Are the very politicians who tried to stop the Australian banking Royal Commission inquiry (but now admit that the whole system is rotten with regular dishonesty and even criminal activity taking place) just being disingenuous when they claim they had no idea about this? Are Australian banks still ‘world class’ – not for their accountability and professionalism (as was said only just a few years ago in the GFC) but actually for their lack of such basic requirements? The most reputable banks (i.e. the big four plus AMP, Macquarie, etc) are now being exposed as having ‘crooked cultures’ – why might this also be reasonably regarded as a ‘canary in the mine’ of wider corporate and ‘big business’ problems of arrogance, greed and systemic corruption of one form or another?
Just a few years ago at the time of the global financial crisis, Australia main banks promoted themselves as having been able to remain relatively unscathed because they apparently had the highest standards in the world (1). However, the current Royal Commission into their conduct has reinforced that this really means the banking systems of many other countries around the world have remarkably low standards of competence and/or even more substantial levels of corruption (2). As Michael West accurately summarises: “While banks at the royal commission admit to misleading conduct and corruption – permitted by a compliant regulator – they are protected by government as too big to fail” (3).
This should be no great surprise when you find out the really dodgy backgrounds of some very well-known banks (such as the Swiss bank UBS ) (4) and especially in some areas of the globe – such as how, as Joe Studwell has pointed out (5), many banks in East-South-East Asia were set up by Asian ‘godfathers’ with extensive organised crime links – some still closely linked. And as we pointed out in our last post, the financial hub of the world London (and a certain class of English accountants engineered the off-shore laundering of drug and prostitution monies as well as tax evasion) is starting to be really exposed as also the centre of global corruption – and that this not at all a coincidence (6).
The Australian government strongly resisted this inquiry and had to be dragged into authorising it ‘kicking and screaming’ (7). Now that it has found such endemic ‘corruption’ and not just a general ‘lack of accountability, political reps are all trying to cover their backsides and say ‘if only we had known’ (8). Of course, enough of them did ‘know’ and not only did nothing but acted to effectively protect the crooks and prevent scrutiny – until enough backbenchers had had enough and rebelled because of public pressure coming to bear from mounting stories or accounts of terrible experiences, and too much needless suffering by people ripped-off or treated unfairly and even criminally by banks. A typical story was the nurse and her husband who received not just bad but false financial advice, sold their house because of this to invest in their dream (as advised), and then lost everything with the bank apparently only concerned to cover things up (yet again) and ignore their responsibility (9).
There have been several layers or levels of related rorts that confirm that the banks had in recent times become predatory profiteers having little or no interest in either adequately serving their customers or adhering to basic ethical and professional standards as they did so. This was exemplified by (a) the encouragement of mortgage fraud (projected to be to tune of $500 billion in the form of so-called ‘liar loans’ (10) and (b) the conspiracy of ‘rip-off bank fees’ for everything ranging from account fees to massively exorbitant for transferring monies to or from overseas. But it got much worse – ranging from the ‘fees for no service scandal’ through to the intentional ‘charging dead people fees for financial advice scandal’ (11). The Financial Advisory level of scams (such as illegal kickbacks to advisers from banks like Westpac – often whilst and for complicit mortgage fraud) has been where some of the worst and even criminal excesses have taken place – ranging from the bad advice of non-regulated and incompetent or simply crooked advisers let loose by the banks to make profits at any cost and to not give a damn about the human collateral in the process. This was exemplified by the NAB’s ‘cash-for-loans bribery ring’ (12). This has dovetailed with the great many cases of bank reps bankrupting perfectly viable businesses for either incompetent reasons or malicious motives (especially the many farmers forced off from or dispossessed of their lands) (13). As Michael West points out the fees and financial advisory scandals coming to light at the commission do ‘not include the regular and systemic ‘credit card shenanigans, mortgage fraud, market rigging or systematic breaches of the anti-money laundering and counterterrorism financing laws” by Australian banks’ (14). [One of our earlier posts focused on how the Commonwealth Bank in particular had been caught out last year in regular money-laundering for criminal and even terrorist organisations overseas] (15).
With the commission a long way from finishing there was a tipping point last week when AMP was revealed to have regularly and systematically lied to the ‘compliant regulator’ the ACCC . The Chief Executive Craig Mellor and Chairman/woman Catherine Brenner have both had to resign as even the government said ‘enough is enough’ and announced that such criminal deceptions would from now on result in jail sentences (16). And in the wake of this there has been an identification of not just a crooked as well as incompetent culture in the banks (again exemplified by the CBA somehow ‘losing’ the records of 20 million customer accounts from the last decade and then keeping this secret) (17), but one where the banks just thumbed their noses at the ACCC because they knew for all its pontification the ACCC has very rarely really taken on a big corporation for illegal as well as unethical activities – that this was the key source of their impunity.
In other words, as another article has accurately put it the real problem is that none of the regulators as well as politicians and bureaucrats seem to really ‘have the balls’ to genuinely hold to account the crooked banks or rather the crooked cultures and particular activities of the banks (18). This is why many are suggesting that yet again nothing will change after the Commission has wrapped up (19) – even despite how the commissioner and his staff seem to be doing a pretty good job so far (20).
But things do need to change . We will need to really build on the exposures of the Commission. And the public needs to hold not just the banks but the relevant politicians and bureaucrats to account as well. We need a few more people with the ‘balls’ to stand up to the crooks. Anyone else??? [And after the country can demonstrate that it can hold the dodgy banks to account, then just maybe there will be sufficient will to also go after all the similar big corporations who rip off the Australian public with tax evasion scams and confuse or even bribe politicians in various deals that will do much damage to the community, the environment and the world more generally].