Terry McCrann: Brian Hartzer will vacate Westpac’s chief executive role
Money-laundering claims made by Austrac against Westpac mean the bank’s chief executive Brian Hartzer will be gone in 2020, writes Terry McCrann.
Terry McCrann
Don't miss out on the headlines from Terry McCrann. Followed categories will be added to My News.
Brian Hartzer will not be CEO of Westpac in — I was going to say 2020, but as that’s now only six weeks away, let’s just say at some point in 2020.
That will mean three down and one to go.
The first of the big bank CEOs to be claimed by the royal commission and the assorted regulators subsequently waking from their decade-long slumbers was CBA’s “hero CEO” Ian Narev.
He was followed out of the — albeit, a different — door by NAB’s Andrew Thorburn.
Once Hartzer falls, or is pushed, on his sword, that will leave only the ANZ’s Shayne Elliott still standing as a Big Bank CEO who predates the RC and its aftermath.
In every case they are entitled to feel more than a bit miffed about having to take the rap for behaviour which in every case both started well before they became CEO and in any event should have been stopped at lower levels of management.
They are also entitled to be miffed as they’d all — and that’s all four — been very effective CEOs.
They might also reasonably ponder “if only……”
That’s, if only their predecessors had done their jobs, all the assorted issues which brought them down would have been dealt with years ago.
And by “predecessors”, I mean both bankers and regulators — especially ASIC and Austrac.
As I’ve argued from day one, we didn’t need a royal commission to uncover and to rectify the various examples of bankers behaving badly and ripping off their customers.
What we needed was regulators doing their jobs.
Take the two Austrac examples.
CBA got pinged for failing to report cash transactions through its ATMs above the $10,000 reporting threshold; as I noted when this surfaced — after being the only bank to allow customers to transact more than $10,000 through an ATM.
It didn’t seem to occur to anyone at CBA to, well, check whether its automated system was, well, picking up such transactions.
But equally it clearly didn’t occur to anyone at Austrac to ask CBA whether it was picking them up. Yes, the guys at CBA were asleep at the wheel, but so were the guys at Austrac. In both cases, non-gender specific.
The same applies to Westpac. Yes, it had the prime responsibility to monitor and report so-called IFTIs or International Funds Transactions Instructions — more simply, customers sending money to or receiving it from overseas.
But year after year, where was Austrac? Was it asking Westpac to prove that it was doing its job? Did it insist on auditing or road testing Westpac’s systems to ensure that it was?
Or was Austrac just ensuring that all the papers were neatly piled on its various desks, real or virtual, before it shuffled them?
Indeed after five years of failure Westpac had to self report. But for that, it — and Austrac — could have kept on failing for, what? Another five years? Forever?
It’s important to note with all the shock horror “money laundering” type headlines, there has been no evidence of deliberate illegal action in either of the Westpac or CBA cases. More simply, they were stuff-ups not conspiracies.
By this, I mean that, apart from perhaps a very small number of isolated cases, we are not talking about bankers setting out to deliberately facilitate either money laundering in the case of CBA, or paedophiles sending money to the Philippines in the case of Westpac, to profit either themselves or the bank itself.
This is very different to the examples we have seen with even major banks in Europe and the US, to say nothing of less developed countries, or in James Bond movies.
No one in management at CBA set out to deliberately build a franchise among money launderers. Nobody at Westpac saw the opportunity to make money out of paedophiles.
And again, despite in both cases the very large number of transactions cited in the breaches, the actual number of really dodgy transactions was very small.
All that said, two things are clear and absolute.
One is the penalty the bank has to pay. CBA copped a $700 million penalty. Entirely appropriate.
Westpac will cop something similar. Again, good.
Secondly, the buck does stop at the CEO’s desk. When there are so many of them, they don’t just stop, they sweep. That’s sweep the CEO away.
One “mistake” — the multibillion-dollar customer remediation from the RC — would be enough of a “sweep”.
Add on another billion, give or take the odd hundred million in relation to Austrac, and it’s just not in contention.
The only real decision for the Westpac board is whether to go the CBA route — elevating an internal successor, or the NAB one — taking a year to bring in an outsider.
CANBERRA NOT TURNING — YET
THE government’s decision to fast-track $4 billion of infrastructure spending makes sense but won’t make any significant difference.
That’s to say, it’s a proactive exercise in removing regulatory red tape. But $4 billion over four years and on top of the $100 billion-plus of infrastructure spend already under way will barely be felt, either positively or negatively, in the economy.
Further, it does not signify a shift in policy in Canberra to a 2009-style “emergency stimulus”. This is not just throwing money around, pink batts and school halls-style, just to throw money around.
But it is legitimate targeted spending. It is finetuning.
Both Treasurer and PM have made it clear that they are not “for turning”. At least, not yet. They are intent on delivering that Budget surplus.
For the RBA it is on to February. For the government it is on to the mid-year Budget update next month.