I was ANZ’s ‘fall guy’ in rate-rigging saga: ex-trader Etienne Alexiou

Former ANZ trader Etienne Alexiou alleges he was sacked for raising serious conduct issues as his latest case threatens to blow open how the bank handled the BBSW scandal.

Etienne Alexiou’s camp next heads to court against ANZ in November. Picture: Ella Pellegrini

Former ANZ trader Etienne Alexiou alleges he was a “fall guy” for raising serious conduct issues at the bank, as his latest case threatens to blow open how ANZ handled an internal probe and what management knew of the rate-rigging saga.

As the Federal Court legal battle ramps up in coming months before judge Nye Perram, it may prove highly embarrassing for ANZ if Mr Alexiou’s claims are substantiated. The case will make reference to the Reserve Bank, senior figures at the corporate regulator and in the banking sector who are mentioned in communications and meetings regarding the rate-rigging probe.

Justice Perram has ordered Mr Alexiou’s side to file any affidavits and evidence on or before October 17, and the case is next listed for a management hearing on November 9.

Mr Alexiou, who was ANZ’s head of balance sheet trading, was sacked by ANZ in 2015 due to ­offensive communications via his Bloomberg chat messages. He had been stood down in November 2014, alongside a small group of traders, while the Australian Securities & Investments Commission conducted an investigation into ANZ’s participation in the rigging of the bank-bill swap rate.

The bank settled with the regulator in 2017, reportedly for $50m.

Mr Alexiou’s earlier case filed in 2015, suing ANZ, exposed shocking allegations of a culture at the bank that condoned drug-taking, lewd language and at times conducting meetings at lap-dancing bars and strip clubs. He discontinued that case – which was seeking about $30m in forgone income and damages – in 2016, privately saying it was due to the toll the case was taking.

The first statement of claim from 2015 alleges that then ANZ head of business management John Chase joked about a white substance “found in the male ­toilets of the dealing room”.

Mr Chase is alleged to have told Mr Alexiou that his line manager Robert O’Callaghan had said: “What a waste, someone should have sprinkled it on the birthday cake.”

The current proceedings will delve into ANZ’s own probe into the bank-bill rate rigging, which was internally dubbed Project Arrow. The new case follows claims ANZ kept close tabs on Mr Alexiou’s independent counsel – paid for by the bank – and through the invoices got insight into his overall dealings with ASIC.

The new legal action alleges Mr Alexiou raised concerns in late 2011 – just months after starting at ANZ – about the way it conducted the bank bill rate set. He also made other complaints including a 2014 insider trading allegation and complaint regarding ANZ’s trading in interest-rate derivatives ahead of a bond issue.

The latest case will centre on whether the disclosures were protected by whistleblower provisions under the Corporations Act 2001, rather than newer legislation that offers broader protections. The case may also draw on provisions under the Banking Act.

Mr Alexiou declined to comment on the latest proceedings on legal advice while the case is before the court.

An ANZ spokesman declined to comment, citing the matter was before the court. ANZ has filed a defence to the latest case, which was not immediately made available upon request by The Australian to the court.

The legal stoush comes at a sensitive time for ANZ as it seeks to get regulators and the Queensland and federal governments to approve its $4.9bn purchase of Suncorp’s banking operations.

Mr Alexiou’s legal representative, Stewart Levitt, principal of Levitt Robinson, said his client was pushed out of the bank despite ASIC not implicating him in the rate-rigging.

“Alexiou was invited by the bank and ASIC to be a fall guy and it was his fierce integrity, fortitude and knowledge of the truth that caused him to resist, to the point where there was no reasonable prospect of anybody being able to pin anything on him,” Mr Levitt said. “Which is why it is alleged that the Bloomberg messages were used.

“ASIC might have been playing ANZ’s game for a long time, until it was impossible to pin the tail on the Alexiou donkey. 

“The abandoned … case was just about the peccadillos, social mores and hypocrisy of the bank in relation to the grounds that they proffered for Alexiou’s dismissal. The new case goes to the heart of the mischief.”

In a recent case management hearing, ANZ’s barrister said the bank had “13 or so witnesses that might need to be spoken to in order to prepare evidence”, many of whom were no longer employees. ANZ wanted Mr Alexiou’s material lodged well before the end of October so it would have time to deal with its own evidence this year.

In ANZ’s prior defence in the 2015 case, it denied the incidents claimed by Mr Alexiou occurred and noted he had been sacked for breaches of codes of conduct.

The latest case will make reference to a call from the RBA’s Matthew Boge in 2011 to ask about the sale of one-month bank bills and to ask whether ANZ had a funding issue. It will also reference a meeting attended by Mr Alexiou and then ANZ Australia boss Phil Chronican and Rick Moscati and Robert O’Callaghan in September 2011. Mr Chronican is now National Australia Bank’s chairman.

It is unclear if ANZ chief executive Shayne Elliott will be drawn into the case. He ran the ­insti­tutional bank for three years until 2012, then had a stint as fin­ance boss, before taking the top job.

Mr Alexiou’s case will highlight a 2014 letter by then co-head of fixed income currencies and commodities Richard Huston deferring the vesting of any shares “until the (ASIC) investigations are closed”. The bank also deferred making a decision on Mr Alexiou’s bonus.

“The letter is basically saying you had better toe the line buddy and make sure that we get out of this clean, otherwise you’re not getting your bonus,” Mr Levitt said.

Mr Alexiou’s camp is still calculating what the current case may claim as damages, which will be offset by any income earned since his termination. Mr Alexiou now runs Sydney-based Belay Capital. “The number (still to be calculated by an independent expert) is based upon projected loss of income for a very high income earner … whose reputation was smashed,” Mr Levitt said.

ANZ has been embroiled in a series of reputational and trading scandals in the past decade.

In 2016, ANZ and Macquarie Group separately admitted their traders attempted to rig a key benchmark rate in Malaysia. Three years earlier, the same two banks were penalised by regulators for trying to rig Singapore’s benchmark rates, as part of action against 20 banks.

Mr Alexiou’s camp took his lawyers HWL Ebsworth to court to seek access to his client file after the law firm denied access. That matter went to the Supreme Court, where the law firm was ­ordered to provide any case and file notes and cost files and agreements to Mr Alexiou.

“Even though ANZ paid all the bills, and there was no basis to exercise a lien, Ebsworth resisted handing the documents over,” Mr Levitt said. “There are not all of the file notes of barristers, because the barristers claimed not to make or keep them.”

Mr Alexiou’s 2015 case argued ANZ had taken “adverse action” against him because he had sought to exercise workplace rights “in contravention of section 340 of the Fair Work Act, 2009”.

The 2015 claim had sought the bank pay Mr Alexiou compensation after it stripped him of rights to shares and cash bonus payments after his sacking.

Mr Alexiou’s earlier statement of claim alleged he’d been told he was to be sacked from the bank for his breaches of a code of conduct.