Former ANZ exec Philip Chronican denies saying bank would tell APRA ‘what to think’ as BBSW drama bubbled, court hears
The court case mounted by an ANZ trader sacked for lewd conduct took another dramatic turn, as banking veteran Philip Chronican stepped into the witness box.
NAB’s chairman has denied telling a meeting of ANZ senior management when he worked at the bank almost 15 years ago that they would “tell the regulator what to think” as nerves rose inside ANZ around its actions in the bank bill market.
Philip Chronican, the chairman of National Australia Bank, appeared in the witness box in the Federal Court in Sydney on Friday. He was called to give evidence as part of ex-ANZ trader Etienne Alexiou’s long-running case against his former employer in which he claims his sacking for lewd messages was unfounded, and the bank’s intent was to muzzle him.
ANZ maintains it sacked him in 2015 for “obscene, offensive and derogatory messages to colleagues”, many of which were aired in court this week. But Mr Alexiou alleges he was fired for blowing the whistle on alleged rate-rigging on the bank’s trading floor.
The ex-trader claims that in a meeting in September 2011 with Mr Chronican, who was then CEO of ANZ Australia, group treasurer Rick Moscati, and global head of fixed income Robert O’Callaghan, he raised concerns that plans to hedge or run risk on the bank’s variable interest rate mortgage portfolio could raise the ire of the Australian Prudential Regulation Authority and damage ANZ’s reputation.
Mr Alexiou alleges in court documents that Mr Chronican dismissed his concerns at the meeting with words to the effect of: “We will tell the regulator what to think!”
Mr Chronican told the Federal Court Mr Alexiou’s claims “don’t make sense”. He insisted that he had backed a proposal to cease hedging on the variable interest rate mortgage portfolio “because the cost of the hedge had risen”.
“Mr Alexiou has ascribed to me words that ‘we would tell the regulator what to think’ and I’m saying that’s a meaningless assertion to put on me because (...) there was nothing to tell them what to think about,” he told the court.
Mr Chronican was asked by Christopher Withers SC, appearing for Mr Alexiou, whether the alleged phrase “we will tell the regulator what to think” was “a way of making him shut up” but the NAB chairman denied that.
He also denied making a comment to the effect that the Australia division would seek to profit, rather than hedge risk, because “that wasn’t the issue” under discussion.
Mr Chronican told the court he did not recall Mr Alexiou being at the meeting, or ever encountering him.
“Not really, I knew of him but I don’t retain any active memory of him,” Mr Chronican said.
Mr Chronican was also asked if the desk which Mr Alexiou had oversight of in his role as global head of balance sheet trading would stand to profit if it had “undertaken the hedging process”, as allegedly proposed in the September 2011 meeting.
“It may have but I was blind to what they did,” Mr Chronican replied. He added: “What we ended up doing was not hedging for a period of time.”
Mr Chronican was also asked about what he knew about the decision to sack Mr Alexiou.
“I was advised by the group general counsel but I don’t know who made the decision,” he said.
ANZ settled with ASIC over the bank bill swap rate matter for $50m in 2017 eliciting an admission of attempting to engage in unconscionable conduct between 2010 and 2012. At the time, the BBSW benchmark was set manually by surveying the market participant banks every trading day.
Mr Alexiou had earlier told the court his wife and daughter were not disrespected by lewd comments he exchanged with colleagues.
Many of the obscene comments, including an impulse to “eat his dinner” off the backside of his daughter’s primary school teacher and his suggestion of “torpedo(ing) a jap chick”, were aired in excruciating detail in the first four days of the trial before Justice Nye Perram.
He was also asked to define what a “MILF” is.
Kate Morgan SC, acting for ANZ, suggested that the bank’s decision to fire him was the only course of action after discovering his crude messages on Bloomberg chats.
“That’s clearly not what happened, Ms Morgan,” he responded.
The former trader, who now runs his own hedge fund, insisted he was “very uncomfortable” and had “serious concerns” about alleged rate rigging at the bank and he had tried to raise these concerns with senior management.
Mr Alexiou was repeatedly granted court protection from self-incrimination after admitting that he lied to ASIC without intending to due to legal advice.
“(I was told,) say ‘privilege’ before you answer each question, you can’t know what anyone else thinks and to be cautious,” Mr Alexiou told the court.
The case is expected to run for another five weeks. Shayne Collins, who is now chief risk officer for institutional banking and markets at CBA, is expected to appear on Tuesday.
Mr Alexiou alleges in court documents that he overheard an ANZ trader, Jason Pritchard, saying he was “going to slaughter the rate set” on a few occasions.
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Originally published as Former ANZ exec Philip Chronican denies saying bank would tell APRA ‘what to think’ as BBSW drama bubbled, court hears
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