“There has been a significant move inside our Federal Parliament with the Senate failing to pass the so-called ‘Ensuring Integrity Bill’
This came as a result of Labor and the Greens having both Jacqui Lambie and One Nation siding with them to have the bill tied up at 34-all.
But something clearly changed the minds of Pauline Hanson and Jacqui Lambie” (Listen Here)
Newsletter – November 29 2019
In all years of being a financial journalist, I have never been as shocked as I have been this week.
Some of the revelations that I have seen and heard by Australia’s oldest bank, Westpac, really have shocked me.
The speed of which major executives have fallen on their swords is outstanding – five days was all it took…but, frankly, they held on too long.
The Chairman Lindsay Maxsted – who for the past five years have been rated as the most respected and powerful director in Australia – gone in the first half of next year.
Its chief executive Brian Hartzer – the ‘Teflon King’ from the Royal Commission – gone already.
The head of risk and compliance committee Ewen Crouch – won’t be seeking re-election at the banks AGM next month.
Three major scalps and no doubt more will come.
As the outgoing chairman said – “To not make the change could be damaging to the bank.” (Listen Here)
Allegations Australia’s second largest bank breached anti-money laundering and counter-terrorism financing laws 23 million times have rocked the financial world. (Watch here)
Last week AUSTRAC, the financial crimes regulator, alleged Westpac engaged in “widespread, systemic and frequent failures” to adhere to anti-money laundering laws and hampered its ability to prevent child exploitation.
It is alleging Westpac did not report some 3,000 transactions where 12 Westpac customers, who transferred a total of $497,612 in small amounts to the Philippines, and other south-east Asian countries for child pornography going as far back as 2013.
With these allegations hanging over their heads, there was no doubt people had to be held accountable and there is no surprise the chief executive and chairman are gone – there position became untenable.
Home Affairs minister Peter Dutton even saying Westpac gave ‘a free pass to paedophiles’.
“Westpac banking bosses, through their negligence, have given a free pass to paedophiles and there is a price to pay for that and that price will be paid and we have been very clear about it,”(Listen Here)
Accountability – that is the key here.
As Treasurer Josh Frydenberg says “These breaches are of the most serious nature and there needed to be accountability.” (Watch Here)
And on Tuesday, we found out who were the first to fall.
But what drove the ultimately decision, and why so quickly?
Head of research for Institutional Shareholder Services Vas Kolesnikoff says shareholders would have driven the decision to step down the CEO.
“I think shareholders would have expressed their concern that the board and management don’t seem to be willing to accept accountability.
“Mistakes are made, however in this game that is corporate Australia responsibility needs to be accepted by boards and their management for their actions.” (Watch Here)
And shareholders are not the only ones making noise – First Super CEO Bill Watson, who manages $3.3 billion on behalf of 50,000 people, and who owns shares in Westpac says the board didn’t uphold its responsibilities.
“They’ve done too little, too late, and they haven’t managed what is really a disgraceful situation.
“We still think that some of the directors that have been around since 2015… need to have a bit of a think about their positions as well.” (Listen Here)
Now, Westpac ‘s panic is obvious – the new interim boss is Peter King. However, it was only a month ago he resigned as Chief Financial officer.
But it’s the speed of which all these events have occurred which have me stumped.
It was only on Sunday Westpac’s directors thought they could guts it out.
With Brian Hartzer even saying “I am absolutely committed to getting to the bottom of this” (Watch here).
Well, he won’t have a chance do to that now and rubbing salt into the wound, he will be paid $2.7 million as he leaves in lieu of 12 months’ notice – that’s on top of around $33 million he earnt in the past six years.
But here is the nagging question – when did Westpac really know about AUSTRAC’s concerns
First, an outright denial from Chairman – “We had no knowledge in advance of last Friday week.” (Listen Here)
But later, something odd…
“AUSTRAC met with the whole board of Westpac in March this year.” (Watch here)
So was Westpac really blindsided by AUSTRAC?
Doubtful. What I can tell you is there was ongoing dialogue between Westpac and AUSTRAC over a very long period of time, over its systems.
Now, whether it knew specifically about that child exploitation is one thing, but it certainly knew it had fundamental problems inside the bank and that’s why the resignations had to come and why more will follow.
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