Banking royal commission: Hayne issues second please explain to CBA over document blunder

Ken Hayne has demanded a fresh explanation from CBA over a document blunder that interrupted last week’s hearings.

Commonwealth Bank has been further put under pressure to come clean over a document blunder at the royal commission which revealed further misconduct of a bad banker, the royal commission has heard.

Royal Commissioner Kenneth Hayne today launched a second order to the lawyers working for the nation’s largest bank to explain the document snafu, after their first explanation to the inquiry raised further questions.

Last week CBA barrister Charles Scerri cast confusion over the royal commission after claiming to have discovered new documents overnight that revealed further misconduct of a bad banker, and then clarifying that the bank’s legal team had been in possession of them for more than a month.

Mr Scerri had told the royal commission CBA lawyers “located” the documents when it was searching for the performance review of a Bankwest bank manager, whom the commission heard had been inflating property valuations to meet lending targets and gain bonuses.

Mr Hayne had ordered CBA’s lawyers to explain the snafu by Tuesday this week, which it did, the royal commission heard at the opening of proceedings today.

Mr Hayne said if further investigations were to reveal that some additional changes were necessary to reflect the position about when the documents were received, the lawyers would have to explain it. He said that on July 3, CBA solicitors wrote to the commission to correct two matters and clarify some information

“Having considered what was said in the letter, I have asked the solicitor assisting the commission to seek further information from CBA … regarding questions that have arisen from that letter,” Mr Hayne said.

“I am not yet in a position to decide what course I should follow in relation to these matters,” he said.

The missing documents related to a “champion” bank manager at CBA subsidiary Bankwest, whose target-beating lending won him a trip to Hayman Island, but later left the company after he was found to have allegedly overvalued loans. The royal commission heard the bank manager, whose name was suppressed, inflated farm valuations but he had also kept inaccurate information in his files, engaged in mis-selling and had fudged numbers to garner bonuses.

Other customers were found to have problems with the same banker, after they contacted his clients when his phone was handed in.

The royal commission heard the banker may have entered into CBA’s conduct register, known as its “Genesis” system, to reset the number of “dishonours” marked against him to zero.

Bankwest became aware of the issues around the time the manager resigned in March 2012.

Documents showed retired CBA non-executive director Harrison Young, who was chair of the bank’s risk committee, was briefed on the Four Corners investigation of Bankwest and on the behaviour of the banker, as part of a review into the Toowoomba operations in 2012.

The banker had been named “Rural and Regional Champion” at the bank for exceeding sales targets in 2011 and was sent on a trip to Hayman Island after he lent $33.5m against his $25m target.