Austrac’s allegations of systematic breaches of money laundering laws by Westpac, extending to tens of millions of transactions, billions of dollars and the enabling of child exploitation, demonstrate again that there’s something rotten — perniciously rotten — at the heart of Australian capitalism.
As one of the big four banks, Westpac — the second to be pinged by Austrac for systematic law breaking — is at the heart of the economy. Its board is supposedly the cream of Australian corporate and financial genius, featuring names like Lindsay Maxsted, Ewen Crouch, Craig Dunn and Margie Seale. Its dividends prop up retirement incomes for hundreds of thousands of Australians.
And it is at the heart of the Australian political system. Since 2010, Westpac has handed over $780,000 in donations to the Coalition — a key reason why the Liberal Party gutted the corporate regulator, tried to repeal financial advice regulation and prevent a royal commission from exposing the banks’ abuses. It gave over $600,000 to Labor, too, to try to keep the other side sweet.
As it turned out, the Liberals’ efforts to protect Westpac and the other banks backfired — they acted more like a flimsy dam wall that, when it inevitably burst, made the resulting mess far worse. But there was another way in which, unintentionally, the Liberals made Westpac’s — and the CBA’s — humiliation inevitable.
While the Abbott government gutted ASIC and tried to repeal financial advice regulation to protect the banks, Austrac belongs to the one area where the Coalition has always been a hardline, indeed draconian, regulator — national security. Austrac never had its budget slashed by hundreds of millions, as the Abbott government did to ASIC; to do so would have been to risk being seen as soft on terrorism and organised crime, not so much by voters as by other governments and particularly our Five Eyes allies.
As it turned out, it was Austrac that exposed the most colossal law-breaking by the CBA. And now it has done the same to Westpac — only much, much worse, both in scale and in the link with something unforgivable even among business and finance commentators — child abuse.
These weren’t accidental breaches. Austrac specifically warned Westpac about the potential for its systems to be used to fund the trafficking and exploitation of children and how to stop it. You’d have thought the mention of child abuse would have spurred any decent human being into dropping everything and doing whatever it took to prevent it. Money, surely, should have been no object in making sure Westpac wasn’t facilitating the sexual exploitation of kids.
But it took them two years to swing into action — those two years being the point at which public confidence in the banks reached a nadir, while bank promises to turn over a new leaf reached a peak — and there’s still no guarantee the problem isn’t ongoing.
This reflects a toxic culture within Westpac. It’s not just the Austrac allegations. Back in late October, a decision of a full Federal Court appeal saw ASIC win an appeal against Westpac over a campaign aimed at encouraging customers to roll over their superannuation savings into bank-run products.
One judge accused Westpac of “systemic sharp practice”; another judge said Westpac had “pursued its own self-interest” and “took unfair advantage of that asymmetry by implementing a carefully crafted telephone campaign … directed to persons with whom Westpac had an existing relationship and in a real sense occupied a position of trust with respect to the customer’s superannuation fund”.
“The whole approach of Westpac,” said the third judge, “was to obtain an advantage for itself without engaging with the personal circumstances of the customers so as to avoid the consequences of the responsibilities of providing personal advice.”
These are the kinds of descriptions you’d expect of a shonky builder, a pawnshop or a boiler-room operator, not one of the pillars of Australian capitalism and Australia’s oldest bank, supposedly run and overseen by the best and brightest corporate Australia has to offer.
Whether it’s systemic law-breaking by the major banks, the epidemic of wage theft and exploitation of migrants by businesses large and small across the country, the building standards scandal in NSW, the gaming of energy regulation by oligopolistic power companies or the funding of climate denialism, there’s an indifference to basic morality and behavioural standards baked into Australian business, coupled with a confidence that regulators could be ignored, litigated away or settled with, with relative impunity.
Until recently, that confidence was not misplaced. And the profound cultural problems within Westpac are by no means confined to that institution or even the big banks.
Most likely the major cause of Westpac indifference to where money flowed abroad was that monitoring this area, or allocating resources to it, was regarded as a waste of money. It wasn’t a profit centre that could deliver bonuses up the chain, so no point in resourcing it. Never mind that transactions might be funding terrorists, or child exploiters. If the transactions provide a profit, why put resources into stopping them?
Anne Lampe
I think in a sense you have nailed part of the problem, which is “profit centers and bonuses”.
I remember when having a position in “the bank”, was meant to indicate that you were a person of integrity and to be trusted.
People of my age and my husband’s age have always trusted our bank manager’s advice, and so, to have that trust exploited for personal gain is not only deceitful but also despicable and deeply dishonerable.
Who, actually was told about the vulnerabilities in the Westpac system, by Austrac?
At what level, in this bank’s management hierarchy was this information and offer of assistance by Austrac, made?
Who else was informed?
Who made the decision to do nothing?
There is absolutely no point in allowing the CEO to fall on his sword and then promote the person who thought ignoring Austrac’s advice was saving the bank some money and someone’s bonus.
These are salient questions, because, after having seen the pictures, taken by CBA bank staff and forwarded to head office; of the money launders seated on milk crates, black backpacks between their knees, loading piles of $100 bills into the ATM’s and transferring proceeds of crime and money in support of terrorism, overseas. The same questions rolled through my head.
I was more than surprised that somehow an in house promotion by the CBA board of Matt Combyn, went without comment by the broader shareholders, none of who seemed able to ask these questions.
Yes, there is something rotting in the center of a lot of business practices in Australia and there is only one way, that I can see to lance this life threatening mess.
Drop the bonus system altogether, thus removing the temptation to cook the figures, all together.
Start recruiting decent,bright, loyal and honest staff from high school and support their educational aspirations, that is how the Reserve bank Governor Phillip Lowe, got the education his family could never have afforded.
And Australia is the better and stronger for it.
Reintroduce in house auditors, who turn up without warning and check out the levels, branches and other checks and balances that should be in place.
Despite being governed by people who avow belief in libertarian free markets, we seem beset by rent-seekers on all sides.
Free market liberalism is all about rent seeking, Altakoi.
And the difference between a bank and a casino is,…, effin’ nothing.
The penultimate paragraph captures the problem.
And yet, only yesterday, the PM was spruiking getting rid of the very “red tape” that used to offer protection to society in a variety of ways. We are a deeply stupid people.
Agreed. It seems to me that the people shrieking most loudly for the reduction of “red tape” are those whose ability to exploit their market position is constrained by that same red tape. Such people really want no “red tap”e at all and conservative governments are usually only too happy to cut red tape, especially red tape that offers protections for the disempowered but threatens profits. Strangely, the Coalition are only too happy to legislate masses of red tape in pursuit of their authoritarian agenda and to maintain tight control over the population-at-large, usually under the guise of “national security”, but equally directed at those who seek to expose the corruption of the LNP. The catch cry of business is that business can be trusted, because market forces will make them do the right thing. Perversely, it is the opposite of what happens and those who are in positions of power are far more likely to try and find ways to circumvent laws in the rabid pursuit of profits. It is worse in the banking sector, because of the perverse impact of privatising banking profits, but nationalising their risks (as happened around the world to the tune a hundreds of billions when the GFC blew up and infected banks around the globe, leaving the banks to run “caps in hand” to governments asking for bailouts and/or guarantees)
The banks’ behaviours show very clearly that once we get ensconced into a herd or tribe, our capacity to subvert morality and ethical behaviour in order to fit in and enjoy the rewards for the herd members is vast. In essence, none of us is as dumb as all us and the power of a few to lead a large group into wrong is frightening. No wonder Morrison works so hard to try and split Australia into tribes, hoping that his tribe or cult of quiet Australians will be bigger than those who belong to other tribes.
That “indifference to morality” is ably abetted by this LNP government, with a supposed Christian as the commander in chief…bring on a proper Federal ICAC..!!
Have you noted that whenever the PM is asked about something important, such, the chance of Chinese influence in our society.
He commences a holy roller foam, lips moving foam emitting, of, “oh, yes, all of our government instruments are finely tasked to detect and protect us”.
All he forgot, (for those of us old enough to remember), is “Don’t you worry about that!”.
I suspect he could barely contain his usual sentiment of “I don’t think it is appropriate to cause anxiety in the general population”, then silently thinking; I have no intention of addressing, Chinese influnce, because the Liberal Party gets so many donations from Gladys Lui.