The Australian ‘banks’ of sovereign citizens – and the havoc they wreak

Australian “bank” Creditnet Bank Internationale has no office, only a Gold Coast mailing address and the number of normal customers wanting to make deposits or take out loans from the group are few and far between.

Yet it has found itself at the centre of controversial moments in Australian corporate history, including being tied to four separate and failed attempts to take over BHP, Qantas, Suncorp and Fosters by colourful former winemaker Andrew Garrett.

Creditnet Bank Internationale has also been embroiled in a $25 billion attempted fraud against the tiny pacific country of Palau. There are also growing concerns among Australian financial regulators that these kinds of organisations pose a risk to ordinary consumers.

Creditnet Bank Internationale says it is backed by gold.Credit: Marija Ercegovac

Creditnet Bank Internationale appears to align itself with the broader sovereign citizen movement, which has an ethos that claims not to be subject to the vast majority of laws – in Australia or anywhere else. It’s a movement that came to public attention during the COVID-19 pandemic for their refusal to recognise police or government health directives.

Businesses like Creditnet Bank Internationale don’t take the deposits or lend to sovereign citizens in Australia. Instead, they claim to open the door to a type of finance used between large banks that they claim helps control the flow of money between lenders.

According to their theory, tapping into the bills of exchange market can give relatively ordinary people access to extraordinary amounts of money – sometimes several billion dollars. The “bank” claims it is not subject to any state or statutory legislative power and instead is governed by common law principles, operates under a trust structure and is entirely backed by gold.

On its website, Creditnet Bank Internationale states it is trustworthy and explains that it provides services to borrowers as a “Sovereign Pure Trust operating as a Sovereign Status Banking Organisation”.

Earlier this month, Australia’s banking regulator won orders stopping Creditnet Bank Internationale founder Robert Gray from holding out that it and his other group Commercial Development Bank were banks. The orders also stop Gray from any activities related to banking, including barring him from issuing bills or notes intended for circulation.

Gray was unrepresented in the matter but has long insisted the two businesses operate legally, telling the Federal Court in his Australian Prudential Regulatory Authority (APRA) matter that “Creditnet … operates from a Sovereign Jurisdiction which is NOT under the control or jurisdiction of APRA”, according to the judgment handed down in the matter.

Court documents filed by the banking regulator in the case showed there had been recent inquiries regarding the bona fides of Creditnet Bank Internationale. It also revealed the regulator had been sending warning letters to the group and Gray since 2004 before it took court action in 2023.

APRA deputy chair Margaret Cole said the action was taken to protect Australian bank users. Credit:

APRA declined to say why it took 19 years to take court action against Gray and his entities. In a press release issued after it won orders against Gray, APRA deputy chair Margaret Cole said consumers needed to be vigilant and research unfamiliar businesses describing themselves as banks before depositing money.

“APRA protects bank depositors through its licensing regime, prudential framework and active supervision. We have taken action once again to prevent Australians mistakenly believing they are depositing money with an APRA-regulated entity and receiving the same protections,” Cole said.

A review of the group’s activities reveals it has been embroiled in issues facing other banks in Australia and overseas. Creditnet Bank Internationale caused an international stir in 2009 when its documents were used by an American man in an attempted €15 billion ($25 billion) fraud against the small Micronesian state of Palau.

Court documents filed by Palau in the US, seeking assistance from US authorities to gather evidence in the case, show that the man had come very close to pulling off this fraud attempt. Gray told this masthead that the financial instruments issued to the man were for funding commercial, humanitarian and infrastructure projects and were in good order.

Gray’s business has also had dealings with Garrett who is perhaps most widely known as the creator of popular summer sipper and 1990s favourite, the Andrew Garrett Sparkling Shiraz.

Andrew Garrett in 2004.Credit: John Donegan

In 2006, Garrett attempted to launch separate takeover bids for Foster’s, Qantas, BHP and Suncorp using bills of exchange from CreditNet Bank International. Garrett sued Westpac in the Federal Court for failing to honour the documents that purported to provide him access to funds exceeding $US11.35 billion ($17.44 billion).

The court found Westpac acted appropriately when it refused to honour the documents after being unable to establish the bona fides of Creditnet Bank Internationale. The judgment in the matter shows Garrett had direct dealings with Gray to arrange his finance, including documents used by Garrett to launch his takeover offer of some of Australia’s biggest companies.

Gray told this masthead Creditnet Bank Internationale had lawfully issued the documents and that the court committed an error at law in the way that it came to its conclusion.

This low-resolution, old photo is the only image associated with Robert Gray online including on his X social media profile page.

Regarding the APRA court case, Gray said he was unable to properly defend himself due to personal circumstances. He told this masthead: “Between the last two-way emailed letters of communications that Creditnet Bank Internationale had with APRA, and recent events taken place in the FEDERAL COURT, I was kidnapped and held for ransom.

“After paying the ransom funds I was released and ended up being hospitalised for an emergency operation. No documents were ever served on me to give me a chance to declare the ‘Truth’ of the Status of Creditnet Bank Internationale to the court.”

In the years after his use of Creditnet Bank Internationale, Garrett – who was in 2009 declared a vexatious litigant by the Federal Court and Supreme Court of South Australia over a separate legal matter involving National Australia Bank – branched out into sovereign citizen banking himself. In 2023, APRA secured Federal Court orders stopping Garrett using the term bank or claiming that three companies – Dynamic Capital Bank, Banque de Capital Dynamique and Banca di Como – were banks.

Justice Michael Lee’s judgment approving APRA’s stop order request provides insight into the ethos behind these types of banks. “As will already be evident, Mr Garrett’s claims are not legally compelling. Indeed, to borrow an expression from a case involving claims not dissimilar to those in the present case, they resemble a ‘jumble of gobbledygook’,” Lee said.

“This is self-evident and I do not propose to waste time dealing with the allegation I am a bankrupt, nor explain why I consider the better view is that I should not be imprisoned in Outer Mongolia or some such place.”

According to Lee’s judgment, Garrett also filed documents in that case that referred to the judge and APRA’s legal team as “prisoners” and drew up a table that assigned them prisoner numbers.

Garrett, who claims on his LinkedIn profile that he holds a variety of roles including Liquidator and Managing Controller of the World and the role of Crown Attorney General in Hong Kong since 2020, told this masthead: “The proceedings were commenced in a manner that was rushed and was not fair to the judge or me. At that time I was recovering from surgery and was incapable of making any submissions whatsoever and explained that to the judge.

“I have now filed and served a Notice of Removal to the High Court of Australia under s38(a) with a Judicial Officer nominated by the Chief Justice of the High Court of SAR Hong Kong,” he said.

Regarding his historic association with Gray, Garrett said: “Robert was always absolutely correct in his dealings. I have no reason to believe anything has changed.”

It doesn’t appear much will change for Gray and Garrett in terms of their dealings with regulators in Australia which maintain that these groups are not the types of banks Australians should give their money to.

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