ANZ, Citigroup, Deutsche to stand trial over cartel allegations

ANZ, Citi, Deutsche and current and former executives have separately lodged not guilty pleas in a landmark cartel case which commits them to stand trial.

ANZ is among the banks that will face cartel charges in the federal court after it pleaded not guilt. Picture: Hollie Adams

ANZ, Citigroup, Deutsche Bank and six current and former executives have separately lodged “not guilty” pleas in a landmark criminal cartel case, which commits them to stand trial in the Federal Court.

Magistrate Jennifer Atkinson heard the pleas in Sydney’s Downing Centre on Tuesday, and said the matters would then head to the Federal Court. A hearing is scheduled for December 15 in front of Federal Court judge Michael Wigney.

The long-running criminal matter relates to an ANZ capital raising five years ago and how the banks managed a shortfall of shares not taken up by investors. The Australian Competition & Consumer Commission lobbed the criminal case in 2018, and fellow bank on the capital raising JPMorgan was granted immunity for its co-operation.

The defendants attended the hearing via phone link on Tuesday, given COVID-19 court procedures, and each bank and individual acknowledged their not guilty pleas to charges levelled at them.

The cartel action involves Citigroup’s former Australia boss Stephen Roberts, Citi bankers John McLean and Itay Tuchman and ANZ executive Rick Moscati.

ANZ’s Rick Moscati is among bank executives pleading not guilty to criminal charges related to alleged cartel activity.

Deutsche Bank’s former country head, Michael Ormaechea, and former equity capital markets boss Michael Richardson, are also part of the action.

For corporations, the maximum fine for each criminal cartel offence is the greater of $10m, three times the total benefits that have been obtained, or 10 per cent of the firm’s annual turnover connected with Australia.

An individual convicted of a criminal cartel offence faces up to 10 years imprisonment, a fine of up to $420,000, or both.

“I am committing the company to stand trial,” Magistrate Atkinson said of each of the banks.

Tim Game, QC, who is representing ANZ, noted the bank was pleading not guilty to four charges but wanted to make a statement to the court regarding the process.

“We have complied with our obligation … we appreciate it is inevitable that we will be committed to the Federal Court,” he said as he highlighted procedural issues, including that the bank had received material late, with the most recent tranches of documents arriving in October and November.

“These proceedings have miscarried and are continuing to miscarry,” he said.

ANZ would not make an application to the court on the matter, though, according to Mr Game because in his view due to governing legislation it was “likely to be fruitless”.

The other parties to the case put it on the record that they agreed with ANZ’s grievances.

Mr Ormaechea’s legal team said he was pleading not guilty to six charges, and made a statement to the court that while he had signed case conference material he did not agree that prosecution processes “have been complied with”.

The other parties to the cartel charges, also agreed with that statement.

The landmark criminal matter is being closely watched by the investment banking community, even though lawyers have since put additional clauses in capital raising and underwriting agreements to ward against running into issues.

In a statement on Tuesday, the ACCC said the criminal charges involved alleged cartel arrangements in 2015 relating to trading in ANZ shares held by Deutsche and Citigroup. ANZ and each of the executives charged are alleged to have been “knowingly concerned in some or all” of the alleged conduct.

“As this matter involves criminal charges, we will not be commenting further at this time,” ACCC chairman Rod Sims said.

The charges are being pursued by the Commonwealth Director of Public Prosecutions.

Citigroup and Deutsche’s not guilty pleas related to six criminal charges.

Mr McLean, Mr Tuchman and Mr Richardson also plead not guilty to six charges, while Mr Moscati’s not guilty plea related to four charges. Mr Roberts’ not guilty plea related to two criminal charges, and reference was made to the Competition and Consumer Act 2010.

In July hearings on the cartel matter, the defendants argued JPMorgan and its lawyers told the competition regulator on several occasions, including in 2015, they believed ANZ’s raising did not reflect cartel behaviour by the banks. The views were communicated at the same time JPMorgan was pressing for immunity if a legal case emerged.

At the time, ANZ’s senior counsel Simon Buchen told Penrith’s District Court the ACCC was tactically interviewing witnesses by making suggestions on statements.

ACCC managers retorted by saying the regulator had processes in place and sought legal advice on what to include in final court submissions, particularly as witnesses could be cross examined.