Former Westpac CEO Brian Hartzer (Image: AAP/Lukas Coch)

Standard and Chartered: US$1.1 billion in fines, on top of an earlier US$667 million.

HSBC: US$1.9 billion in fines.

Deutsche Bank: US$630 million after an earlier US$258 million.

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Dutch bank ING US$1.2 billion.

All for money laundering offences, or breaching financial sanctions. And they’re just the nine and ten-figure fines. Eighteen of the 20 biggest European banks have been fined for money laundering offences in recent years.

Recently it’s been the turn of Scandinavian banks, which have laundered stolen billions from Russia through their branches in the Baltic states, with seeming impunity, in rather startling contrast to the progressive moral rectitude with which the Scandinavians like to comport themselves.

Whatever the state of financial services regulation — whether corrupted and lax, like it has been in Australia until recently, or prosecuted zealously by an aggressive regulator, like in the US — one thing has united western governments when it comes to banks: a willingness to go after institutions that enable money laundering.

The global economy is awash with money that needs laundering. The half-trillion-plus in annual drug industry profits from groups like the Mexican drug cartels. The billions stolen by kleptocratic regimes like Vladimir Putin’s and literally housed in London real estate. The vast profits of people-trafficking networks in Europe. Terrorism financing. Child exploitation networks. The finances of sanctioned regimes like North Korea and Iran.

Not to mention bog standard organised crime groups, the proceeds of corruption and the black economy. Trillions of dollars looking for a place to move, store and launder it.

And bank after bank after bank around the world has succumbed to its lure. Sometimes, as was the case with HSBC, there’s evidence of complicity from senior executives. More usually, the banks blame their inadequate IT systems for failing to spot transactions that should be reported to authorities.

They’re inevitably apologetic and promise that things will be fixed and it won’t happen again. Until it does.

What were senior executives and board members at Westpac and the Commonwealth doing over the last decade as their international counterparts had to cough up billions in money laundering fines?

Were they unaware that, when it came to money laundering, the lax regulation and laughable punishments that characterised Australian financial services regulation didn’t apply, but the rather more draconian rubric of national security? Did they think Australia was somehow disconnected from the global world of drugs, child exploitation, people trafficking and organised crime — that no one in Australia ever wanted to send money to terrorist groups, or funnel the proceeds of illicit activities into an offshore haven?

Yesterday Westpac CEO Brian Hartzer belatedly fell on his sword — too belatedly to save Westpac’s reputation as the paedophile’s bank of choice. Director Ewen Crouch is going as well, and chairman Lindsay Maxstead is graciously bringing forward his retirement.

In a demonstration of how power is shifting in Australia, it was industry super funds, not the government, that did it for them, by indicating their discontent with Maxstead’s dog-eared strategy of contrition, reviews, promises to do better and no actual accountability.

That might have worked five years ago; now, it’s just the empty and increasingly rapid ritual before heads, inevitably, roll.

These people are supposed to be the cream of the crop of Australian business. But they’re bizarrely incurious about the operations of the companies they are paid huge amounts to oversee, and apparently oblivious to what has been happening internationally as bank after bank was pinged for letting crooks, child abusers and terrorists use them to move money around.

It’s one thing to gouge customers, charge dead people, run underperforming super accounts and refuse to pay insurance claims. But helping drug dealers, child abusers and terrorists? That Hartzer and Maxstead thought for a moment this was just another scandal defies belief.

And wouldn’t it have been nice to have heard from the new head of the Business Council of Australia about two of its members and their breaches of key regulations. Or from its CEO Jennifer Westacott, who spoke at the National Press Club yesterday and failed to mention Westpac until asked by journalists.

What she did mention, repeatedly, was the need to cut red tape in the economy, because there’s too much of it. Undoubtedly, Hartzer and Maxstead agree.

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Peter Fray
Peter Fray
Editor-in-chief
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