Published: Thu, November 28, 2019
Money | By Ethel Goodwin

Australia Westpac CEO out over money laundering scandal

Australia Westpac CEO out over money laundering scandal

Australian banking giant Westpac said Tuesday its beleaguered CEO Brian Hartzer was stepping down after regulators accused the bank of major breaches of money laundering laws involving more than US$7 billion.

Westpac is facing a potentially massive fine over claims that it failed to report millions of global fund transfers, including "high-risk transactions" to Southeast Asian nations potentially linked to child exploitation.

In step with this, Westpac's current Chief Operating Officer - Gary Thursby - will assume the role of acting Chief Financial Officer.

However, his so-far unvested short and long-term bonuses will not be paid and he will not be eligible for any future bonuses.

"As was appropriate, we sought feedback from our stakeholders, including shareholders, and having done so it became clear that board and management changes were in the best interest of the bank", Mr Maxsted said. King introduced his retirement in September, however will stay till the appointment of a everlasting substitute.

Westpac Chairman Group Chairman Lindsay Maxsted is another casualty of the scandal, announcing he will "bring forward his retirement" to the first half of 2020.

Among the most damaging allegations against Westpac, the regulator accused bank executives of "indifference" to clear evidence that some worldwide transfers were used to fund child exploitation.

In idea, Westpac may face a positive as much as 483 trillion Australian (US $330 trillion).

The financial watchdog in its submission to the Federal Court noted that each of the breaches attracted a civil penalty "between 17 million-21 million Australian dollars".

In February, soon after the Royal Commission final report was published, the CEO and chair of No. 3 lender National Australia Bank stood down after being singled out in the document for failing to accept responsibility for the bank's wrongdoings.

Shadow treasurer Jim Chalmers welcomed the departure, which he said "shows that people need to be accountable for the behaviour of companies under their leadership (and) clearly there has been a failure of leadership here".

"The alleged violations that occurred in Westpac are very serious, both in terms of the number of such alleged violations and their nature", he advised reporters on Tuesday.

"I think it's welcome, I think it's appropriate", Health Minister Greg Hunt said on Sky News, minutes after the Westpac announcement.

"This stems from the strongest and clearest comments from the Prime Minister and the Treasurer on the expectations of the community and the government's expectations of what constitutes a serious and deep breach", he mentioned. "Unfortunately in the heightened media environment it will not look good if we have our staff whooping it up with alcohol", he said, The Australian reported. He negotiated a settlement of 700 million Australian dollars.

Mr Hartzer is the third chief executive among Australia's "big four" banks to depart since the royal commission began in 2018.

Risk and compliance committee chair Ewen Crouch has also decided not to seek re-election at the December 12 AGM, when Westpac faces a possible second strike on executive pay and potential board spill.

The financial institution's share costs had been up greater than 1% on Tuesday, having slumped eight% over the earlier 4 buying and selling days within the wake of the revelations.

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