Austrac’s allegations of systematic breaches of money laundering laws by Westpac, extending to tens of millions of transactions, billions of dollars and the enabling of child exploitation, demonstrate again that there’s something rotten — perniciously rotten — at the heart of Australian capitalism.
As one of the big four banks, Westpac — the second to be pinged by Austrac for systematic law breaking — is at the heart of the economy. Its board is supposedly the cream of Australian corporate and financial genius, featuring names like Lindsay Maxsted, Ewen Crouch, Craig Dunn and Margie Seale. Its dividends prop up retirement incomes for hundreds of thousands of Australians.
And it is at the heart of the Australian political system. Since 2010, Westpac has handed over $780,000 in donations to the Coalition — a key reason why the Liberal Party gutted the corporate regulator, tried to repeal financial advice regulation and prevent a royal commission from exposing the banks’ abuses. It gave over $600,000 to Labor, too, to try to keep the other side sweet.
As it turned out, the Liberals’ efforts to protect Westpac and the other banks backfired — they acted more like a flimsy dam wall that, when it inevitably burst, made the resulting mess far worse. But there was another way in which, unintentionally, the Liberals made Westpac’s — and the CBA’s — humiliation inevitable.
While the Abbott government gutted ASIC and tried to repeal financial advice regulation to protect the banks, Austrac belongs to the one area where the Coalition has always been a hardline, indeed draconian, regulator — national security. Austrac never had its budget slashed by hundreds of millions, as the Abbott government did to ASIC; to do so would have been to risk being seen as soft on terrorism and organised crime, not so much by voters as by other governments and particularly our Five Eyes allies.
As it turned out, it was Austrac that exposed the most colossal law-breaking by the CBA. And now it has done the same to Westpac — only much, much worse, both in scale and in the link with something unforgivable even among business and finance commentators — child abuse.
These weren’t accidental breaches. Austrac specifically warned Westpac about the potential for its systems to be used to fund the trafficking and exploitation of children and how to stop it. You’d have thought the mention of child abuse would have spurred any decent human being into dropping everything and doing whatever it took to prevent it. Money, surely, should have been no object in making sure Westpac wasn’t facilitating the sexual exploitation of kids.
But it took them two years to swing into action — those two years being the point at which public confidence in the banks reached a nadir, while bank promises to turn over a new leaf reached a peak — and there’s still no guarantee the problem isn’t ongoing.
This reflects a toxic culture within Westpac. It’s not just the Austrac allegations. Back in late October, a decision of a full Federal Court appeal saw ASIC win an appeal against Westpac over a campaign aimed at encouraging customers to roll over their superannuation savings into bank-run products.
One judge accused Westpac of “systemic sharp practice”; another judge said Westpac had “pursued its own self-interest” and “took unfair advantage of that asymmetry by implementing a carefully crafted telephone campaign … directed to persons with whom Westpac had an existing relationship and in a real sense occupied a position of trust with respect to the customer’s superannuation fund”.
“The whole approach of Westpac,” said the third judge, “was to obtain an advantage for itself without engaging with the personal circumstances of the customers so as to avoid the consequences of the responsibilities of providing personal advice.”
These are the kinds of descriptions you’d expect of a shonky builder, a pawnshop or a boiler-room operator, not one of the pillars of Australian capitalism and Australia’s oldest bank, supposedly run and overseen by the best and brightest corporate Australia has to offer.
Whether it’s systemic law-breaking by the major banks, the epidemic of wage theft and exploitation of migrants by businesses large and small across the country, the building standards scandal in NSW, the gaming of energy regulation by oligopolistic power companies or the funding of climate denialism, there’s an indifference to basic morality and behavioural standards baked into Australian business, coupled with a confidence that regulators could be ignored, litigated away or settled with, with relative impunity.
Until recently, that confidence was not misplaced. And the profound cultural problems within Westpac are by no means confined to that institution or even the big banks.