Federal Court tells Westpac, Austrac to push for agreement

Westpac and Austrac told to expedite an agreed statement of facts to get child exploitation scandal hearings moving.

Justice James Allsop is hearing Austrac’s case against Westpac. Picture: Renee Nowytarger

Westpac and the anti-money laundering regulator Austrac have been asked by the Federal Court to forge ahead with the creation of an agreed statement of facts relating to the bank’s alleged child exploitation funding scandal and not to get bogged down in “every last jot and tittle”.

Appearing on a video conference court session yesterday, Federal Court Chief Justice James Allsop sided with Westpac, which had argued that mediation between the bank and Austrac should continue with a view to producing an agreed statement of facts in the coming months.

Austrac’s lawyer from the Commonwealth Director of Public Prosecutions, Simon White, SC, said it was difficult to produce such a statement while there were still disputes between the regulator and the bank about certain particular claims alleged against the lender.

Mr White also said that “data that has been received by Austrac from Westpac that is relevant to the case is now the subject of investigation by Commonwealth entities”, and that further facts could be uncovered in the lead up to any potential defence hearing.

John Sheahan, QC, acting on behalf of Westpac, said there was no reason the parties could not produce a “partial” agreed statement of facts, and where Westpac did not agree it could defend the claims in court.

Late last year Austrac accused Westpac of 23 million breaches of anti-money laundering legislation, including allegations it failed to act when it was facilitating thousands of child exploitation payments to The Philippines and Southeast Asia, among claims it failed to properly monitor billions of dollars in international money transfers, known as IFTIs, or report those transactions to regulators.

Westpac has flagged that it would not fight a large degree of the millions of alleged breaches of law levelled against it, paving the way for a potential settlement analysts believe could be as high as $1bn.

Justice Allsop told the barristers, who both appeared via video link, to agree by the end of Tuesday to a new schedule to produce an agreed statement of facts.

“The matter has a significant degree of complexity and importance,” Justice Allsop said.

“One feature of the statement of claim is the difficulty faced by the pleader in reducing the large body of almost infinite detail into a coherent taxonomy of facts and particulars to support a traditional pleading,” he said.

“Once one comes to grips with the content of the concise statement and pleading, it becomes apparent that there is a sea of detail underneath both documents which must be organised, understood and debated, or agreed upon.”

While the circumstances of the case management hearing were unusual, disrupted due to government controls on gatherings to limit the further spread of COVID-19, Justice Allsop said the lawyers could “get a fair bit done” via video conference, in which members of the press were allowed to observe.

“I’m not sure whether you are at home or in your chambers,” he said.

“If there are lockdowns that prevent you going to your chambers, we can still proceed with this debate and with as much material on the papers as is possible.”

“I know the press is listening to this and there’s no reason why they shouldn’t, but one judge was heard to say that the mute button and the camera button were very useful things.”

The Australian Prudential Regulation Authority has raised the prospect it could disqualify Westpac directors and executives if they breached the executive accountability regime, while the Australian Securities & Investments Commission has confirmed it is investigating Westpac over “possible breaches of legislation”, including disclosure obligations and directors’ duties relating to the Austrac lawsuit.

In 2017, Commonwealth Bank was sued in the Federal Court by Austrac over 50,000 instances where it broke the law, ultimately leading to a record-breaking $700m fine. Mr White acted for Austrac in its case against CBA, while Ms Higgins advised CBA. John Sheahan, QC, who represented CBA, has also been hired by Westpac. Both Ms Higgins and Mr Sheahan advised Westpac during the royal commission.

Westpac has been hit with several class actions as a result of the case.