NAB alleged to have played a role in 600 Queensland small businesses missing $18 million in payments

At the same time as senior officials at this “big four” bank were being grilled at the Financial Services Royal Commission, its board was already aware it was alleged to have contributed to the multimillion-dollar losses that hit 600 Queensland small businesses.

WHILE senior officials of National Australia Bank last year faced a grilling in the Financial Services Royal Commission, the banks’ board knew of NAB behaviour alleged to have contributed to multimillion-dollar losses to 600 Queensland small businesses.

Complaints of the bank’s behaviour highlighted in an explosive document had been prepared by a Brisbane property developer whose cumulative losses for shoddy work on a unit complex now total $6 million.

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The document was sent to the NAB board on behalf of the Subcontractors Alliance - a lobby group formed after the October 2013 liquidation of Walton Construction Queensland.

It alleged that NAB, through 2013 and into 2014, breached the Queensland Criminal Code and the Banking Code of Practice to dishonestly divert more than $18 million owed to 600 Queensland subcontractors engaged by WCQ to unjustly enrich the bank.

“The total amount of debts owed by the companies and lost to creditors was more than $78 million,” the complaint said.

It called on NAB to compensate creditors for their losses and for the further damage caused.

In a letter dated January 3, NAB denied any liability and rejected claims a Federal Court judgment in December had seriously implicated it in the structured demise of the building company.

The complainants allege the bank knew - when it referred Walton to business advisors, the Mawson Group - that Walton was insolvent and that its own securities over WCQ would not be recovered by normal processes.

They claimed NAB allowed the Mawson Group to continue to trade the insolvent companies for a further seven months.

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During that time, money owed to Walton companies’ creditors was withheld, and ultimately retained by NAB to cover its own exposure to the builder.

The document claimed the bank knew an agreement fashioned by the Mawson group to transfer WCQ assets to another company would result in creditors not being paid, but did nothing.

Much of the material in the document had already been provided to the Royal Commission in the form of a submission from the Subcontractors Alliance.

Signed by property developer and project manager Len Willis and Subcontractors’ Alliance head Les Williams, the complaint to the NAB board, sent mid-October, named bank officials and others, cited precedents and alleged conduct in breach of Commonwealth law and the Queensland Criminal Code in relation to fraud.

Those offences have maximum penalties of 10 years’ jail.

No one has ever been charged.

Mr Willis said too many people were being damaged for so-called white-collar crime to continue to be treated as a risk of business.

“Criminality shouldn’t be a risk of business,” he said.

“You can’t have criminal activity allowed in conjunction with the banks, but the whole system does not want to prosecute.

“We have raised these issues with both sides of politics, but their responses to date seem to indicate that they don’t really understand the scale and impact of this criminal conduct.

“There is much speech-making since the royal commission, but no evidence that they are taking steps to ensure these crimes are prosecuted appropriately, in the public interest.

“If it were truly understood, they should be outraged that such a thing can happen in this country.”

Subcontractors’ Alliance head Les Williams. Picture: Brett Wortman / Sunshine Coast Daily

The complaint stated that the bank’s behaviour served to not only damage the victims but lent support to the co-conspirators.

It likened it to “the failures to act against wrongdoing by banks, and their networks of agents and advisors, which has already been subject to scrutiny in the current royal commission”.

“The liability of those who assisted the main offenders is also a question of law that is likely to produce disquieting results for the defendants,” it said.

Mr Willis said there were striking similarities between the NAB complaints and those that ultimately saw Westpac and other bankers forced to pay $1.6 billion in compensation in relation to the long-running Bell Group Ltd suit.

He said what was alleged was that NAB had committed crimes for its own benefit at the expense of creditors, many of whom were engaged to do work and supply materials for which they would never be paid.

The complaint said any claim by NAB that debts owed by creditors would have been greater if Walton had been placed in liquidation in March 2013 was not supported by evidence to the contrary.

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At that point the bank was in receipt of a report it had commissioned from Deloitte, which found the Walton group was relying on subcontractor retentions for liquidity.

“If a liquidator was appointed at the time the company became insolvent, there would have been no opportunity for the defendants to inveigle other creditors to continue supplying goods and services in exchange for customer payments, and to withhold payment for those goods and services from the other creditors,” the complaint states.

The complaint quoted 2016 observations by liquidator Michael McCann who stated: “It appears that a possible motivation for continuing to fund Walton Constructions (parent company) losses was to improve the outcome for NAB by running down its Bank Guarantee exposure until such time as NAB’s debt was fully covered by cash deposits”.

Property developer Len Willis of P & W Enterprises Pty Ltd has been impacted by major developers going under. Picture: Tara Croser

Mr Willis was owed $4m by Walton for shoddy work performed on a unit complex he was developing.

By the time Walton went into liquidation, interest and costs had elevated the amount to $6m.

Losses at that stage of his life, he said, had been devastating.

Mr Willis said a black and white sense of justice had also driven his dogged five-year pursuit of the matter.

A legal letter from the bank, received by Mr Willis in early January stated: “NAB recognises the terrible effects that insolvencies like Walton Construction can have on everyone involved in the construction industry, including many who are themselves NAB customers.

“That is why NAB’s approach is to work hard to avoid such appointments.

“NAB’s actions in respect of Walton Construction were not unlawful or wrongful and NAB denies any allegation of breach of any legislation, the Code of Banking Practice or duties owed to anyone.

“In the circumstances your request for compensation is declined.”