CBA boss feels the heat on Storm Financial

COMMONWEALTH Bank boss Ralph Norris may be ordered to appear before the parliamentary inquiry into the Storm Financial investment debacle after a Nationals senator blasted him yesterday for failing to attend.

COMMONWEALTH Bank boss Ralph Norris may be ordered to appear before the parliamentary inquiry into the Storm Financial investment debacle after a Nationals senator blasted him yesterday for failing to attend.

John Williams, a senator for NSW, said he would seek agreement from other committee members to subpoena Mr Norris after complaining that the bank had elected to wheel in lower-ranked executives.

"I find it disappointing, and I will be asking the committee to consider further action against Ralph Norris to appear before us next Friday," Senator Williams said yesterday. "We have 300-odd submissions, and there has been a lot of talk about the Commonwealth Bank and not much of it is good. Hence he should have come along to refute those submissions."

The actions of the CBA and separately the Bank of Queensland in extending loans to clients of the now-failed Storm Financial group to pile into share-based investment schemes, are central to the hearings of the parliamentary inquiry.

The inquiry resumes today in Cairns, with sessions to be held this week in Townsville, Brisbane and Sydney.

Former employees of the CBA and Storm Financial in north Queensland have challenged claims by senior CBA officials that mistakes made in the bank's Townsville offices were simply a local anomaly, saying senior bank staff were well aware of the branch's activities.

In a submission to the parliamentary inquiry, two former Commonwealth Bank employees in Townsville who later worked for Storm Financial, Carmela Richards and Kristy Devney, said the volume of business generated by Storm to the bank increased dramatically over the course of the decade. Their submission states that in 2002-03, Storm placed about $20 million of business with the CBA, but this had shot up to $120m in the 2007-08 financial year, with a target of $130m in the financial year recently finished.

They said that within the bank, two full-time positions had been created specially to service Storm clients, while the CBA had also implemented a separate BSB number for Storm clients.

"It is clear the CBA at the highest levels had always identified Storm clients by the lending area responsible for processing its business, and accordingly was well aware of the size of the home loan being referred by Storm within the bank," their submission says.

The submission says senior CBA staff from Townsville who had achieved high lending rates through referrals from Storm Financial were rewarded with holidays on the Gold and Sunshine coasts, at which other senior CBA staff were present.

The two former staffers queried the CBA's claim that some of the lending practices of its former Townsville management did not conform to usual bank practices, saying any applications that relied on income outside the bank's policy guidelines could not be approved locally.

They said it was "clear the Storm business was valued at all levels within the bank and not something that was a local anomaly, as CBA has asserted."

Earlier this year, the Townsville-based Storm Financial went into administration with debts of more than $100m after it failed to repay a CBA loan, taking with it the life savings of hundreds of north Queensland investors.

The Commonwealth Bank has since admitted its lending practices were wrong.

Senator Williams said Mr Norris had a duty to appear before the committee. The CBA did not respond to calls last night.