November 22, 2019 17:20:45
The board of Westpac has held an emergency meeting as the bank stands accused of 23 million breaches of money laundering laws, but no heads have rolled.
- AUSTRAC made a damning assessment of Westpac’s senior management and board
- The AFP says it is working with AUSTRAC to assess the child exploitation allegations
- The board will face investors at its annual general meeting in three weeks
However, the meeting ended with the senior executive team and board of directors intact, as the board maintained the status quo.
“As a board, and as individuals, we are devastated by the issues raised by AUSTRAC in its recent statement of claim,” Westpac chairman Lindsay Maxsted said in a statement to the stock exchange.
“Our board, CEO, and management team are fully committed to fixing these issues and we are taking all steps necessary to urgently close any remaining gaps and fix our policies and procedures so that this can never happen again.”
The Westpac share price has taken a battering, falling from $26.55 at close of trade on Tuesday to $24.77 at Friday’s close — a drop of nearly 7 per cent over three sessions.
Ahead of the board meeting, Prime Minister Scott Morrison had called for action to restore confidence in Australia’s banking system.
“I would like to see at this board meeting and the many board meetings that will follow a confident plan to address, firstly, the clear weaknesses they’ve had in their systems that have allowed this to take place, which they have identified,” Mr Morrison told 3AW.
“And secondly, there has to be some understanding of the accountability for when these things happen.”
In its statement, the board said improvements had been made to its anti-money-laundering compliance, and it would appoint “independent experts” to oversee its work, including a “review of accountability”.
“The board will provide an update in coming days to share more information on what has occurred and what steps we are taking,” it said.
AFP working with AUSTRAC on child-exploitation matters
Court documents filed by AUSTRAC were highly critical of the response of Westpac’s executives and directors to money laundering compliance.
“These contraventions are the result of systemic failures in its control environment, indifference by senior management and inadequate oversight by the board,” the statement of claim read.
The revelations that Westpac’s LitePay service allowed paedophiles to send money to the Philippines to pay for child exploitation have been condemned by child protection advocates.
The Australian Federal Police (AFP) has confirmed it is currently assessing the matter.
“The AFP can confirm it has been working with AUSTRAC and is aware of the individuals identified [who are] suspected of suspicious transactions which may relate to child sex offences,” it said in a statement.
The pressure on Westpac’s board could come to a head at its annual general meeting, due to be held in three weeks in Sydney.
Last year, Westpac shareholders delivered an overwhelming protest vote against the bank’s executive pay report, after a horror year of reputational damage stemming from the banking royal commission.
A second protest vote at this year’s meeting would deliver a ‘second strike’, triggering a shareholder vote on whether to spill the board.
CBA laundering scandal cost boss his job
The board’s statement on Friday echoed Brian Hartzer’s comments in a media call on Wednesday, when he asserted he would personally lead the bank’s response.
However, Jefferies banking analyst Brian Johnson told The Business other bank chief executives have left for less.
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“Someone has got to be accountable. It comes down to three questions — did the senior executives at Westpac know, should they have known and did they act in an appropriate way to deal with this?”
Former Commonwealth Bank CEO Ian Narev ended his tenure early after AUSTRAC launched civil proceedings against the bank for failing to report almost 54,000 suspicious transactions.
“I would have thought the board at Westpac will be sitting down and looking at what happened at Commonwealth Bank where directors’ scalps were basically claimed, and they’ll have to really think about what they do,” said Mr Johnson.
“It certainly is a significant issue and one that Westpac really needs to come out and address.”
November 22, 2019 13:24:52
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