Executives’ dinner date off as crisis breaks
Prime Minister Scott Morrison turned up to the Business Council of Australia’s annual dinner with a $4bn infrastructure commitment.
And what did the PM’s hosts at the blue-chip business lobby get him in return?
A money laundering scandal of epic proportions.
READ MORE: $1bn scandal hits Westpac
CEO Jennifer Westacott, her new president Tim Reed and their just-elected BCA boardmate Rio Tinto CEO Jean-Sebastien Jacques have one of the lobby’s biggest members, Westpac, to thank for that.
Westpac’s chair Lindsay Maxsted — also a director on the BHP board and chair of Transurban, both BCA members themselves — has long been a fixture at the dinner, as has his CEO Brian Hartzer.
Margin Call understands that after a polite phone call on Tuesday night from the good people at anti-money laundering regulator Austrac, it became clear their Wednesday evening was going to be otherwise occupied with high-level discussions.
Indeed, we gather Maxsted, Hartzer and the gang had for some weeks been on notice that they should prepare for a mid- to late-November encounter with the courts.
Although clearly they didn’t think it was inevitable. Why else would Westpac’s famously diligent corporate affairs exec Carolyn McCann have been overseas in London when the legal news broke?
READ MORE: Westpac sued by Austrac over anti-money laundering rules, child exploitation risks | Gluyas — Allegations aimed at the top | PM ‘appalled’ by allegations | Durie — Belated reckoning for banks
Enough about Westpac and their non-attendees.
There was the usual blue-chip CEO and director crowd along at Sydney’s Fullerton, so we won’t bore you naming them all.
Have a look at the pics if you are that way inclined.
The only one we’ll point out is of outgoing BHP boss Andrew Mackenzie and his Woodside counterpart Peter Coleman, who were good enough to re-enact their recent heated exchange. Ancient history now.
But we should note the political guests along, always an interesting measure of who is reaching out to the big end of town.
Among them were Treasurer Josh Frydenberg, of course and the PM’s entrepreneurial numbers man Stuart Robert.
And representing Labor Jim Chalmers. Team Albo’s outreach project continues.
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Will the risky trio survive Austrac’s latest raid?
The three members of chairman Lindsay Maxsted’s Westpac board up for election at next month’s AGM all sit on its risk and compliance committee.
Will the risky trio survive Austrac’s latest raid on the big four banks?
The anti-money laundering financial regulator Nicole Rose has suddenly elevated the gathering of the $90bn bank in three weeks time to the biggest show in town this side of Santa.
Austrac chief Rose has given Westpac investors 23 million reasons to turn up at the Sydney meeting, where they’ll be asked to approve the issue of $3.6m worth of long-term performance rights to Hartzer, who has been boss since February 2015.
On the day the 52-year-old took over the top office from the retiring Gail Kelly, Westpac shares were trading at $34.26 each, compared with their close on Wednesday in the wake of the regulator’s civil suit against the bank of $25.67.
Not what the boss would have hoped for after almost five years in the top office.
Maxsted, who by the December 12 AGM will have been Westpac chair for nine years and a director for more than 11, is seeking to stave off a second strike against the bank’s remuneration report, which followed the 64.2 per cent smack down by shareholders last year when Kenneth Hayne’s royal commission had just ended.
In an effort to avoid a second strike this time around and a potential subsequent motion to spill the entire Westpac board, in 2019 Hartzer didn’t get a short-term bonus.
There was no long-term bonus either for the Connecticut-born banker (who hasn’t had an increase in his $2.7m base pay since he started as boss in 2015) because performance hurdles weren’t met.
Maxsted has also reshaped a handful of his bank’s broader executive and board pay policies, but whether that will be enough to sway investors in light of Wednesday’s lawsuit remains to be seen.
Austrac’s fresh Federal Court proceedings and the prospect of Westpac having to pay out multi-billion-dollars fines — Matt Comyn’s CBA, for example, had to pay $700m for its 53,000-plus breaches — also raises the stakes for other shareholder votes at the AGM.
Each of the three Westpac directors that are up for re-election at next month’s meeting — M&A lawyer Ewen Crouch, former Veda boss Nerida Caesar and ex-ANZ finance chief Peter Marriott — are members of the board’s risk and compliance committee.
Crouch, as chair of the committee and a Westpac director for almost seven years, should expect particular focus from investors on the day.
After all, Austrac in its statement of claim alleges Westpac’s “contraventions are the result of systemic failures in its control environment, indifference by senior management and inadequate oversight by the board”.
It doesn’t get more pointy than that.
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Paths collide in Australia’s Federal Court
Move over, Rowena Orr, a new big four bank nemesis has emerged.
The new terror of Australian banking is career public servant Sonya Marsic, who has worked for the Michael Kingston-led Australian Government Solicitor for around 25 years, starting in 1995.
That’s pretty close to the same time that now-Westpac boss Brian Hartzer moved to Australia as a consultant to work on strategic projects for ANZ.
On Wednesday, almost 2½ decades later Hartzer and Marsic’s paths collided in Australia’s Federal Court, as Nicole Hope’s Austrac sued the $90bn-plus bank over anti-money laundering rules and child exploitation risks.
The ASG “senior executive lawyer” Marsic’s name, details, signature and legal handiwork are all over Austrac’s notice of filing and damning statement of claim.
Her details are becoming increasingly frightening in the local banking scene.
She was the lawyer for the AGS who acted for Austrac in its case against the Commonwealth Bank alleging it failed to properly monitor transactions made via its smart ATM network.
The action was settled mid-last year and cost the Matt Comyn-run bank $700m in fines, which was the largest civil penalty in Australian corporate history.
The outcome saw Austrac chief Rose publicly thank Marsic and barrister on the matter Simon White, SC for their work.
This time around the regulator alleges Westpac (which has engaged director Ewan Crouch’s old shop Allen’s to work on this latest legal crisis) contravened anti-money laundering and terrorism rules on over 23 million occasions, with each attracting a civil penalty between $17m and $21m.
No need to be an actuary to work out that means a potential new record for Hope’s plucky team.
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