Prime Minister Scott Morrison says the board of Westpac should reflect “very deeply” on the future of chief executive Brian Hartzer following millions of money laundering compliance breaches at the bank, while stressing the government did not appoint bank bosses.
In the latest scandal to engulf a major bank, Westpac was accused by the regulator of breaching anti-money laundering laws 23 million times on Wednesday. The lawsuit from the financial intelligence agency AUSTRAC also alleges the bank failed to properly vet thousands of transactions that could be linked to child exploitation and live child sex shows in the Philippines and other parts of south-east Asia.
Mr Hartzer has apologised and on Wednesday said he was “utterly horrified” to learn of the detailed allegations potentially involving child exploitation. He has vowed to personally lead an investigation to get to the bottom of the scandal, and signalled he does not intend to resign.
Asked if Mr Hartzer or someone else at the bank should resign over the scandal, Mr Morrison said it was a decision for the board and leaders of Westpac to make, rather than the government.
“These are things that the board and the management need to determine themselves,” Mr Morrison told the ABC’s AM program.
“It’s not for the government to say who should be in those jobs or not, but they should be taking this very seriously, reflecting on it very deeply, and taking the appropriate decisions for the protection of people’s interests in Australia. These are some very disturbing, very disturbing transactions involving despicable behaviour.”
AUSTRAC’s case against Westpac has put significant pressure on Mr Hartzer and the board, by claiming the breaches were the result of “systemic failures in [Westpac’s] control environment, indifference by senior management and inadequate oversight by the board.”
Mr Hartzer on Wednesday said he accepted the case “almost overwhelmingly” but he rejected the claim of “indifference” on the part of the bank’s most senior leaders. Mr Hartzer said he had made changes to Westpac’s management of money-laundering risks as CEO, and he was committed to seeing these changes through.
AUSTRAC has the power to pursue massive penalties, and there have been predictions the penalty facing Westpac could rival the $700 million penalty paid by Commonwealth Bank for its breaches in 2018, with Bell Potter analyst TS Lim estimating a penalty of up to $3.7 billion.
Business Insider Emails & Alerts
Site highlights each day to your inbox.