Westpac Banking gave ‘a free pass to paedophiles’, and now it must pay
After the financial crime agency made the claims in a lawsuit against Westpac last week, Prime Minister Scott Morrison called on the bank’s board to consider the CEO’s future
Bengaluru/Sydney — Australian home affairs minister Peter Dutton said Westpac Banking must pay the price for giving “a free pass to paedophiles”, as the corporate watchdog began investigating the lender over millions of breaches of money laundering laws.
Dutton is the third senior elected official to go on the offensive against the country's number two retail bank after the financial crime watchdog accused Westpac of allowing payments between known child exploiters among 23-million transactions that violated anti-money-laundering protocols.
After the financial crime agency Austrac made the allegations in a lawsuit against Westpac last week, Prime Minister Scott Morrison has called on the bank's board to consider the CEO’s future, while attorney-general Christian Porter described the alleged breaches “off the charts”.
“It is clear ... that the Westpac Banking bosses, through their negligence, have given a free pass to paedophiles and there is a price to pay for that, and that price will be paid,” Dutton told parliament on Monday.
The Australian government had “no more important undertaking ... than to keep Australian children safe [and] it is clear that the Westpac Banking bosses have failed that obligation”, he added.
Westpac, which has an annual general meeting scheduled for December 12, has so far resisted calls from politicians and investors for senior executives to be removed over the scandal which has so far wiped A$7.5bn ($5bn) from Westpac's market value.
In interviews with local media at the weekend, Westpac chair Lindsay Maxsted said firing CEO Brian Hartzer during the crisis would be destabilising.
“For Brian not to be CEO would be an amazing piece of destabilisation of a company. But we also understand, on the other hand, there is some destabilising going on, possibly, by him being here,” he was quoted saying in The Australian Financial Review.
Westpac has also said it would close its cross-border payment services that were named in the Austrac lawsuit, and that its executive team would withhold all or part of their 2019 bonuses.
It has also said it will spend an extra A$80m improving financial crime monitoring will in the 2020 financial year.
A Westpac spokesperson did not respond to a Reuters request for comment on Monday.
Corporate regulator the Australian Securities and Investments Commission, meanwhile, said it was investigating “possible breaches of legislation it administers” in relation to Austrac's allegations.
Law firm Phi Finney McDonald said it had been asked by institutional investors to consider filing a class-action lawsuit against the country's oldest bank.
“Modern institutional investors take corporate governance issues extremely seriously,” said law firm director Tim Finney.
“The suggestion that a major bank could be so lax with its anti-money laundering systems that it potentially facilitated child abuse and exploitation is about as serious as it gets.”
Shares in Westpac closed down 1.3%, dropping for a fourth consecutive session and bringing its cumulative losses since Austrac's accusations to 8%.
“Heads rolling would appease the market short-term and at least show that they are serious about changing the culture which clearly seems to have been at fault,” said Henry Jennings, a senior analyst and portfolio manager at Marcus Today.