By Dr George Venturini  

Dr. E. Jones, a distinguished senior academic in the Department of Political Economy at the University of Sydney, had been an early critic of the Royal Commission. “The Terms of Reference were a motley collection of admirable and potentially limiting or diverting items,” wrote Dr. Jones. “Its preamble was a shocker of government self-delusion – a system “most stable”, “systemically strong”, “internationally recognised”, “world’s best”, and so on.

That and the ridiculous brevity of the Commission’s mandate looked like a Clayton’s Commission in the making. Thus the title of his series, as previously noted, on the backdrop to the Royal Commission hearings.

“The Commission’s early hearings were a surprise. There had been assertive questioning of the banking sector’s cosseted and overpaid leaders,” wrote Jones. The A.M.P., a financial services company in Australia and New Zealand providing superannuation and investment products, insurance, financial advice and banking products including home loans and savings accounts, possibly a fifth pillar of crime, had come crashing down. “Banking involvement in the corrupt franchise sector had been a revelation.”

“But much of the supposed shock horror exposures had already received good coverage in myriad Parliamentary inquiries and ongoing Fairfax media stories.

Beginning 21 May, the Banking Royal Commission devoted a cursory two weeks to small business lending. Cursory, because this sector has been long under the radar.” (E. Jones, ‘The Royal Commission falls from grace’, Independent Australia, 23 June 2018).

Ms. Kate Carnell, the  Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, rightly expressed dismay at the brief period allocated to small business.

Having been the regular recipient of bank victim accounts since 2000, Dr. Jones is atypically familiar with the banks’ modus operandi regarding its small business, and family farmer, borrowers. It is perennially ugly. He can attest that it is a sector rife with malpractice, indeed criminality.

Dr. Jones described an event with more than a whiff of malignity which was the takedown of close to a thousand Bankwest commercial property borrowers after the C.B.A. purchased Bankwest from HBOS Australia on 19 December 2008.

“Curious, then – he said – that Counsel Assisting, Michael Hodge QC, should open the small business session declaiming that the foreclosed customers got the story wrong regarding the C.B.A.’s motivation for this takedown.

The key alleged claims were that the C.B.A.’s ultimate purchase price could be reduced by default and foreclosure of select Bankwest borrowers (“clawback”) and/or that a desired enhancement of the bank’s tier one capital adequacy ratio could similarly be achieved by such foreclosures.

Mr. Hodge noted that these ulterior motives:

“… allow the convenience of avoiding grappling with the risk presented by a particular borrower or industry… They therefore avoid asking how a bank might or might not legitimately respond to its perception of increased risk in respect of a particular loan or lending in a particular industry.”

This characterisation could have been written by the bank itself.

The Hodge presentation was readily picked up by the Australian Financial Review and painted as the unvarnished truth and the last word.

Mr. Hodge’s summary of the supposed claims is inadequate, indeed inaccurate.

Bankwest victims were forced to make inferences from the fragmentary information publicly available. Two Parliamentary inquiries (Post-GFC Banking, Impairment of Customer Loans) were impeded for having no access to the documentation. A Royal Commission is supposed to get to the bottom of things.

It is indisputable that the C.B.A. tried to clawback a sizeable $47 million of resort developer Rory O’Brien’s loan but was denied by HBOS and its advisers. Some clawback was obtained with the ultimate price paid being $2.126 billion, compared to the agreed $2.428 billion. Moreover, HBOS’s book value for Bankwest at time of purchase was $3.676 billion. Has the takedown already been pre-ordained in the large-scale discount in the purchase price?

The injustice and the scale of the C.B.A. foreclosures [have] generated a resolve amongst foreclosed Bankwest borrowers that has led to numerous inquiries and, ultimately, to the Royal Commission itself. For this group to be crudely impugned is to threaten the integrity and reputation of what should formally be an august procedure.

The stakes involved in the C.B.A. takeover are enormous. Bankwest’s parent HBOS was ailing. The Government and the regulatory apparatus gave CBA carte blanche to acquire Bankwest (in a hurry) in the interests of system stability. The A.C.C.C. produced, to my mind, a questionable accommodating report, asserting that the takeover was not anti-competitive.

A superficial glance at a sample of Bankwest victims unearths familiar stratagems. The Global Financial Crisis did not universally wipe out values. Rather, there followed strategic devaluation of assets, promises not kept, arbitrary imposition of usurious fees and penalties, receivers rampaging through appropriated properties, customer assets sold ridiculously under value and fabricated residual debt.

Some Bankwest victims and families were disgracefully harassed. Where is the commercial imperative in this sadistic behaviour?

One’s initial fears of a Clayton’s Royal Commission are now rekindled with substance. It appears that there are forces greater than merely the CBA itself that want this large-scale borrower foreclosure removed from forensic examination, exposure and redress.

The C.B.A. has been exposed as a corporate blackguard regarding Storm Financial, Commonwealth Financial Planning, Comminsure, Dollarmite accounts, money laundering facilitation on a vast scale… Can we seriously believe that the C.B.A. has been driven by “commercial imperatives” in this wholesale cleanout of Bankwest’s commercial portfolio?

The foreclosed Bankwest borrowers have been sacrificial lambs for a process instigated for a broader public purpose. The C.B.A. appropriated that public purpose for a private end – with catastrophic results for many victims.

All documentation relevant to the purchase should be made public. The entire paper trail of the purchase and the C.B.A.’s foreclosure program should be exposed.

Retail banks, regardless of their private ownership, are para-state organisations. Their public role is fundamental – hence the need for commensurate regulation.

The 1981 Campbell Report – the bible and rule book of financial deregulation – got it wrong. The Report claimed that rudimentary prudential capital provisions and unrestrained competition would produce the goods. The Report’s authors declined to enlighten us on what “competition” in retail banking involved.

Campbell claimed there was no need for specialised or government-owned banks. Thus they were done away with. Of special relevance is the closure of the small business/farmer Commonwealth Development Bank in mid-1996, with the privatisation of its parent bank.

From day one of deregulation, the experience was anything but salutary — witness the foreign currency loans scandal and the orgy of crazy lending to dodgy corporates.

My interpretation of the 1991 Martin Banking Inquiry is that it was oriented not to dissecting and repairing the dysfunctionality of the de-regulated 1980s, but to diverting dissent — not least from the victims’ publicity conduit, Democrat Senator Paul McLean.

Post-Martin, the banks were granted self-regulation in the form of the banking ombudsman and the cynically-contrived privatised code of banking practice.

This is the backdrop to the current environment in which the banking sector treats selected borrowers savagely and with impunity. Thus has, in particular, the People’s Bank become the nemesis of the people.

The bank lender – small business/farmer borrower relationship is one of the most asymmetric of all commercial exchanges.

Nobody cares to examine the character of the relationship, least of all the complicit legal profession and the ill-educated courts. Banking law academics are silent. A contract is a contract, says the law.

Banks break the contract at will, but the courts see only borrowers’ indebtedness and obligation for repayment.

And what price the hallowed contract when a borrower’s contract with a lender is assumed by another when the lender is taken over, the new owner proceeding to change the terms of the contract? This issue is especially relevant when the borrower is a farmer with a loan with a specialist rural lender (Commonwealth Development Bank, Primary Industries Bank Australia, Landmark, Rural Finance Corporation of Victoria) that is taken over by a conventional bank.

Bank borrowers essentially have no rights, only obligations.

Banks perennially take customer security, especially the family residence and extended family guarantees, not to mitigate risk, but as a vehicle for ready predation. The strategic object ab initio is property theft. Armed with a banking license, it’s as easy as falling off a log.

The credit relationship is one of structured dependence, traditionally compensated by trust in professional expertise and integrity. But the banker has been replaced by the money lender. Trust is betrayed and the customer is disarmed from the beginning.

These issues have been laid out in my submission to the Royal Commission in late February. Commission staff have not seen fit to contact me, even given my evident broad exposure to the nature of the beast that is the subject of the Commission’s investigation.

The banks remain unrepentant. There is every probability that when the Commission runs its course the banks will carry on with their entrenched unlovely practices – indeed, with a new ferocity.

A.S.I.C. will continue to tell small business complainants to go away, in spite of its legislated responsibilities for unconscionable conduct in financial services. The Financial Ombudsman Service, soon to move unreformed into the Australian Financial Complaints Authority, will continue to destroy borrower hopes by deferring to the interests of the banks that provide its funding.

“Entrepreneurship” is touted as the root stock of a free enterprise economy. In this environment, anybody who takes that calling at face value is living in a fool’s paradise.” (E. Jones, ‘The Royal Commission falls from grace’, Independent Australia, 23 June 2018).

Dr. Jones had early made a submission to the Royal Commission (‘Submission to the Banking Etc Royal Commission,’ bankvictims.com.au, 6 March 2018).

Here is, in substance, the Executive Summary of the Interim Report.

“The Commission’s work, so far, has shown conduct by financial services entities that has brought public attention and condemnation. Some conduct was already known to regulators and the public generally; some was not.”

Commissioner Hayne asked two questions. “Why did it happen? What can be done to avoid it happening again? These are now the key questions.”

In the Interim Report these questions – ‘why’ and ‘what now’ – were asked with particular reference to banks, loan intermediaries and financial advice, with a view to provoking informed debate about both questions.

As for the first question, “Why did it happen?” the Commissioner said:

“Too often, the answer seems to be greed – the pursuit of short-term profit at the expense of basic standards of honesty. How else is charging continuing advice fees to the dead to be explained? But it is necessary then to go behind the particular events and ask how and why they came about.

Banks, and all financial services entities recognised that they sold services and products. Selling became their focus of attention. Too often it became the sole focus of attention. Products and services multiplied. Banks searched for their ‘share of the customer’s wallet’. From the executive suite to the front line, staff were measured and rewarded by reference to profit and sales.”

Australia’s banks built every part of their operations around selling, to maximise profits, at the expense of serving their customers’ needs.

The Interim Report noted:

“Selling became their focus of attention. Too often it became their sole focus of attention. Products and services multiplied. Banks searched for their “share of the customer’s wallet”. From the executive suite to the front line, staff were measured and rewarded by reference to profits and sales… How else is charging continuing advice fees to the dead to be explained?”

The Report reached damning conclusions about the management systems in place at the Commonwealth Bank and the National Australia Bank, saying that they were the only two organisations unable to furnish a proper list when asked about the misconduct they had been aware of over the previous five years: “Taken together, the course of events and the explanations proffered can lead only to the conclusion that neither CBA nor NAB could readily identify how, or to what extent, the entity as a whole was failing to comply with the law.

If that is right, neither the senior management nor the board of the entity could be given any single coherent picture of the nature or extent of failures of compliance; they could be given only a disjointed series of bits of information framed by reference to particular events.” (P. Martin, ‘Banking Royal Commission’s damning report: ‘Things are so bad that new laws might not help’, theconversation.com, 28 September 2018).

The Report clearly identified some forms of dishonesty and greed: charging for doing what one does not do is dishonest; giving advice which does not serve the client’s interests but profits the adviser is equally dishonest; and no matter whether the motive is called ‘greed’, ‘avarice’ or ‘pursuit of profit’, the conduct ignores basic standards of honesty; its prevalence and persistence require consideration of the issues of ‘culture’, regulation and structure.

“It is greed that has led Australian banks to steal from dead people” proclaimed Richard Denniss after reading the Interim Report.

And he went on: “Greed is good. Or so said Michael Douglas’ character Gordon Gekko in the 1980s hit film Wall Street. Gekko went further, stating “Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind.”

But greed also leads Australian banks to steal from dead people.”

In handing down his Interim Report Commissioner Hayne was damning in his criticism of the behaviour of Australian bankers. It was not a lack of laws, guidelines or codes of conduct which led to the richest banks stealing from the poorest Australians, the Commissioner argued: it was simply greed.

Hollywood often makes bank robbers the heroes of its films, but until Gordon Gekko came along the bank robber was always the underdog. Since the 1980s – when the neoliberal value of self-interest replaced the traditional value of self-sacrifice – films, bankers and even elected representatives have been telling the plebs that not only is it alright for rich bankers to rob poor people, it is laudable.

As Denniss wrote: “The scale of fee-gouging, profiteering and the terrible treatment of customers should be no surprise to our regulators or politicians.

Australia’s big four banks are among the most profitable in the world. In fact, the profits of the big four banks account for 2.4% of gross domestic product. Think about that: of every $100 produced in Australia, $2.40 goes to the shareholders of the big four banks.”

Continued Saturday – The five pillars of financial crime (part 3)

Previous instalment – The five pillars of financial crime (part 1)

By 1Petermcc

Science shows us that humans and dinosaurs did not share Earth, with the gap between us and them somewhere around an impressive 60 million years. But political science shows us that is not totally accurate. If you are thinking this is a Jurassic Park post you are almost correct in so far as the born again dinosaurs are not housed on Isla Nublar, but in the Coalition party rooms of our federal parliament.

Rather worryingly, just as in Michael Crichton’s forsaken theme park, the modern day dinosaurs are mixing freely with the human population with disastrous results.

Dinosaurs (at least the original ones) know all about global warming having been run out of town by a meteor strike that cranked up temperatures and killed off their food sources, but modern day dinosaurs have lost the art of reading Science and can’t make the connection between our behaviour and destabilised weather patterns.

Luckily we don’t need another meteor strike and runaway temperature rises to save the planet from these modern-day dinosaurs. We humans have the power to defeat them with a small piece of paper and a primitive pencil in the polling booth.

Don’t want to follow the dinosaurs into extinction? Send the born again dinosaurs to the Sky News retirement village where they can complain bitterly to the rest of the echo chamber. Almost totally removed from Australian society. Meanwhile, the rest of us can transition to our new low carbon economy quickly and get on with business. It doesn’t have to be a long drawn out change process if you vote for folk who can manage the transition, and are eager to bring it on.

By Dr George Venturini  

Five pillars of financial crime

On 5 May 2014 ABC TV Four Corners, in conjunction with Fairfax journalists, broadcast an exposé of a sales-driven ‘culture’ within the Commonwealth Bank of Australia financial planning division, which was described as profit at all cost. (A. Ferguson, ‘Banking bad’, Australian Broadcasting Corporation, 5 May 2014). This was in light of an account fraud scandal at the U.S. bank Wells Fargo.

The word ‘culture’ – pronounced as coltcher in the patois spoken by sub-tropical English, the Englanders, actually – has entered the everyday conversation instead of what Professor Evan Jones calls the landscape; and he defines it as ‘ethics-free’.

Conventionally, ‘corporate culture’ refers to the beliefs and behaviours which determine how a company’s employees and management interact and handle outside business transactions. Often, corporate culture is implied, not expressly defined, and develops over time from the cumulative traits of the people the company hires. A company’s ‘culture’ may be reflected in its dress code, business hours, office setup, employee benefits, turnover, hiring decisions, but also – and most importantly – treatment of clients, client satisfaction and every other aspect of operations.

“The landscape is ethics-free.” Dr. Evan Jones wrote in his three-part series titled ‘The Clayton’s Banking Commission’. (E. Jones, ‘The Clayton’s Banking Commission,’ 8 December 2017, independentaustralia.net).

Chaired by a Labor Senator, a subsequent Senate committee inquiry recommended a royal commission into the fraud scandal which left thousands of C.B.A. customers millions of dollars out of pocket. The committee reported on the performance of the Australian Securities and Investments Commission, A.S.I.C. Several days later, Mr. Ian Narev, C.B.A. chief executive, apologised unreservedly to customers who lost money in the bank’s financial planning scandal. Apologies are cheap – a few embarrassing moments, but no compensation. Mr. Joe Hockey, then Federal Treasurer, whose mother had fallen victim to the scandal, complained that the bank did not act quickly enough to address the problem.

The C.B.A. was subsequently embroiled in other matters including money laundering for drug syndicates, turning a blind eye to terrorism financing, ignoring statutory reporting responsibilities for more than three years on more than 750,000 accounts, (I. Verrender, “How the Commonwealth Bank laid the groundwork for a royal commission’. ABC News, 7 August 2017) and impropriety in foreign exchange trading. (J. Frost, J. Eyers, ‘CBA and NAB admit impropriety in foreign exchange trading’, The  (Melbourne) Age, 21 December 2016).

In 2015  the National Australia Bank, N.A.B. was implicated in a series of scandals concerning financial planners; it was revealed that the N.A.B. quietly paid millions of dollars in compensation to hundreds of clients for what it considered was inappropriate financial planning advice by its staff between 2009 and 2015. A whistle-blower claimed that there was a volatile, toxic and scheming ‘culture’ within N.A.B. (A. Ferguson, R. Williams ‘Forgery, sackings and millions in compensation: NAB under fire over financial planners’, The Sydney Morning Herald, 21 February 2015) and S. Danckert, ‘Senior NAB financial planner banned for deceptive conduct,’ The Sydney Morning Herald, 26 April 2016).

The Australian Securities and Investments Commission banned N.A.B. staff who were previously licensed to provide financial advice. Subsequently, it was revealed that N.A.B. was also implicated in impropriety in foreign exchange trading.

Westpac Banking Corporation, more commonly known as Westpac, was implicated in allegations that it rigged one of Australia’s key interest rates, the bank bill swap rate and was sued under responsible lending laws for using an automated process to decide whether peoples’ home loan applications met lending criteria. (S. Long, ‘Westpac: Landmark Federal Court case over lending practices sends message to other banks’, A.B.C. News, 1 March 2017). Further, a Westpac banker was imprisoned for fraudulently lending millions of dollars to elderly pensioners. (E. Jackson, ‘Former Westpac banker David St. Pierre jailed over $4 million fraud’, news.com.au. A.A.P., 9 February 2017). Following A.S.I.C. investigations, Westpac was instructed to make a donation of AU$3 million to Financial Literacy Australia after A.S.I.C. found that the bank’s employees disclosed confidential details of their clients’ orders to other foreign exchange traders. Westpac refunded AU$65 million to 220,000 customers after it failed to pass on benefits they should have received under package deals, including home loans, credit cards and transaction accounts, offered by the bank. (C. Yeates, ‘Westpac refunds $65 m to 200,000 customers over discount error’, The Sydney Morning Herald, 19 October 2017).

The Australia and New Zealand Banking Group Limited, commonly called A.N.Z, was also implicated in the bank bill swap rate scandal and settled with A.S.I.C. prior to the commencement of legal proceedings. (D. Chau, ‘ANZ settles interest rate rigging case just before trial begins’, A.B.C. News, 23 October 2017).

The Macquarie Bank was implicated in the foreign exchange trading scandal and was instructed to donate AU$2 million to charity and to open up its foreign exchange arm to scrutiny after A.S.I.C. uncovered a series of breaches by its traders. (G. Wilkins, ‘Macquarie admits to misconduct inside its foreign exchange trading arm’, The Sydney Morning Herald, 19 March 2017).

Appearing before the House of Representatives Standing Committee on Economics, the chief executives of the A.N.Z., C.B.A., N.A.B., and Westpac advised that, despite consumer complaints, very few senior bank staff had been dismissed due to misconduct even though they had been responsible for the activity of more junior staff, who had been dismissed. (J. Eyers, ‘Big four banks sack few for misconduct’, The Australian Financial Review, 10 April 2016).

In a 2016 speech before the National Press Club, Mr. Bill Shorten, the Leader of the Opposition, outlined his plans for a royal commission into the banking sector, should Labor win government at the 2016 federal election. Support for a royal commission also came from a Liberal member of Parliament. For eight years, since 2008, a whistle-blower, Mr. Jeff Morris, who had been with C.B.A., documented what he called the industry’s “systemic bad behaviour.” (K. Vickery, ‘Whistleblower Jeff Morris says; ‘nothing will change’ without a Royal Commission into banks’, news.com.au. Australia, 9 June 2016).

Despite an attempt launched in April 2016 to protect consumer interests, increase transparency and accountability, and build trust and confidence in banks, amidst growing community concerns, in January 2017 twenty-five members of the Australian Banking Association launched Better Banking, an initiative aimed to provide improve products, service and ‘culture’, and to provide consumers with helpful information and resources. In April 2016 Mr. Stephen Sedgwick, a former senior Australian public servant, was commissioned to conduct a review into bankers’ pay and commissions; (S. Rose, J. Shapiro, ‘Bankers pay to be reviewed by former public service cop Stephen Sedwick’, The Australian Financial Review, 12 July 2016) and recommended the termination of bonus payments to retail bank employees who are linked to sales performance. (A. Uribe, ‘Stephen Sedgwick says bank culture can’t be regulated ‘from the outside’ ’, The Australian Financial Review, 29 July 2017) In March 2017 A.S.I.C. handed down a report on financial advice compliance in the sector; and in September 2017 the Turnbull government introduced legislation to establish the Australian Financial Complaints Authority, an external dispute resolution body aimed to simplify how customers resolve complaints with bank and other financial services organisations.

Over the preceding years, there had been widespread criticism of A.S.I.C.’s activities as a regulatory body, including its supervision of banks. (A. Ferguson, ‘ASIC needs more power over white-collar criminals, according to Senate’, The Australian Financial Review, 26 March 2017).

In late 2017 some Nationals members of Parliament  threatened to introduce a private member’s bill calling for a commission of inquiry into the banking system. As planned, the bill was to have been co-sponsored by the Nationals, Labor, the Greens and Senate cross-bench parties. A Nationals Senator and two Liberal-National members of Parliament, together with the Greens, Labor, and Senate cross-bench parties, had enough numbers to force the Turnbull government’s opposition to a royal commission.

In the 2017 federal budget, the Turnbull government proposed the introduction of a bank tax (or levy) which was to apply to banks with liabilities of at least AU$ 100 billion. The levy came into effect on 1 July 2017. (P. Coorey, ‘Scott Morrison’s plan to deal the bank inquiry’, The Australian Financial Review, 24 November 2017).

With political pressure mounting, on 30 November 2017  Prime Minister Turnbull and his Treasurer, Scott Morrison, announced plans for a royal commission. (M. Grattan, ‘Grattan on Friday: Government’s misjudgement on banking royal commission comes back to bite it’, The Conversation, 19 April 2018).

The setting up of the royal commission was supported by Mr. Bill Shorten, the Opposition leader. However, Mr. Chris Bowen, the Opposition treasury spokesperson, stated that Labor disagreed with the terms of reference and wanted the Government to consult with consumer groups and those impacted by financial scandals. Meanwhile, the Greens sought to widen the Commission’s terms of reference. The Australian Banking Association, and some of its members, who initially opposed calls for a royal commission, supported the terms of reference.

On 1 December 2017 Prime Minister Turnbull announced the appointment of former Justice Kenneth Madison Hayne, AC QC as the sole Commissioner for the Royal Commission. On 14 December 2017 the Governor-General Sir Peter Cosgrove issued Commonwealth letters patent appointing the Commissioner and the Commission’s terms of reference. The Commissioner was directed “to inquire into and report on misconduct in the banking, superannuation and financial services industry.”

The Commissioner subsequently announced that he would be assisted by legal counsel including Rowena Orr QC, Michael Hodge QC, Albert Dinelli, Eloise Dias, and Mark Costello. The Royal Commission was due to table its final report on 1 February 2019, which – it was noted – was to be not long before the next Australian federal election.

Initial proceedings commenced on 12 February 2018. As at 28 September 2018 10,140 submissions had been received. Of them, 61 per cent dealt with banking, 12 with superannuation and 9 per cent with financial advice.

After 289-day hearings, of 27 witness statements, and two thousand hours of evidence, a three volume Interim Report from the Royal Commission was published and tabled on 28 September 2018. The Report covers policy related issues arising from the first four rounds of hearings.

The Report contains substantial findings against banks, insurance companies and financial planners. The Report was tabled by the Government on the same day: 28 September 2018. Public submissions in response to the Interim Report were open and to be submitted by 5pm on Friday, 26 October 2018. The Commission was also accepting written submissions on policy related issues on Round 6 (Insurance). Submissions could be made from the Public submissions page and were to be submitted by 12pm (noon) on Thursday, 25 October 2018. The following round of hearings (Round 7) was to focus on policy questions arising from the first six rounds. Round 7 was to be held in Sydney (19-23 November 2018) and Melbourne (26 – 30 November 2018). Details about topics and case studies to be heard were to be published prior to the hearings commencing. The Commission was required to conduct an inquiry. It cannot resolve individual disputes. It cannot fix or award compensation or make orders requiring a party to a dispute to take or not take any action. The final report was due to be submitted to the Governor-General by 1 February 2019.

Continued Wednesday – The five pillars of financial crime (part 2)

Previous instalment – The restoration of malpractice (part 4)

By Dr George Venturini   

On 5 May 2015 The (Melbourne) Age reported that A.N.Z. would reimburse $30 million for miscalculated interest on credit card cash advances, affecting millions of customers.

On 25 May 2015 A.S.I.C. banned a former representative of Macquarie Equities Limited after he engaged in unauthorised discretionary trading on his clients’ accounts and created false records. Macquarie Equities had reported the conduct to A.S.I.C.

On 24 July 2015 A.S.I.C. reported that N.A.B.’s wealth management business would pay $25 million in compensation to 62,000 customers after a system error on its navigator wrap platform relating to estimation of income and tax. N.A.B.. Wealth appointed PricewaterhouseCoopers to review the process.

On 15 October 2015 A.S.I.C. permanently banned an adviser of a Westpac subsidiary for transferring funds from clients’ accounts without authorisation, falsely creating documents including emails and bank statements, and perpetuating the false documents on client accounts.

On 19 October 2015 A.S.I.C. announced that C.B.A. would refund $7.6 million to 8,400 C.B.A. customers for failing to provide advertised fee waivers and other benefits of services package. C.B.A. had discovered the error and had reported it to A.S.I.C. in 2014.

On 29 October 2015, after A.S.I.C. surveillance, Westpac offered to refund premiums to 10,600 insurance customers who had paid for insurance cover they did not need. Customers were charged for loan protection insurance when they did not have a loan and did not intend to be covered.

On 12 November 2015 A.S.I.C. announced that A.N.Z. would provide some $13 million in compensation to 200,000 customers after it failed accurately to apply bonus interest to progress saver accounts for a number of years. The refund payment included an additional amount to recognise the time elapsed since the initial breach. A.N.Z. discovered the breach after a customer complaint and reported it to A.S.I.C.

On 25 November 2015 A.S.I.C. announced that the C.B.A. would refund approximately $80 million to some 216,000 wealth package customers as compensation for failing to apply fee waivers, interest concessions and other benefits since 2008. The refund payments included an additional amount of interest to recognise the time elapsed since the relevant benefit was not applied. C.B.A. had discovered the breach after a customer complaint and had reported it to A.S.I.C. in 2014.

On 10 December 2015 Macquarie Securities (Australia) Limited paid a penalty of $ 110,000 for allegedly contravening one of the A.S.I.C. market integrity rules 2010 and the Corporations Act. The penalty was for failing to prevent a non-designated trading representative from submitting trading messages.

On 18 December 2015 A.S.I.C. permanently banned a former Western Australia branch manager after the individual was convicted and sentenced for nine accounts of stealing as a servant and one count of gaining a benefit by fraud for making unauthorised withdrawals from various bank accounts in a friend’s name, totalling $515,000.

On 15 January 2016 The Sydney Morning Herald reported that two traders dismissed by A.N.Z. for inappropriate behaviour were suing the bank for tens of millions of dollars, claiming a rampant environment of sex, drugs and alcohol was condoned among senior staff on the dealing floor. A.N.Z. said that the staff were dismissed for serious breaches of its code and it would “be vigorously defending both their court applications.”

On 20 January 2016 Westpac paid $1 million after A.S.I.C.’s concerns about credit card limit increase practices. A.S.I.C.’s concerns included the bank’s failure to make reasonable inquiries about some consumers’ income and employment status before increasing their credit card limit.

On 2 February 2016 The Australian reported that the Commonwealth Bank of Australia had to date offered nearly $3 million to people affected by its financial planning scandal as part of its open advice review, and paid more than $2 million to victims of shoddy advice, with more than 6,000 cases still in the programme.

On 4 February 2016 The Sydney Morning Herald reported that two C.B.A. staff were allegedly complicit in an elaborate Ponzi scheme worth $76 million. The alleged leaders of the scam were due to face court in February 2017 and had indicated they would plead not guilty to almost 100 fraud and deception offences.

On 4 February 2016 A.S.I.C. banned a former N.A.B. adviser for seven years for engaging in misleading and deceptive conduct including forging client’s signatures on change of adviser forms and receiving the remuneration that flowed from processing these false forms. An appeal to the Administrative Appeals Tribunal was to be lodged.

On 16 February 2016 A.S.I.C. banned a former director and responsible manager of a Macquarie subsidiary for six years for breaching his duties in 2011 as an officer of a responsible entity of a registered management investment scheme. The mis-conduct included creating fake emails to extract confidential information from his fund’s competitors. An appeal to the Administrative Appeals Tribunal was to be lodged.

On 3 March 2016 A.S.I.C. banned a former N.A.B. adviser for five years for engaging in misleading and deceptive conduct, including falsely representing that he was a member of a superannuation fund to obtain unauthorised information about a member’s account. An appeal to the Administrative Appeals Tribunal was to be lodged.

On 4 March 2016 A.S.I.C. started legal proceedings in the Federal Court against A.N.Z. for alleged unconscionable conduct and market manipulation in relation to the A.N.Z.’s involvement in setting the bank bill swap reference rate, which affects commercial and personal loan rates. A.S.I.C. alleged that A.N.Z. traded in a manner intended to create an artificial price for bank bills on 44 separate days during the period of 9 March 2010 to 25 May 2012. A.N.Z. rejected the allegations and said it would vigorously defend the legal action. It said that A.S.I.C. had advised that it had no concerns about the bank’s current market practices.

On 7 March 2016 the former chief medical officer of C.B.A.’s insurance arm, CommInsure, made claims about a culture of dishonest and unethical practices to avoid payouts to sick and dying people. The chief medical officer revealed that doctors were pressured to change their opinions, outdated medical definitions were used to deny payouts, and medical files disappeared from the internal filing system. Mr. Ian Narev, C.B.A.’s chief executive, said: “I’m aware … and we’ve discussed individual cases where the outcomes that the customers have received for policies that they took out have not been good enough.” Allegations of deleting files “would be completely inconsistent with the culture that we are building at the Commonwealth Bank and inconsistent with the way that we run the bank.”

On 7 March 2016 A.S.I.C. found that A.N.Z. had breached responsible lending laws in making offers of overdraft facilities to its customers and ordered it to pay penalties totalling $212,500.

On 15 March 2016 A.N.Z. paid $4.5 million as compensation for breaches in the delivery of financial advice.

On 17 March 2016 A.S.I.C. imposed additional conditions on Macquarie Bank’s Australian Financial Services licence for breaches relating to the handling of client money between March 2004 and 2014. The breaches raised issues including failing to deposit monies into a designated client trust account; and making withdrawals which are not permitted from such an account. Macquarie filed an application for review of the decision and asked for stay of the new conditions pending the review. It said that it treated client money with the utmost seriousness and self-reported the incidents.

On 30 March 2016 A.N.Z. announced it would refund approximately $5 million to 25,000 customers after it failed properly to apply some fee reductions and fee waivers.

On 4 April 2016 A.N.Z. told a parliamentary inquiry that for 2014-15 it reported three breaches of the internal dispute resolution requirements under the code of banking practice to the code compliance monitoring committee, and six such breaches in 2013-14. Two breaches for 2014-15 were self-identified and one was raised with A.N.Z. by the committee.

On 5 April 2016 A.S.I.C. started legal proceedings in the Federal Court in Melbourne against Westpac for unconscionable conduct and market manipulation in relation to Westpac’s involvement in setting the bank bill swap reference rate in the period 6 April 2010 and 6 June 2012. It was alleged that Westpac traded in a manner intended to create an artificial price for bank bills on 16 occasions during the period between 6 April 2010 and 6 June 2012. Westpac denied the allegations and said it would defend the claims.

On 5 April 2016 a subsidiary of Westpac Banking Corporation paid penalties totalling $493,000 after A.S.I.C. found it had breached important consumer protection provisions relating to the repossession of motor vehicles, including failing to provide customers with default notices before commencing enforcement proceedings to repossess mortgaged vehicles; and failing to provide customers with legally required information setting out their rights within the required time-frame after it repossessed mortgaged vehicles.

On 6 April 2016 it became known that a former A.N.Z. planner had been gaoled for more than six years – between April 2009 and December 2015 – for stealing almost $1 million from an elderly client to feed a gambling debt. A.N.Z. promised to reimburse the victim. Meanwhile an appeal was lodged.

On 8 April 2016 the Leader of the Opposition, Bill Shorten, announced that, once in government, Labor would establish a Royal Commission into the banks. The announcement began an 18-month campaign from the Opposition on the issue, thus increasing pressure on the Turnbull government.

On 3 August 2017 the government’s financial intelligence agency, AUSTRAC, had accused the Commonwealth Bank of vast breaches of money laundering and anti-terrorism financing laws. It alleged that criminal gangs had laundered about $70 million through C.B.A., including through its network of smart ATMs, which allow anonymous cash deposits. Once warned of the risk, C.B.A. had failed to act. That had happened on six occasions when the bank learned that customers may be financing terrorism. C.B.A. had failed to refer the allegations to authorities. In total, AUSTRAC charged that C.B.A.  had breached the anti-money laundering and counter-terrorism financing act 50,000 times.

On 13 March 2018, before the Royal Commission, National Australia Bank staff was found to be involved in a bribery ring to benefit from an incentive programme to sign up new customers. The bribery ring involved multiple branches, forged documents, fake payslips and Medicare cards, with bribes being paid in cash to secure loans. Senior Counsel assisting the Commission, Ms. Rowena Orr Q.C. said that a whistle-blower was recorded as saying: “Money exchanges hands in cash in envelopes, white envelopes, usually over the counter. The money is deposited at C.B.A. so N.A.B. cannot detect the deposits. [It was]happening on a daily or weekly basis and has been happening for a number of years.”

On 19 March 2018 the Royal Commission heard how little A.N.Z. did to check the general living expenses of customers who have been sent to the bank from mortgage brokers. The admission prompted criticism that it may be breaching responsible lending laws by failing to verify the financial situation of those applying for home loans. The week of hearings also produced evidence of irresponsible lending by C.B.A. and Westpac.

On 16 April 2018, before the Royal Commission, Mr. Anthony Reagan, the head of financial advice for A.M.P., admitted that he had lost count of the number of times the company misled A.S.I.C. over the practice. The witness conceded that there were reasons for concern about the company’s internal practice.

On 17 April 2018 A.M.P. made surprising admissions to the Royal Commission over two days of hearings. A.M.P. began with revelations that it had a deliberate policy of charging customers fee for services they never received. Correspondence produced before the Royal Commission showed that A.M.P. was aware that customers were being charge 90 days for financial advice it had no intention of providing. It was initially a mistake, the records suggest, but A.M.P. did not want to stop the practice because it was profitable.

On 18 April 2018, before the Royal Commission, the Commonwealth Bank admitted that it is the worst entity in Australia for charging fees for financial advice which was never received by customers. Counsel Assisting the Commission, Mr. Mark Costello, was questioning Ms. Linda Elkins, from C.B.A.’s wealth management arm Colonial First State when the startling admission was made. (P. Karp, N. Evershed and C. Knaus, ‘A recent history of Australia’s banking scandals,’ 19 April 2018, theguardian.com).

During the first two weeks of its hearings the Royal Commission was presented with the most outrageous examples of financial institutions’ shameless fleecing of their clientele. Nothing of this was new to Dr. Evan Jones who for years has been writing about the systematic malfeasance which extends throughout the Australian society. (E. Jones, ‘The Clayton’s Banking Royal Commission,’ 8 December 2017; ‘The Clayton’s Banking Royal Commission (Part 2): More of the same,’ 23 December 2017; ‘The Clayton’s Banking Royal Commission (Part 3): The root of the problem,’ 1 February 2018).

Perhaps even Dr. Jones would be surprised by the activity of A.M.P. Beginning in 1849 as the Australian Mutual Provident Society, managing life insurance, AMP has evolved over almost 170 years to be a publicly listed, global wealth manager.

ANZ accepted an enforceable undertaking to remedy a poor compliance culture and pays hundreds of millions in settlement to Opes Prime investors.

In 1998 A.M.P. demutualised and listed on the Australian Stock Exchange. A.M.P. Bank opened for business and the A.M.P. Foundation was formed. In 2009 A.M.P. and China Life Group formed a strategic partnership; in 2011 A.M.P. and A.X.A. Asia Pacific merged, and the new A.M.P. and Mitsubishi U.F.J. Trust and Banking formed another strategic partnership. In 2017 A.M.P. and United Capital formed another strategic partnership. Having grown thus fast in retail banking in Australia and internationally, with strong partnerships in China and Japan and investments around the world, the main activities of A.M.P. are in financial advice, retail superannuation, corporate superannuation, self-managed superannuation funds, insurance, banking and investment management.

During the first week of the Royal Commission hearings it was found that  Australia’s largest wealth manager corporation charged clients fees for advice that they had not received, lied to the Australian Securities and  Investments Commission about it twenty times and then doctored a so-called ‘independent’ report prepared by lawyers at Clayton Utz, a leading Australian law firm,  into the matter. A.M.P. was at pain to explain to the Royal Commissioner that it ‘prioritised shareholders’ interest over clients.’

The senior counsel assisting the Royal Commission, Ms. Rowena Orr Q.C. said that A.M.P. and its advisers had misled A.S.I.C. twenty times from 2015 to 2017 about the nature and extent of its fees-for-no-service practice.

Evidence presented to the Royal Commission found that A.S.I.C. – as a matter of practice – relied more on negotiation with licensees than taking direct action and using courts for ‘public denunciation’.

Evidence tabled at the hearing showed that ASIC was quite slow in launch prosecutions. In particular:

–  A.S.I.C. has never prosecuted anyone for failing to report a breach within the current 10-day limit, given high evidentiary standards needed and to give licensees more time to investigate the breaches,

–  A.S.I.C. has not instigated one civil penalty order in the past five years,

–  A.S.I.C. has only succeeded in getting two licence suspensions and two licence cancellations since 2013,

–  A.S.I.C. has launched one criminal case in the past ten years,

–  A.S.I.C. has launched six civil penalty cases against licensees since 2013, when new legislation came into force allowing this course of action, and

–  Since 2008 A.S.I.C. has issued 229 bans against financial planners, 46 per cent have been permanent. (S. Letts, ‘AMP could face criminal charges for misleading ASIC, baking royal commission told…,’ 2018-04-27, abc.net.au).

On its part, the Commonwealth Bank had been charging fees for long dead people, for advice that they had never received. One heard a scarifying story about a Westpac financial adviser telling a nurse to sell her house so she could pool her superannuation in a bed-and-breakfast-adventure, an advice which was illegal under the superannuation law. One was told of some 353 employees of N.A.B. having falsified forms of superannuation holders.

Delivering her closing statement counsel assisting the inquiry Ms. Rowena Orr Q.C. said that the C.B.A., N.A.B. and Westpac, too, were facing the courts over multiple breaches of the Corporations Act.

Ms. Orr said that, on the evidence available, it was open to the Royal Commissioner to find that the conduct of the C.B.A., and five of its advice licensees, contravened the Corporations Act by failing to ensure the advice was provided efficiently, honestly and fairly.

“It is also open to the commissioner to find that the conduct in question was attributable to a cultural tolerance on the part of C.B.A. and its advice licensees of risks and conduct that were potentially detrimental to clients, but which were to the financial advantage of C.B.A. through its advice licensees.”

The case against Westpac centred on appalling advice provided by a number of its financial planners, while N.A.B. faced more scrutiny on the widespread practice of falsifying customers’ signatures on investment documents.

All the banks were facing charges relating to the failure to take reasonable steps to ensure that advisors complied with the Corporations Act.

The attitude of the ‘regulatory agencies’ was easily attributable to the practice of ‘retiring’ from the so-called public service – the Commonwealth Treasury or the Reserve Bank of Australia, for instance – and immediately upon ‘retirement’ taking up very senior governance and executive positions with the very same banks that they formerly ‘regulated’. Business economists, often recruited from those government agencies, would become highly paid employees of the A.N.Z., C.B.A., N.A.B., or Westpac. Better still, they would find very comfortable positions with the ‘custodians’ of the ‘four banks’, such as Bank of America, J.P. Morgan, Macquarie Bank, T.D. Securities and – of course – Goldman Sachs & Co. (J. Menadue, ‘The bank’s PR gloss and descent from heaven,’ 27 April 2018, johnmenadue.com).

Over the previous weeks public outrage had mounted as damning revelations had emerged from hearings conducted by a royal commission into financial services. The country’s four big banks and A.M.P., a major finance firm, are now notorious for levying fees for no services, knowingly charging fees for up to a decade after customers have died, and giving misleading financial advice that caused people to lose their homes.

With weeks of hearings still to come, it already had been proven that the financial giants manipulate interest rates, forge customers’ signatures or require them to sign blank documents and lie repeatedly to corporate regulators. It is also clear that regulators have permitted them to continue their predatory activities.

None of these abuses can be explained, as politicians and the corporate media have sought to do, as the activities of individual rogues, corrupt officials and super-greedy financial advisers. Such practices are the inevitable result of business models, set from the top, designed to extract ever-greater profits, aided by the complicity of successive governments, both Coalition and Labor, which have protected the banks for decades.

After forty years of restoration of ‘good government’ against the alleged amateurship of the Whitlam government, ‘the experts’ had very little to show except for their platitudinous slogans: ‘Liberty, human rights and the free market’, ‘continuity and change’ and – recently – ‘Job & Growth.’ Oh, yes, and: ‘Innovation.’ It is a long word, not the catchiest, perhaps, but easy to remember!

Such is the sickening theatre of neo-liberalism Downunder.

Continued Saturday – The five pillars of financial crime (part 1)

Previous instalment – The restoration of malpractice (part 3)

By RosemaryJ36

By definition, a conservative is someone who chooses to retain traditional values and is averse to change, whereas a progressive is a supporter of social reform and believes in adapting to change.

There is a rapidly growing consensus among those who believe in basing their actions and policies on evidence, that global warming has been – and continues to be – affected adversely by mankind’s activities.

Since the Industrial Revolution and the development of manufacturing and sophisticated means of transport, dependent on fossil fuel-based energy, emissions of carbon dioxide and other so-called greenhouse gases have been increasing. Simultaneously, massive areas of forest and jungle (an essential carbon sink) have been cleared for profit-making agricultural production.

Also, on an on-going basis, oceans have been taking over as carbon sinks, putting at risk not only marvels like the Great Barrier Reef, but also marine life, on which human life depends.

In addition to the Industrial Revolution, we have had a growth in activities which are dedicated to the acquisition and retention of wealth, with little or no regard to the well-being of other inhabitants of the planet, or, indeed, the planet itself.

I am sure that Greta Thunberg has little interest in being nominated for a Nobel Peace Prize, but is totally dedicated to persuading, as rapidly as possible, people and governments across the world to develop the necessary policies to combat global warming.

Increasingly people are beginning to accept that the issue is real, but are then consumed with pessimism that we have left it too late so why bother to attempt to change!

We have a diminishing window of opportunity for progressive policies to be established.

During WWII, we accepted food rationing and a wide range of restrictions on daily life in order to concentrate on the war effort.

We are now conducting a climate war, which is a global issue – we are not fighting other nations but nature itself!

The first question to ask any candidate for the 18 May 2019 Australian federal election is “What are your plans for stopping and reversing global warming?”

No other issue is important, because, without viable action, we do not have a future!

Conservative politics has resulted in a small minority becoming very rich, a large number of people left desperately clinging on to life in a world which is staring into the abyss and a planet which is being starved of oxygen!

Time for discussing climate change by philosophers is over. We just have time to set up panels of experts to prioritise the actions we must take to save our future.

We also do not have time to argue that we are a minnow in a big pond whose actions would be futile in the larger picture. We have to make a start and, believe me, if you take the trouble to research what is happening in Europe and many States in the USA, you will realise that we will not be alone!

The important issues now are not tax breaks, profits, dividends etc, but – will a child, now 15, be able to have a viable existence as an adult?

The consensus is – climate change, global warming – call it what you will – IS for real and if we act fast and immediately, we just might save our future on this planet.

This IS the Climate Change Election.

WE are the ones whose votes will determine our future!

By Dr George Venturini   

Whoever it is that owns the ‘big four’ banks, one thing is clear: if the same four custodian companies own similar chunks of each of the ‘big four’, there is indication that the shareholders behind them do not want one bank to succeed at the expense of another. The optimal result is had if all of them win together – and maintain their dominant position, of course. Thus ‘structured’ the ‘big four’ are regarded as too big to fail.

Research by the Productivity Commission, which has for quite some time arguing for more competition in the banking sector, published ahead of the Royal Commission concluded that the four major banks were among the most profitable lenders in the world, earning profit margins of 36.4 per cent in the June quarter of 2017. For the same period return on equity after tax were 13.6 per cent.

On the other hand, the present neo-liberal government has had in mind for quite some time to reward he four banks with corporate tax concessions to the tune of $ 3.2 billion to the A.N.Z., close to $ 4 billion to the C.B.A., $ 2.6 billion to the N.A.B. and $ 3.5 billion to Westpac.

When ‘the spill’ came in September 2015 (the Liberals practice no internal coups, of course; that ignominy is for Labor), a better ‘free market expert’ was chosen. Malcolm Turnbull made his fortune as chairman and managing director of Goldman Sachs and Co. Australia in 1997-2001, eventually becoming a partner. He has, presumably, maintained discreet connections, and is listed as one of the former partners, along with such notable such as Mark Carney – Governor of the Bank of England (2013-) and  Mario Draghi – President of the European Central Bank (2011-).

At mid-September 2016 Mr. Turnbull was in New York to address the United Nations General Assembly and to attend two special summits on refugees. On that occasion he bragged on how to deal with the problem of ‘illegal arrivals’ and volunteered to teach other countries on how to deal with the problems caused by more than 65 million people currently displaced around the world – a situation not seen since the second world war.

On 20 March 2017 the Turnbull government reaffirmed its commitment to multicultural Australia with the release of the statement ‘Multicultural Australia: united, strong and successful’. The statement was meant to outline the strategic direction and priorities for multicultural policy in Australia. “We are a richly diverse nation – it claimed – and have flourished with waves of migration. This cultural diversity is one of our greatest assets. Our immigration nation is not defined by race, religion or culture but by our shared values of freedom, democracy, the law and equal opportunity. We reject practices which undermine these shared values.”

On 11 April 2018 a learned panel, led by Dr. Tim Soutphommasane, the Race Discrimination Commissioner at the Australian Human Rights Commission, returned to the theme of Leading for Change: A Blueprint for Cultural Diversity and Inclusive Leadership (2016) with a new, up-dated study by the same titled and launched that day. The panel lamented that the story it had told in 2016 had been “an unhappy one. [Then] There was an almost total absence of non-European backgrounds represented among the cohort of chief executives in Australia.”

Two years later the panel continue[d] the story. “Our new report – it alerted – provides an updated overview of the representation of cultural diversity in the senior leadership of Australian organisations. Leading for Change: A Blueprint for Cultural Diversity and Inclusive Leadership Revisited, written in partnership with the University of Sydney Business School, the Committee for Sydney, and Asia Society Australia, gives a breakdown of the cultural diversity of the two most senior tiers of senior management within the ASX 200 group of listed companies, Commonwealth and State government departments and universities. The report also provides statistics for the cultural diversity of the Australian Parliament.

The findings of this report suggest we have a long way to go before realising the full potential of our multicultural population. If progress is being made on cultural diversity, it remains slow.

Based on the 2016 Census data on ancestry, we estimate about 58 percent of Australians have an Anglo-Celtic background, 18 per cent have a European background, 21 per cent have a non-European background, and 3 per cent have an Indigenous background.

However, our examination of almost 2500 senior leaders in business, politics, government and higher education shows only very limited cultural diversity. Almost 95 per cent of senior leaders at the chief executive or ‘c-suite’ levels have an Anglo-Celtic or European background. Of the 372 chief executives and equivalents we identified, 97 per cent have an Anglo-Celtic or European background.”

The Report offered a breakdown. “Within the ASX 200 companies, there appears only to be eight CEOs who have a non-European background – enough to squeeze into a Tarago. Of the 30 members of the Federal Ministry, there is no one who has a non-European background, and one who has an Indigenous background. It is similarly bleak within the public service, where 99 percent of the heads of federal and state government departments have an Anglo-Celtic or European background (that’s one of 103). Universities don’t fare much better: just one of the 39 vice-chancellors of Australian universities has a non-European background.

All up there are 11 of the 372 CEOs and equivalents who have a non-European or Indigenous background. A mere cricket team’s worth of diversity.

These are dismal statistics for a society that prides itself on its multiculturalism. They challenge our egalitarian self-image. And they challenge our future prosperity as a nation. If we aren’t making the most of our multicultural talents, we may be squandering opportunities.

We reiterate that improving the representation of cultural diversity requires action at three levels: leadership, systems and culture. Through a series of case studies drawn from Australian organisations’ experience, we highlight examples of how such concrete steps can be taken.”

The Australian Human Rights Commission Report told the naked – perhaps unpleasant – truth and unmasked the facile, pompous lies of governments.

Writing about the Report, Dr. Soutphommasane concluded: “If we are serious about shifting numbers, it may be necessary to consider targets for cultural diversity – if not quotas. Such measures don’t stand in opposition to a principle of merit. After all, meritocracy presumes a level playing field. Yet do we seriously believe that a perfectly level playing field exists, when there is such dramatic under-representation of cultural diversity within leadership positions?

Multiculturalism can be as superficial as food and festivals. But if we’re serious about our diversity, we must be prepared to hold up a mirror to ourselves – and ask if what we see looks right for an egalitarian and multicultural Australia.” (T. Soutphommasane, ‘Australian business and other organisations persistently fall short on cultural diversity,’ 13 April 2018 … johnmenadue.com; see also the review by a distinguished Australian scholar: Review: ‘Leading For Change’ – Corporate Cultural…, countercurrents.org).

On 30 November 2017 Prime Minister Turnbull and Treasurer Scott Morrison joined in announcing that the government would establish a Royal Commission into the alleged misconduct of Australia’s banks and other financial services entities.

The joint media release said that: “All Australians have the right to be treated honestly and fairly in their dealings with banking, superannuation and financial services providers. The highest standards of conduct are critical to the good governance and corporate culture of those providers.

We have one of the strongest and most stable banking, superannuation and financial services industries in the world, performing a critical role in underpinning the Australian economy.”

In particular, it was the view of the Turnbull government that the Australian “banking system is systemically strong with internationally recognised world’s best prudential regulation and oversight.”

The ministers further observed that: “Ongoing speculation and fear-mongering about a banking inquiry or Royal Commission is disruptive and risks undermining the reputation of Australia’s world-class financial system.

The Government has decided to establish this Royal Commission to further ensure our financial system is working efficiently and effectively.

Instead of the inquisition into capitalism that some have called for, the Royal Commission will take a conventional, focused approach. It will not be a never-ending lawyers’ picnic.”

The view of the Australian government was that “Our approach to banking and financial services reform has focused on ensuring that our financial system is resilient, efficient and fair. 

We have moved to establish a new one-stop shop to resolve customer complaints; significantly bolstered the Australian Securities and Investments Commission’s powers and resources; created a framework to hold banking executives accountable for their actions; and acted to boost banking and financial services competition for the benefit of customers.” [Emphasis added]

The government was concerned to ensure “that the Inquiry will not defer, delay or limit, in any way, any proposed or announced policy, legislation or regulation that [the government] is currently implementing.

The scope of the Inquiry was to “consider the conduct of banks, insurers, financial services providers and superannuation funds (not including self-managed superannuation funds).” And also, to “consider how well-equipped regulators are to identify and address misconduct.  It will not inquire into other matters such as financial stability or the resilience of our banks.”

The initiative was directed towards “a sensible, efficient and focused inquiry into misconduct and practices falling below community standards and expectations. Most Australians are consumers of banking and financial services, and we all have the right to be treated honestly and fairly by banking and financial services providers.”

At this point the Prime Minister and the Treasurer rhapsodised: “Trust in a well-functioning banking and financial services industry promotes financial system stability, growth, efficiency and innovation over the long term.”

Having resisted for some two years a call for a commission the government was now declaring that there was a “sense of inevitability” about it and, furthermore, praising itself for the decision!

As a matter of record, Turnbull had come under serious internal pressure and the combined pressure of the Greens, Labor and much of the crossbench, while the ‘big four’ banks had written to Treasurer Morrison calling for an inquiry “to end political uncertainty.”

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry was established, pursuant to the Royal Commissions Act 1902, on 14 December 2017 by the Letters Patent issued by the Governor-General. The Letters Patent which formally appointed the Royal Commissioner and outlined the Terms of Reference for the inquiry.

The Commissioner, the Honourable Kenneth Madison Hayne A.C., Q.C., was authorised to submit an interim report no later than 30 September 2018, and was requested to provide a final report by 1 February 2019.​ ​

The work of the Royal Commission began on 13 March 2018. It was to have a round of public hearings, starting on 16 April 2018.

As at 27 April 2018 the Royal Commission had received 4,501 public submissions, of which 65 per cent on banking, 10 per cent on financial advice and 9 per cent on superannuation.

The careful observer of business in Australia would hardly find some novelties; the same skulduggery had been going on for years. Just looking at the past ten years one would see that:

ANZ accepts an enforceable undertaking to remedy a poor compliance culture and pays hundreds of millions in settlement to Opes Prime investors.

On 6 March 2009 it became known that A.N.Z. had agreed to a settlement of hundreds of millions with Opes Prime Group Limited investors and accepted an enforceable undertaking to remedy a poor compliance habit.

On 14 October 2009 C.B.A. was fined $100,000 for failure to comply with the required continued disclosure of obligations under the Corporations Act.

On 31 March 2011 a former Macquarie Bank manager was gaoled for two and a half years after pleading guilty to making $1.4 million from insider trading.

On 7 March 2012 A.S.I.C. accepted an enforceable undertaking from C.B.A. after disclosure that a message sent to its internet banking customers was misleading. In December 2011 C.B.A. had requested that customers provide their consent to continue to receive credit limit increase invitations. It was the view of A.S.I.C. that the messages suggested that if the customers did not consent, they would lose the chance to receive credit limit increase offers in the future.

On 5 September 2012 The Sydney Morning Herald reported that a Macquarie Private Wealth internal report found more than 80 per cent of the division’s private client advisors were in breach of compliance standards.

On 14 September 2012 C.B.A. agreed to make $136 million available in compensation for involvement in Storm Financial Limited, the collapse of which hurt 14,000 investors. The $136 million was in addition to payment of about $132 million and other benefits that C.B.A. had already provided to Storm investors under its C.B.A. resolution scheme.

On 10 November 2012 The Australian Financial Review reported that N.A.B. was to pay $115 million to settle a class action with shareholders after insufficient disclosure of its investment in securities supported by sub-prime mortgages during the global financial crisis.

On 17 December 2013 two members of the C.B.A. Group entered enforceable undertakings to review their handling of client money. The two companies completed a remediation programme after identifying weaknesses, including unauthorised withdrawals of client money from trust accounts and pooling of client money.

On 23 December 2013 N.A.B. gave an enforceable undertaking to A.S.I.C. which authorised it to monitor and control market direct market access trading after possible misconduct by trading personnel contracted to the bank resulted in a share price spike of the ASX 200.

On 30 January 2014 The Sydney Morning Herald reported that A.N.Z. was conducting a sweeping review of all of its home loan, savings and small business accounts to ensure that they are operating correctly after a major glitch forced the bank to refund $70 million to 235,000 home loan customers.

On 20 May 2014 A.S.I.C. banned a former Westpac trader for eight years after an investigation found that he had set up a series of fictitious trading entries and prepared a false document.

On 12 September 2014 Macquarie Bank agreed to a $75 million settlement in a class action brought against it for involvement in Storm Financial.

On 17 September 2014 A.S.I.C.  fined N.A.B. $40,800 for potentially misleading advertising in relation to a UBank, an Australian direct bank, home loan product.

On 17 September 2014 A.S.I.C. fined Westpac $20,400 for potentially misleading statements in a product disclosure statement.

On 1 October 2014 A.S.I.C. fined N.A.B. $10,200 for potentially misleading statements in a product disclosure statement.

On 4 January 2015 The Australian Financial Review reported that seven traders, including a senior A.N.Z. Group trader, were being investigated for possible manipulation of market benchmarks.

On 15 January 2015 The Sydney Morning Herald reported that two traders dismissed by A.N.Z. for inappropriate behaviour were suing the bank for tens of millions of dollars, claiming a rampant prevailing atmosphere of sex, drugs and alcohol was condoned among senior staff on the dealing floor. A.N.Z. said that the staff were dismissed for serious breaches of its code and it would “be vigorously defending both their court applications.”

On 10 February 2015 a former financial planner was gaoled for defrauding more than 150 clients of more than $5.9 million over a period of 20 years, including eight years of working for an A.N.Z. subsidiary. The company cooperated with A.S.I.C., investigated the matter, ensured thorough remediation and terminated the adviser’s authorisation once wrongdoing was established.

On 13 February 2015 a two-year enforceable undertaking between A.S.I.C. and Macquarie Equities Limited concluded. The enforceable undertaking was entered into in January 2013 after A.S.I.C. had found “systemic deficiencies” in its compliance with financial services laws.

On 26 February 2015 A.S.I.C. permanently banned a former Westpac home finance manager after a conviction of fraud for withdrawing more than $113,000 from ATMs after obtaining eight credit cards using false names.

On 17 March 2015 a former N.A.B. foreign exchange trader was sentenced to seven years gaol for insider trading after pleading guilty to masterminding a $7 million crime.

On 27 March 2015 two former C.B.A. executives were charged over alleged bribery scandal for allegedly receiving more than $1.9 million in return for awarding an I.T. contract to a particular company.

On 15 April 2015 The (Melbourne) Age reported that N.A.B.’s British banks had receive a record $ 38.8 million fine from Britain’s Financial Conduct Authority for “serious failings” in handling complaints regarding payment protection insurance to up to 90,000 customers of the British subsidiary.

On 16 April 2015 the Australian Broadcasting Corporation reported that 8,500 A.N.Z. customers were sold advice packages but did not receive services included in them. The A.N.Z. was due to reimburse $30 million in fines.

On 20 April 2015 The Sydney Morning Herald reported that a Queensland businessman was suing Westpac for misleading and deceptive conduct after the bank allegedly slotted him into highly leveraged financial products and blew up $4 million in savings.

On 21 April 2015 A.N.Z. told the Senate Economics References Committee that in the 12 months to April 2015 it had reported six A.N.Z. planners to A.S.I.C. for breaches; and terminated the employment of 16 planners over the previous three years for behaviours which range from ‘cultural differences’ and inappropriate behaviour through to the serious compliance breaches reported to A.S.I.C.

On 21 April 2015 C.B.A. told the Senate Economics References Committee that it reported 12 C.B.A. advisers to the police over allegations of fraud or forgery since 2011; and that 43 planners had left in previous three years, including some who left while under investigation.

On 21 April 2015 Macquarie Bank told the Senate Economics References Committee that it had paid $9.5 million in compensation to financial advice clients and reported 11 advisers to A.S.I.C. Macquarie was reviewing 2,500 client files for possible compensation and found out of 320 files already there were 65 clients eligible for compensation.

On 21 April 2015 N.A.B. told the Senate Economics References Committee that it compensated more than 750 of its financial advice customers a total of $14.5 million between January 2010 and September 2014.

On 21 April 2015 N.A.B. told the Senate Economics References Committee that 41 planners had been dismissed over the previous five years and it had reported 10 planners to A.S.I.C. for breaches.

Continued Wednesday – The restoration of malpractice (part 4)

Previous instalment – The restoration of malpractice (part 2)

By RosemaryJ36

A recent search indicates that the Northern Territory has the smallest population of any Australian state or territory, it has the third largest area and the proportion of its population which is Indigenous is the highest in the country.

For a variety of reasons, the NT population (mainly the non-Indigenous portion) is in decline and the proportionate GST funding model takes no account of the fact that the actual geographic size of the NT does not diminish if people leave!

When you add to that the following facts you must begin to wonder how any locally elected government in the NT could hope to be successful:

1. A majority of the Indigenous population lives in remote townships and settlements.
2. Pregnant women from these remote communities have to move into the nearest town with suitable birthing facilities, at least a month ahead of their due dates, disrupting family connections.
3. Many who are unwell have to seek hospital care in the city, because local facilities are not sufficient, and need to bring family members with them.
4. There is often friction between local indigenous communities and those from other regions who need accommodation and access to services.
5. Access to alcohol is always an issue and those from dry communities often tend to be reluctant to return to their community after they have had to come to town for, for example, medical treatment or attendance at government offices not available out bush.
6. The NT Land Councils are in receipt of mining royalties, which they are then required to distribute for the benefit of the relevant communities.
7. Not only in the NT, elected local councils do not necessarily have the knowledge and skills necessary to handle community funds with integrity, and they are often the prey of unscrupulous managers, who line their own pockets at the expense of the community.
8. White governments seldom consult adequately with local indigenous communities.

There are many other issues which could be raised, including the out of hand rejection of the ‘Uluru Statement from the Heart’ by then PM Malcolm Turnbull.

Even within any one Australian jurisdiction, there are differences between tribes and groups as to how they need help from government. What is a common thread is that they want more involvement in discussions of issues affecting them personally and as distinct groups.

Just as a male doctor will never experience, and therefore fully understand, the severe period pains which some women suffer, (and, to balance that, I understand that no woman will ever experience the pain inflicted on a male who is kneed in the groin!) so too, white, urban administrators will seldom have any in-depth understanding of the needs of members of a remote Indigenous community.

It is time for white people to bow to the more informed assessments of Indigenous leaders and establish committees, with a majority of members selected by the relevant community, in planning services for the Indigenous population across Australia.

For far too long we have lived in the shadow of the white Australia policy and the efforts to ignore the ancient cultures and knowledge of our First Nations.

I am not an expert in this area, but then – neither are many of the bureaucrats who develop and administer policies with no sufficient care for their appropriateness for the people affected by them.

I realise New Zealand’s foundations were laid in very different circumstances from those applying here in Australia, but I am so impressed by how their First Nations enjoy a degree of inclusivity which is totally lacking here!

It would be fantastic to see a change of attitude in this area once the next federal government is elected.