The government at the weekend piled on more pressure for Westpac heads to roll over the bank’s money laundering scandal, with Treasurer Josh Frydenberg saying the affair had a long way to play out.
“These issues develop a momentum of their own. They’ve got an AGM on December 12 – and, no doubt, there’ll be some very hard discussions between now and then,” Frydenberg said.
The treasurer also revealed the Australian Prudential Regulation Authority (APRA) had become involved. APRA supervises banks and other institutions in the financial sector.
“APRA has the ability, under the Banking Executive Accountability Regime, to disqualify boards and to disqualify executives where there’s a failure to appropriately enforce and uphold the duties under the legislation,” Frydenberg said.
“That legislation came into force in 2018. It’s not retrospective, and some of those alleged breaches date back to 2013. But … I know that APRA is looking at it”.
23 million breaches
Westpac last week was accused by AUSTRAC of 23 million breaches of the anti-money laundering and counter-terrorism financing law, with the alleged breaches include transfers of money to the Philippines for child sex exploitation. AUSTRAC has begun civil proceedings against Westpac.
AUSTRAC is an official agency that uses financial intelligence and regulation to disrupt money laundering, terrorism financing and other crimes.
Frydenberg’s comments came as Westpac on Sunday announced a “response plan” across three areas. These included
“immediate fixes” – among them, closing the LitePay international funds transfer system, which facilitated low-value international payments
lifting standards – including priority screening and improving cross-industry data sharing
protecting people - with what the bank described as “investments to reduce the human impact of financial crime”. This will involve multi million dollar funding for programs to counter child sexual exploitation.
In political terms, the latest bank scandal comes at an awkward time for the government, which has its ensuring integrity legislation, to crack down on rogue unions and union officials, before parliament on Monday.
After accepting amendments from both Centre Alliance and Pauline Hanson, the government said on Sunday it was confident the legislation, strongly opposed by Labor, will pass.
Asked on the ABC what form the Westpac board’s accountability should take, Frydenberg said: “There must be accountability, and that will obviously involve decisions that they take about the futures of senior management, as well as the board”.
So far, there has been no sign of Westpac taking heed of the hints and calls for resignations.
The government’s position had consistently been that membership of boards were matter for shareholders and boards determined executive teams, Frydenberg said.
“That being said, these are very serious issues. There must be accountability.
Authors: Michelle Grattan, Professorial Fellow, University of Canberra