Westpac chairman John McFarlane ‘frustrated’ over bank scandals

Westpac chairman John McFarlane has voiced his anger over the scandals that have plagued the bank in recent years.

Westpac chairman John McFarlane has expressed his frustration over the scandals that have plagued the big four bank. Picture: Adam Yip

Westpac chairman John McFarlane has voiced his anger over the scandals that have plagued the bank in recent years, telling shareholders he is more frustrated than they are by the wrongdoings as he vowed the lender would do better.

“I‘m not sure who’s the most frustrated here, you or me,” Mr McFarlane said in response to a question on the bank’s culture following the AUSTRAC and Bill Papas scandals.

“I actually agree with you here, these things shouldn’t happen. I won’t comment specifically on the fraud, but these things just shouldn’t happen. And I can tell you that when they do happen, there is accountability, certainly in the management team.”

Westpac is currently pursuing Mr Papas for repayment of $300m, with the bank claiming it was defrauded using false invoices and lease agreements.

“So this is incredibly frustrating for me, it’s frustrating for the board, it’s frustrating for the chief executive, and it shouldn’t be happening.”

The lender was dealing with a lot of the problem areas through its simplification program, he said.

“A lot of these issues have arisen in stuff we don’t want a bar of, and so we’re dealing with them strategically. That will be the bulk of the seven of the ASIC-type issues.

“That’s one way of dealing with them. The other way is not making mistakes in the first place. And when you’ve made them, dealing with them quickly and making sure they can’t happen again.”

Westpac CEO Peter King, left, and chairman John McFarlane. Picture: Emma Foster

The corporate regulator in November announced it had commenced six civil penalty proceedings against Westpac in the Federal Court.

 ASIC and Westpac have agreed facts and penalties on the matters, which will be presented to the court next year.

“We believe around April, but that’s obviously subject to the court, and that’s when those matters will be considered by the court,” Westpac chief executive Peter King said.

The bank was throwing “a lot of bodies, a lot of money, and a lot of time” in trying to fix the problems, Mr McFarlane added.

“I can’t promise you we’re not going to make any mistakes because that’s just not the real world. What we’ve got to do is be better than everyone else. And that’s our mission.”

Mr McFarlane also expressed his disappointment at the lender’s drop down the rankings among the big banks by market capitalisation.

“This hurts. And it’s not the right position for Westpac traditionally, with our business mix. We’ve always expected Westpac to sit around the number two position relative to the other major trading banks (excluding Macquarie).

“When I stand back from it, a number of things happened at Westpac that I wasn’t aware of when I was outside the organisation, but I’ve become aware of since I joined.”

These included that the bank had lost market share in a number of areas and that return on equity had been declining, he noted.

“So it is true that in a number of ways the company hasn‘t been performing.

“What we need to do is completely reverse that, get into businesses that we really should be in, get out of businesses that we shouldn’t be in and are eroding value, and improve the way we run the enterprise for shareholders going forward.”