SYDNEY, Nov 25 AAP – Westpac faces a fresh investigation into its alleged money laundering and child exploitation scandal as the lender scrambles to salvage its reputation and stem a share price plunge that has now stretched into a fourth session.
Westpac has lost as much as $8.06 billion from is market capitalisation since financial crime watchdog AUSTRAC announced last week it was taking the bankto court over an alleged 23 million breaches of money laundering laws.
The alleged breaches, which included claims the bank facilitated payments linked with child trafficking and sex offences, prompted the nation’s second largest lender to slash executive bonuses and shut down its international transfer platform LitePay as its management team faces increasing pressure.
And the heat was turned up another notch on Monday when the corporate watchdog ASIC confirmed it too would be examining the bank for potential legal breaches,believed to relate to the Corporations Act and whether directors breached their duties.
The Australian Prudential Regulation Authority will also be investigating the bank, while chairman Lindsay Maxsted is set to front key investors this week in a series of meetings that could decide his future, and that of chief executive Brian Hartzer.
Law firm Phi Finney McDonald it was also investigating the bank, as it mulled whether to file a shareholder class action lawsuit.
“Modern institutional investors take corporate governance issues extremely seriously,” said Phi Finney McDonald director Tim Finney.
“The suggestion that a major bank could be so lax with its anti-money laundering systems that it potentially facilitated child abuse and exploitation is about as serious as it gets?
Confirmation of ASIC’s investigation comes after Westpac released a statement on Sunday outlining its response plan to AUSTRAC‘s legal action, with Mr Maxsted saying the bank was “determined to urgently fix (the) issues”.
These new commitments – which include closing LitePay, lifting standards through priority screening,and investing in initiatives to reduce the human impact of financial crime – will incur an extra $80 million pre-tax expense in FY20.
“We accept that we have fallen short of both our own and regulators’ standards and are determined to get all the facts and assess accountability,” Mr Maxsted said in a statement.
“In the interim, the board has determined that either all or part of the grant of the 2019 Short Term Variable Reward will be withheld for the full Executive team and several members of the general management team subject to the assessment of accountability.”
Westpac shares closed on Monday down 1.3 per cent to $24.44, while the broader market climbed 0.3 per cent.
Some investment groups have urged Westpac shareholders angered by the bank’s failure to properly monitor payments potentially linked to the streaming of child exploitation to reject its remuneration report for a second consecutive year.
The bank is scheduled to hold its annual general meeting in Sydney on December 12.