ANZ fails to stop court discovery of conduct documents, on risk of ‘roving commission’

ANZ’s lawyers are warning court action against the bank, and the discovery of key documents, risks a ‘roving commission’ into the lender’s conduct.

Etienne Alexiou is taking on ANZ in the Federal Court. Picture: Ella Pellegrini

ANZ’s lawyers are warning contentious court action against the bank by a former employee, and the discovery of key documents, risked becoming a “roving commission” into the ANZ’s culture and conduct.

Appearing in the Federal Court on Thursday, ANZ’s senior counsel Kate Morgan attempted to stop a push by former bank trader Etienne Alexiou to discover a string of documents tied to his case. Mr Alexiou is suing his former employer, alleging he was a “fall guy” for raising conduct issues at ANZ, around the time the bank was in hot water with the corporate regulator for alleged manipulation of the bank bill swap rate.

Mr Alexiou alleges ANZ sacked him as a trader in 2015 for offensive language on his Bloomberg chat messages, in an attempt to hose down a scandal surrounding market manipulation by the bank’s trading team. ANZ eventually settled the bank bill rigging case for $50m but made no admission about the conduct.

The bank’s culture is again, however, in the spotlight given the Australian Securities & Investments Commission is investigating irregular trading and price activity in the government bond market on a $14bn issuance, jointly managed by ANZ last year.

Ms Morgan, appearing for ANZ, said Mr Alexiou’s discovery application risked degenerating into “some kind of roving commission into the conduct at large, or the culture at large, at ANZ”.

She warned some of the material held by ANZ showed culture incidents “far outside the applicant’s own experience and the applicant’s own engagement with ANZ in relation to incidents that occurred in his career”.

“One is the culture objection, and then one is the culture incident objection, which delves into, again, material far outside the applicant’s own experience and the applicant’s own engagement with ANZ in relation to incidents that occurred in his career and that ultimately founded his exit from the bank,” Ms Morgan said.

But Justice Nye Perram warned ANZ had not articulated how the limiting of discovery would affect its position. That essentially blocked the bank’s application and allowed discovery to continue.

That means the Federal Court will progress with Mr Alexiou’s application for between 150 and 300 categories of discovery, as his case against ANZ inches towards a trial.

The matter is set for a hearing in September 2025.

Mr Alexiou’s court action, first filed in 2016 before being revived in 2020, alleges ANZ contrived to sack him along with several other traders over culture issues after discovering they were assisting ASIC’s probe. ANZ is defending the case.

The bank has recently found itself in ASIC’s sights again.

ANZ last week played down the latest allegations regarding the bond market, with chief executive Shayne Elliott saying bank had not uncovered “anything improper” in how it managed last year’s government bond issue.

He said, however, that the bank had terminated one staff member and parted ways with two others, in moves related to behavioural issues within the markets team. Another employee was handed a formal warning regarding poor behaviour.

Mr Elliott said the bank was considering a company-wide ban on alcohol during work hours as it grappled to contain cultural problems within the lender.

The Australian Prudential Regulation Authority has flagged its concerns with “non-financial risk” at ANZ, with chair John Lonsdale saying ANZ had failed to clean up its act almost a decade after the last big scandal in the bank’s markets team.

Mr Lonsdale recently warned APRA had “longstanding concerns on non-financial risk and more recently they’ve been heightened by the developments in the markets area” of ANZ.

APRA last month hit ANZ with a requirement to hold an additional $250m in capital because of governance issues in its markets unit, taking the total capital add-on to forced by the regulator to $750m.

Originally published as ANZ fails to stop court discovery of conduct documents, on risk of ‘roving commission’