Deutsche Bank, ANZ, Citigroup probe ACCC on ‘test and remove’ strategy, call for fair trial in cartel case

Deutsche Bank has questioned the prospect of having a fair trial for it, Citigroup, ANZ and six senior bankers in a landmark criminal cartel case.

Marcus Bezzi, ACCC executive general manager for specialised enforcement, backed the regulator’s processes in court on Tuesday.

Deutsche Bank has questioned the prospect of having a fair trial for it, Citigroup, ANZ and six senior bankers in a landmark criminal cartel case, given the competition regulator did not retain initial statements by witnesses that were later changed.

Deutsche’s senior counsel Murugan Thangaraj cast a shadow in the Penrith District Court on Tuesday on an Australian Competition and Consumer Commission process of typing over initial statements, meaning the original version could be overridden and not saved.

He said the banks had only discovered “prior inconsistent statements” by some ACCC witnesses at JPMorgan — which was granted conditional immunity in the case — because they were sent via email, rather than being retained by the regulator.

“Witnesses in court cases are challenged on credit … aren’t we as the defence entitled to know when your witnesses have given a previous inconsistent version?

“Your (ACCC) process is no retaining of drafts, no note taking, the effect of your process is it is impossible for you to disclose prior inconsistent statements,” Mr Thangaraj said. “Who makes the note for disclosure purposes to give defence and the community of a fair trial?”

The comments came in pre-trial hearings as the ACCC and Director of Public Prosecutions pursue criminal charges against the three banks and key staff over how they managed a 2015 sale of surplus shares not taken up in a $2.5bn ANZ raising. The regulator alleges the banks acted as a cartel and is drawing on evidence supplied from JPMorgan, a fellow bank on the deal.

On Tuesday, ACCC executive general manager of specialised enforcement Marcus Bezzi strongly disagreed with Deutsche’s claims and labelled the formalising of a witness statement an “iterative process”.

“If there is a note taker we disclose that, if there is no note taker there is nothing to disclose … we are under no obligation to disclose things that we haven’t got (in a formal signed statement),” he said, highlighting the ACCC focused on the signed version by the witness, which they were prepared to back up in court.

“If the witness doesn’t adopt it as a position, if the witness considers that on reflection it’s actually not the evidence that they’ll give orally when it comes to court, I’m not sure that it is really exculpatory.”

The heated exchange was referring to an initial account given by JPMorgan’s markets boss Jeff Herbert-Smith that banks working on the transaction made separate decisions about not trading in ANZ’s surplus shares on a particular day. That position was not repeated in his final court statement.

Mr Thangaraj persisted with his argument suggesting the ACCC was employing a strategy to remove parts of initial witness accounts.

“Why the ACCC in this case deliberately chose not to take any notes during interviews is because your policy is we don’t have to disclose exculpatory utterances that are not noted … that is precisely what happened.”

But Mr Bezzi disagreed, saying an initial account of events wasn’t evidence and that Mr Herbert-Smith had “clarified his position” in subsequent interviews.

Defence lawyers also questioned why JPMorgan’s own lawyers Gilbert + Tobin were able to participate in interviews with current and former bank employees, who had their own representation. JPMorgan and the individuals have to seek immunity from prosecution separately.

The ACCC made a formal statutory request for JPMorgan’s internal investigation on the alleged cartel behaviour, but the bank refused, claiming legal privilege, and only provided parts of the material. While Mr Bezzi admitted JPMorgan was also slow in providing other documents, he said overall the bank was cooperative and he was comfortable with a media statement made to that effect.

The ACCC had internally dubbed the cartel investigation Operation Deacon.

ANZ’s senior counsel Simon Buchen took aim at the ACCC on Tuesday for several references in notes, some handwritten by staff, to “test and remove” parts of witness statements.

“This distinction that you’ve sought to draw between an account and evidence is an attempt by you to downgrade the significance of removing exculpatory material from what these witnesses were telling you,” he said to the ACCC’s general manager and then cartel team leader Jane Lin.

She explained that was the way the ACCC drafted witness initial statements, in part to ensure the regulator hadn’t misinterpreted the comments.

Citigroup’s senior counsel Dean Jordan asked Ms Lin to explain why references to banks acting as a syndicate for the capital raising were removed from one witness account.

Magistrate Jennifer Giles is presiding over the pre-trial hearings, which she wants wrapped up this week.

“If you miss finishing this week you are into next year,” she said. That timeline would suggest the formal trial may slip into 2022.

In Monday’s hearings it was revealed JPMorgan and its lawyers told the ACCC as far back as 2015 they believed ANZ’s controversial capital raising did not reflect cartel behaviour by banks, despite at the same time pressing for immunity if a legal case emerged.

In the damning case launched in 2018, the ACCC charged with cartel conduct six high-profile bankers: ANZ’s former treasurer now Australia chief risk officer Rick Moscati and former Deutsche Bank executives Michael Ormaechea and Michael Richardson. At Citigroup, former Australia chief executive Stephen Roberts, and bankers John McLean and Itay Tuchman are entangled in the case. Each banker, and their respective employer at the time, has denied the allegations.

The hearings continue.