ignored, but it is also rarely adhered to.
Sections 13 (1) & 4 (a) & (b) states:-
(1) An APS employee must behave honestly and with integrity in connection with APS employment.
(4) An APS employee, when acting in connection with APS employment, must comply with all applicable Australian laws. For this purpose, Australian law means:
(a) any Act (including this Act), or any instrument made under an Act; or
(b) any law of a State or Territory, including any instrument made under such a law.
Over the past decades Australian politicians and political parties have consistently made decisions that have lacked transparency and solely based on political gain and not on public interest. One could pose the question, is this the only case or are there others similar cases?
In its essence, the way in which this case has been dealt with highlights a myriad of serious national security flaws and a failure of Australia’s “Whole of Government” approach to National Security[v] which Government should now urgently address as a matter of priority.
The wider implications of decades of negligence and concealing misconduct in order to benefit political expediency has resulted in the undermining Australia’s financial integrity, economic stability and the very fabric of Australia’s democracy and its democratic processes.
This has ultimately resulted in a loss of confidence and trust in government and its bureaucracy.
“Effective democracy depends on informed voters. In a truly open society, citizens are entitled to full knowledge of government affairs. Information about official conduct does not become any less important because it diminishes official reputations”
Federal Court Judge and Commissioner of the Fitzgerald Inquiry, Hon Tony Fitzgerald AC QC
Despite the disturbing revelations of numerous Inquiries into Australia’s banking sector, including that of the Senate Inquiry into the Performance of ASIC, Government remained reluctant to hold a Royal Commission, a view shared by ANZ’s CEO, Shayne Elliott in his evidence to a Standing Committee:-
“…….hard to know exactly what the benefit would be……” adding further “…..I believe we can stand here today and say that the conduct and the operation of the industry today is better than it was in the past and we’re making real progress to restore the community’s confidence and trust in our system. We have a very, very important role to play in the economy. I think that should be our primary focus. Yes, we should fix all these things. I personally believe that a royal commission would be distracting.”[vi]
Despite CBA’s CEO Matt Comyn admission that it failed to “prevent misconduct” and ANZ’s CEO Shayne Elliot being “appalled” at seeing the impact misconduct had on victims, this case and the evidence provided is testament that nothing has really changed. Victims of fraudulent and corrupt banking practices continue to be put through a merry-go-round of ongoing abuse, hoping they would eventually give up.
Successive Governments, Ministers, politicians and bureaucrats who knew about these practises, but for political expediency and their political survival chose to remain silent and conceal banking misconduct rather than act in the interests of the Australian public should now be held accountable. Those responsible that have misused and abused their vested powers, should now be held accountable and prosecuted under the Common Law provision “Misconduct in Public Office” (Attachment Article by David Lusty)
The release of the Banking Royal Commission’s findings has today vindicated all those that for decade have been speaking out against fraudulent and corrupt baking practices. Their joint efforts will ensure Australia’s future generation of children will inherit a more robust, viable and prosperous economic future.
[i] Commonwealth of Australia, House of Representative Standing Committee on Economics, Annual review of Australia’s four major banks Official Committee 5 October 2016, p. 5. Canberra
[ii] Commonwealth of Australia, House of Representative Standing Committee on Economics, Annual review of Australia’s four major banks Official Committee 5 October 2016, p. 5. Canberra
[iii] Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry The Interim Report of the Financial Services Royal Commission https://financialservices.royalcommission.gov.au/Pages/interim-report.aspx
[iv] Mr Shayne Elliott, CEO, Australia and New Zealand Banking Group (ANZ), House of Representatives Standing Committee on Economics, Review of the four major banks (third report), Committee Hansard, 11 October 2017, p. 39.
[v] Australian Government “Strong and Secure – A Strategy for Australia’s National Security 2013 https://apo.org.au/sites/default/files/resource-files/2013/01/apo-nid33996-1218491.pdf
[vi] Shayne Elliott, CEO, Australia and New Zealand Banking Group (ANZ), House of Representatives Standing Committee on Economics, Review of the four major banks (third report), Committee Hansard, 11 October 2017, p. 59.
House of Representative Standing Committee on Economics Reports have been attached and are also available on the above Australian Government website.
Other Relevant articles
Philomena O’Grady: ,,Decades of Negligence, Corruption and Conflict of Interest within Australia’s Financial Markets – Who is Accountable when Banks compromise another jurisdictions Financial Integrity?”
For more details: firstname.lastname@example.org