More bad news for the banks

Ross Greenwood speaks to Former chairman of the ACCC, Professor Allan Fels, as criminal charges over alleged cartel conduct, primarily arranging shares, to help boost their capital reserves, are laid against ANZ, Citigroup, Deutsche Bank and a number of individuals including the former CEO of Citigroup and the ANZ chief risk officer.

Introduction: More bad news for the banks

ROSS GREENWOOD:  It was a big news abroad that was broken light this afternoon, and that is that the common multi pop of public prosecution and has lied charges this afternoon and spelt them out against some of the Australia’s and the world’s largest banking organization. So this not that include charges against Citigroup, also George Bank and The Iron Zenith Bank. Now, each being charged with criminal cartel offenses, but there are also criminal charges that have being laid against a number of individuals. Including, now let’s get some of these people here for you so we’ve actually got them, the Iron Zenith’s Chief Risk Office for Australia, Rick Moscati. There is also Steven Roberts, the Former Chief Executive of City in Australia, it was at one time slided tio become a chairman here but never took up that role, left in 2016. Certainly in his time one of the most significant and powerful bank is in Australia. Also charged from Citigroup as Managing Director, John McClane, that’s here in Foreign Exchange Itai Tutman. There’s also Michael Umachea, formerly the head of George Bank in Australia, he retired in January last year after 22 years. Formerly headed up global marketing Asia Pacific. The former Head of Equity Capital Markets of George Bank, Merrill Linch Bank of America Michael Richison. Now, all of this people deny these charges. It’s going to be interesting to see what does take place.

Now the A Triple C says, because this is a criminal man hunt, before the court it will not provide further comment and is listed to appear before the downing central local court in Sydney on third of July and we understand that even the charge shapes will not be available. Until these people appear in the court at their time. One person will take an interest in a way which is investigating has been undertaken. Now there is a former Chairman of the A Triple C Professor Allan Fels who’s online right now. Many thanks to your time Allan.

Interview with: Allan Fels, Former Chairman, ACCC

PROFESSOR ALLAN FELS: Thank you, Ross.

ROSS GREENWOOD:  Can you just tell me what is the significance of the A Triple C being involved in this investigation?

PROFESSOR ALLAN FELS: Well it’s very big because of the fact that it stands in Maca Industry, the part to conduct criminal cases has been now pulled about 8 years, we all knew that it would be off to a close path, we have to find evidence and compile the case and so on. But we now have three cases, that this is a really big one and it will have a far in re-cautions across a whole of corporate Australia to know that, and live conspiracy to restrict conned and put up cross can put you in jail.

ROSS GREENWOOD:  Is it important, Allan that it’s the A Triple C that has conducted this investigation and not the Corporate Regulator Asic? Does that suggest something of a two fall between the two? And Maybe the A Triple C is sick to take on more pulse in investigation into the Corporate sector?

PROFESSOR ALLAN FELS: Normally, cartel cases are run by the A Triple C and Assic does more on consumer protection so to speak of investors inside of trading and that kind of thing. So it’s a silly normal division of labor. Of course, what in way comes there is the fact that the A Triple C has always been a dead serious of strong enforcer of the law, Asic has been less prone to go to court. Apparently, this case has been under investigation for two years, and it’s basically looks more like a coincidence that it’s happening in the middle of the royal commission.

ROSS GREENWOOD:  More of a coincidence, but what you’re saying is that the A Triple C is again proving itself as the tough cop on the beat as compared with Asic which has a history of trying to negotiate settlement or enforceable undertakings?

PROFESSOR ALLAN FELS: That’s absolutely true and in this case the people under receiving in the start, we can tell what they’re taking to the press, so that sort of thing will– maybe the law doesn’t apply to after all. Even if we broke the law, the police should have talked to us in advance and things like that. And that culture just doesn’t apply in the world of competition law.

ROSS GREENWOOD:  We should explain to the people why this is taking place and it’s effectively going back to 2015. The Iron Zenith Bank was said to rise two and a half billion dollars from a share holders. What happened was that not enough of those share holders put their hands on there pockets for that two and a half billion dollars, it was ultimately twenty five and a half million shares that were worth seven hundred and eighty nine million dollars as a short fall which was never revealed to those investors which might also be the subject of separate class section precedings in the future. But ultimately many of this so called under writers, some of this biggest organizations took out many of those shares but much of that was never revealed to the market. That’s what this is really all about it, isn’t it?

PROFESSOR ALLAN FELS: Yes, on the space of it, Ross at our competition system. This looks like competition law 101. A group of people got together and agreed to restrict output and therefore to put out process and everyone should know that that’s illegal in any sector of the economy the law applies to all markets for goods and services.

ROSS GREENWOOD:  Now it’s interesting you say that, because I could have imagine that happening in, I don’t know, maybe the water market, maybe in the electricity market, maybe in the cardboard box market. But the suggest could have happened in the stock market is interesting because there was security laws that cover the trading of shares which does not necessarily cover the trading of other goods.

PROFESSOR ALLAN FELS: That is correct about the security laws is no exemption, whatsoever, from the competition law if they just address our issues. And I’m quite surprised that they are meant to be serious compliance programs in this organizations telling people whatever you do don’t reach past agreements with competitive or anyone else. I don’t quite know why the compliance programs haven’t covered that. I mean maybe they did, maybe they didn’t but it’s just as I said, competition 101 you don’t get into those sorts of agreement.

ROSS GREENWOOD:  Tell you what Allan Fels, it was good having you in the program. Professor Allan Fels is the former Chairman of the A Triple C and we appreciate your time.

PROFESSOR ALLAN FELS: Thanks, Ross.

 

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