Judge orders federal prosecutor to refine charges for a second time in landmark Citi, Deutsche, ANZ cartel case

Prosecutors have yet again been ordered to submit a new indictment in a landmark bank cartel case due to ‘material defects’ in the charges.

Justice Michael Wigney of the Federal Court described the situation as ‘entirely unsatisfactory’, given the long-running criminal case is set to go to trial next April.

A Federal Court judge has slammed a landmark bank cartel case as a “complete shemozzle” after ordering the federal prosecutor to scrap its indictment for the second time over “material defects” in charges levied against Citigroup, Deutsche Bank and some of their executives.

The move means that the Commonwealth Director of Public Prosecutions will again be sent back to the drawing board to refine charges relating to the Australian Competition & Consumer Commission’s three-year push for accountability over an alleged plot to control the flow of trade in ANZ’s shares.

Making the orders on Wednesday, judge Michael Wigney described the situation as “entirely unsatisfactory,” given the long-running criminal case is set to go to trial next April.

“It would not be unfair to characterise the situation concerning the state of the indictment as a complete shemozzle,” he said in his judgment.

“It is, on just about any view, an entirely unsatisfactory state of affairs for the indictment to be unsettled well over three years after the accused were first charged and just over six months before the trial has been listed to commence.”

Justice Wigney remarked it was “unfortunate” that the federal prosecutor had been unable to “properly plead and particularise” its charges in the long-running case, despite already being ordered to revise a previous indictment in July.

“As has already been noted, the prosecutor’s difficulties may in part be explained by the exceptional complexity of the offences in question,” he said.

“That, however, is no consolation to the accused who have had these serious charges, which concern events which occurred as long ago as 2015, hanging over their heads now for over three years.”

The charges, first filed in the NSW Local Court in June 2018, alleged JPMorgan, ANZ, Citigroup and Deutsche Bank and six executives colluded to buy the shortfall of ANZ shares in a $2.5bn 2015 capital raising to restrict or limit any fall in their share price.

The case was brought to the ACCC’s attention after it was approached by JPMorgan, which has since struck an immunity deal with the CDPP as the case was kicked up to the Federal Court for a criminal trial.

But its scope has been vastly narrowed, most recently when charges against ANZ and company executive Rick Moscati were sensationally dropped last week.

ANZ executive and former group treasurer Rick Moscati.

Justice Wigney remarked that the defects in the most recent charges against ANZ and Mr Moscati were “more substantial and reflect a significant, though imperfectly pleaded, shift in the prosecutor’s case”.

Although the ANZ charges were dropped after he had prepared his judgment, Justice Wigney said it did not alter his decision.

The CDPP also dropped charges against former Citi country head Stephen Roberts in August.

Citi’s SC Dean Jordan said the CDPP would have to explain how dropping ANZ from the case would effect the culpability of the remaining defendants, given it had consistently argued the bank was the “instigator and the beneficiary” of the alleged cartel conduct.

Citigroup’s John McLean and Itay Tuchman, and Deutsche’s Michael Ormaechea and Michael Richardson, remain in the case, but the number of individual charges have been nearly halved.

Justice Wigney has expressed on several occasions his unhappiness with the duration of the case and the unsettled charges.

But despite pushes by the defendants to quash the flawed indictments as they were “entirely bereft of particulars” he has resisted doing so, pointing to the “substantial public interest in having those who are charged with serious criminal offences brought to trial”.

The CDPP has until November 17 to file new charges.

A spokesman for the prosecutor said the CDPP “will be filing a replacement indictment as ordered by the court”.

Later, lawyers for Deutsche and Citi grilled former and current ACCC employees who worked on the initial cartel investigation – Operation Deacon.

Former assistant director Zoe Lonard was questioned over the process of transcribing the statements of JPMorgan employee and immunity witnesses Jeff Herbert-Smith in unrecorded interviews conducted in March 2016, and why seemingly “exculpatory” statements made by him were removed from the final document.

Deutsche’s silk Murugan Thangaraj SC asked Ms Lonard why she had left a note in a draft document asking whether a comment made by Mr Herbet-Smith that “it was up to the trading team to decide how they wanted to trade” – implying there was no joint decision to buy the ANZ shortfall – should be removed.

“To the best of my memory, I think it’s because it conflicted with things he’d said at other parts of the interview about this particular issue,” she said.

“In particular, the aftermarket trade to Perpetual. He said that he’d asked for it to be reversed because it, I guess, didn’t accord with the discussions that had happened with the other banks.”

“There were two different answers, and the one that you suggested be taken out was the one that was in fact exculpatory,” Mr Thangaraj replied.

The banks had previously accused the ACCC of removing comments from the witness statements in pre-trial hearings of the case when it was in the Local Court.

The case will hold pre-trial hearings for the rest of the week for the cross-examination of ACCC officers.