NAB hands over bombshell document on home loan bribes to banking royal commission
NATIONAL Australia Bank has finally unearthed for the banking royal commission a crucial document about rogue bankers who took bribes to secure home loans for customers.
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NATIONAL Australia Bank has finally unearthed for the banking royal commission a crucial document about rogue bankers who secured home loans for customers in return for bribes.
Counsel assisting the commission Rowena Orr, QC, has revealed the document was handed to her this morning by NAB lawyers.
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The commission heard yesterday that rogue NAB staff falsified documents to secure mortgages for customers.
In return, the staff received cash bribes paid across the counter in white envelopes.
Ms Orr said the document handed over today showed the NAB board was notified by the bank’s chief risk officer — on November 4, 2015 — of possible fraudulent behaviour by branch staff.
The fraud was allegedly carried out at by a network of staff in five branches across greater western Sydney.
It revolves around NAB’s “Introducer” program, where the bank pays commissions to businesses that refer customers who then take out loans.
The fraud allegations were tabled yesterday during questioning of NAB executive general manager for broker partnerships Anthony Waldron.
At the commission hearing this morning, Ms Orr questioned Mr Waldron as to why it took until February 2016 for NAB to official inform the corporate regulator of the allegations.
Banks are required to report such issues to the Australian Securities and Investments Commission within 10 days.
“The group chief risk officer briefed the (board risk) committee on an issue identified as fraudulent behaviour in regards to ‘introducers’,” Ms Orr said.
She asked Mr Waldron why NAB had not produced that document before this morning.
“Im sorry I can’t — it is the first time I have seen the document,” Mr Waldron said.
The commission has also heard that accountancy heavyweight KPMG had compiled a report for NAB about the issue.
It found there were a “litany of control issues” in the bank’s processes.
A packed courtroom is attending the second day of public hearings for the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
Spectators include former deputy prime minister Tim Fischer.
The commission is currently focusing on concerns around consumer lending.
Ms Orr on Monday noted the NAB Introducer scheme had generated $24 billion worth of business for the bank.
But it had been marred by rorting, she revealed, including cases where pay slips were forged, bribes paid to staff, and customers’ signatures faked.
While the program was meant to be for businesses such as financial planning, architectural and real estate agencies, Ms Orr said there were instances of gym instructors acting as “introducers”.
“Let’s be frank: there was fraudulent conduct by (some) NAB bankers and introducers,” Ms Orr put to Mr Waldron.
“Yes,” he said. Mr Waldron was appointed to his current role in 2016 after the problems were discovered.
One whistleblower contacted NAB in October 2015 and said there was a network of five rogue branches in greater western Sydney, the commission heard.
Staff embroiled in the scheme included some managers, that person said.
Bribes of $2800 were paid “in white envelopes over the counter” at some branches, it was alleged.
“People are being promoted on the basis of home loans and lending — it appears they are smashing targets but some of it is false,” said one whistleblower email read by Ms Orr at the hearing on Tuesday.
She said two whistleblowers approached NAB about the problems at those branches.
Last November, NAB revealed it had sacked 20 bankers and taken action against 32 others — including slashing pay — after a review uncovered inaccurate and incomplete documentation for 2300 mortgages. Those sacked were in Melbourne and Sydney.
Former High Court judge Kenneth Hayne, who is leading the commission, had also queried yesterday why it took until February 2016 for NAB to notify regulators of that situation, noting five people had already been sacked by November 2015.
“NAB knew enough to sack people,” Mr Hayne said. “Are you telling me it didn’t know enough to notify ASIC?”
The Commonwealth Bank was also scolded for handing over inadequate material on past misdeeds.
“(The first CBA submission) had a high level and general approach. It did not go into detail as a number of other entities had done,” Ms Orr said.
The bank then provided a spreadsheet on cases going back five years, she said, but “the volume of information made it hard to assess misconduct”.
Ms Orr also raised concerns over the level of detail CBA provided about its mortgage broker subsidiary, Aussie Home Loans.
The commission is still taking submissions from the public, at this link: royal commission submissions.
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