LOGIN
Finance

Save the victims: Send bank CEOs to gaol

By | | comments
(Cartoon by Tom Toles via abeldanger.net)

In the second of his three part series, Dr Evan Jones exposes the immense harm banks do to ordinary Australians through their consistent corruption.

[Read Part One: To fix Australia's banking culture: Start sending bank CEOs to gaol]

THE AUTHORITIES can send those engaging in insider trading to gaol (save for Gunns’ ex-CEO John Gay). So why not bank CEOs?

The authorities get hot and bothered over insider trading, but what’s the big deal? The share market, at least in the short term, is a casino. By contrast, the harm that banks do with their corrupt practices is immense.

Here follows a selective list of various small business or farmer victims of fraud or high level unconscionability. A couple of victim aggregations are included. Ditto the odd investor or home mortgagor. The list is indicative of the length of the criminality over time (the period of financial deregulation) and the extent of the criminality right across the banking sector.

The CEOs in place at the time of the crime are listed, as are various accessories where known – either internal to the bank or the facilitating law firms and receivers. Send the accessories to gaol as well. Partners of law firms or receivers could draw straws as to who goes into the clink.

Foreign currency loan victims

Mostly SMEs/farmers, estimated at 3000+, with Commonwealth Bank (CBA), Westpac and ANZ

Bank CEOs: Don Sanders (CBA, previously deputy governor of the RBA); Stuart Fowler (Westpac); Will Bailey (ANZ).

Banks competed with each other (soon after financial deregulation) to push complex and toxic facilities that bank staff themselves didn’t understand.

When the Australian dollar plunged against the denominated loan currencies (Swiss franc, U.S. dollar, Japanese yen) in 1985-6, borrowers were left with liabilities of more than double the original principal borrowed. The banks then attempted to push all responsibility for the calamity onto the borrowers, with the bulk of the ignorant judiciary deciding for the banks.

The Somersets (company: Kabwand)

Farmers, Qld, 1984; NAB

Bank CEO: Neil ‘Nobby’ Clark. Legals: Thynne Macartney.

Fraudulently induced into purchase of worthless property by a corrupt lending manager (friends with the then owner); the bank forecloses on and bankrupts the Somersets, involving reconstructed diary notes, corrupt law firm involvement and a complicit judiciary. Exhibit A of what is to follow for the next 30 years.

The Riggs

Steel building frame manufacturers, NSW, 1985; CBA.

Bank CEO: Don Sanders. Accessory: David Murray as CEO from 1992. Legals: Les Taylor (CBA solicitor & general counsel)

Revenues fraudulently appropriated by massive undocumented interest rates / charges. The Riggs’ assets (including family home) foreclosed, sold under value to local related parties and the Riggs bankrupted. An important regional firm (and potential major exporter), partnering with BHP subsidiary Lysaght, destroyed.

John Carroll (Brendan Communications)

Mobile phone technology, Victoria, late 1980s; NAB.

Bank CEO: Neil ‘Nobby’ Clark. Legals: Mallesons Stephen Jaques.

Small pioneering mobile phone equipment firm destroyed, Carroll believed, in the interests of Telecom, a major NAB customer. Carroll’s life was threatened and his outer Melbourne installation was trashed by the local sheriff (who later felt remorse) using conscripted prison labour.

The Troianis (Wide Bay Bricks)

Brick manufacturers, Qld. 1990s; NAB.

Bank CEO: Don Argus. Legals: Mallesons Stephen Jaques.

Sante Troiani, innovative and successful brick manufacturer (and in possession of a major quality clay deposit), was seduced by the NAB into giving it his business in 1993.

The NAB then set about destroying his business through a complex structure of extractions and depredations (helped by company insiders), culminating in foreclosure and family bankruptcy in the early 2000s, with transparent legal and judicial complicity.

The only rational interpretation of this process was that Troiani’s destruction was to the benefit of building giant Boral, with whom the NAB had directors in common. The bank appropriated tens of millions of dollars of Troiani assets, leaving the couple with nothing.

Pioneer Park (formerly Domino Mining) and Merlo Australia

NSW, 1996; ANZ.

Bank CEO: John Macfarlane (from September 1997). Accessory: Don Edgar, general manager, Business Banking. Legals: Minter Ellison. Receiver: Pricewaterhouse Coopers.

A Central Coast-based manufacturing company of world class industrial machinery, especially for coal mining (including specialist underground vehicles), was induced to move to the ANZ bank in 1996 to finance an expansion linked to new contracts with China and the Australian army. ANZ unilaterally broke the terms of the contract in late 1998, issuing demand and imposing an administrator/liquidator in 1999. The company was never in default.

The receiver trashed the site, discarded engineering drawings (that is: the firm’s intellectual property, built up over decades) worth tens of millions, and flogged equipment at what prices could be obtained immediately, fleecing the workforce in the bargain. The land (sitting on one of the State’s most valuable coal sites), near Wyong station, is now owned by a South Korean government company.

Faced with the blatant lies surrounding its actions and initial success of the firms’ advocates in court, a cabal of bank, law firm and judicial collusion (with personal or professional linkages) destroyed the company through a comprehensively corrupt process over the period to 2006.

Barry Landa

Property investor, NSW, 2002; Perpetual Trustees, NAB

CEO: David Deverall (2003-11). Accessories: CEOs Graham Bradley (pre-2003), Chris Ryan (2011-12), Geoff Lloyd (2012-). Legals: Kemp Strang.

In 2002, Barry Landa was induced by a broker linked to Challenger Mortgage Management to borrow funds ($1.65m), using as security his home and several investment properties, to invest in Perpetual Trustees Australia Ltd.

The broker, Dominic Cincotta, instead funnelled the funds (as with other victims) into a PTAL account under his wife’s name. Internal audits early discovered the dodgy accounts but PTAL failed to act. Landa was paying off his presumed mortgage to Cincotta (summing to $750,000), receiving fraudulent statements, with those payments also going into Cincotta accounts.

Landa discovered the scam in late 2003, with Cincotta subsequently sentenced to gaol. But PT pursued Landa for his properties, claiming innocence with respect to Cincotta’s scam. Some later court judgements agreed. Landa lost his $750,000, his original ‘loan’ escalating to $3.96m, due to fees and penalty interest charges.

The NAB bought Challenger in 2009, and from thence Landa received statements from the NAB. But who "owned" Landa’s mortgage after this transaction remains mysterious. Ultimately, Landa paid the $3.96m to lawyers Kemp Strang (fearing further costs and losses in court), but which company received the payment also remains unclear.

Kemp Strang blackmailed Landa in refusing to return the title to his house until he signed a non-accusatory statement. The home title was recently promptly returned to Landa after his complaints to several politicians.

The Cristians

Homeowners, NSW, 2005; Macquarie Mortgages, Perpetual Limited.

Bank CEO: Alan Moss (Macquarie), David Deverall (Perpetual). Accessory: James Angus (Macquarie & Perpetual staffer). Legals: Dibbs Abbott Stillman.

The Cristians sought a loan through a mortgage broker to upgrade their property. The provider was supposedly Macquarie Mortgages. The Cristians insisted on and were offered an interest only loan, but were misled into signing a principal and interest contract (apparently with funds coming from Perpetual) which they had previously explicitly rejected, requiring higher unaffordable payments. Macquarie stuffed them around on settlement and then declined to rectify the wrong facility. The Cristians refused to legitimise the provider deception, but were foreclosed. 

Successive court cases recognised only the signed contract, not the deception and gave possession to Perpetual in 2007. The Cristians’ account is verified by the affidavit in their favour by the original mortgage broker.

The Thirups

Homeowners, NSW, 2010s; NAB

CEO: Cameron Clyne. Accessory: Andrew Thorburn, current CEO. Legals: Dibbs Barker.

Unknowing victims of an elaborate mafia-style sting operation, centred on a false front ‘mortgage broker’ and spiv NAB insider, and forged documentation. The bank nevertheless ignores the criminal operation to which it is party (the criminals remain at large), sues for possession of Thirup residence, and is successful in court

The Priestleys

Farmers, NSW, 2010s; NAB

Bank CEO: Cameron Clyne. Accessory: Ashley Gardiner (recovery administration).

Chris and Claire Priestley arranged a loan package in late 2004 from the NAB to buy out part of the family property, then drought-affected. With different bank managers overseeing the loan, the terms were changed in 2008 to more readily facilitate default. In the meantime, the NAB obtained a healthy dividend from Rural Adjustment Authority drought relief funds allocated to the Priestleys.

The drought broke in December 2009, but the bank wanted the Priestleys out immediately, on terms impossible to meet. The bank finally took possession in early 2013. This is a classic case of denial of post-drought recovery options, flouting of the Code of Banking Practice, and abuse of Farm Debt Mediation procedures.

See my articles here, here and here.         

Craig Harwood

Meat processor and exporter, Qld, late 2000s; Westpac.

Bank CEO: David Morgan (sometime Deputy Secretary, federal Treasury). Receivers: Korda Mentha.

Craig Harwood and his father ran a successful game meat processor, with significant exports. Their business had been a recipient of numerous business awards, and government grants.

In 2002-03, planning expansion with a new factory, Harwood obtained an attractive loan offer from the CBA. Given a decades-long relationship with Westpac, Harwood asked his then loan manager if Westpac could match the CBA offer. The Westpac manager said yes, but did so outside his authority, scared of losing business.

To hide his scam, the Westpac manager offered an inappropriate facility (a massive expansion of the overdraft) while promising workability, which soon proved dysfunctional for the expansion plans. Westpac then moved the Harwood business into administration. After various subterfuges, Westpac and Korda Mentha destroyed the business.

Patrick Hayes

Property investor, Qld, 2007; Westpac

CEO: Gail Kelly. Legals: Allens, Gadens.

A scam has been operating for some time involving bank officers (who move between banks, NAB, ANZ, then Westpac and CBA), and a corrupt gang comprising an ex-bank officer playing developer, finance broker, Gold Coast real estate agent, property valuers and dodgy solicitors, and centred on a wealthy property ‘investor’ Mario Girardo. The bank insider (aided by bribes to colleagues) would facilitate excessive loans to Girardo on massively inflated valuations. But the cabal’s operations were perennially in trouble. They needed dupes to stay ahead of the bank’s auditors.

Hayes, asset rich but cash poor, had significant land nearby. A prospective purchaser (a listed company) had had an offer from Westpac finance, but the corrupt Westpac insiders cancelled this loan, offering the same funds to Hayes but inducing him into partnership with Girardo as a condition of the loan. Hayes’ equity was used to prop up the ongoing scams.

Westpac has refused to press charges against the scammers and their own staff, bankrupting Girardo in 2009 but pursuing Hayes through the courts (with colluding judiciary and elements within the police force onside) for its missing millions. Girardo ended up with a 6 year jail sentence for kidnapping a former partner. Westpac senior management belatedly realised (after 4 years of reckless lending of more than $20 million) that Girardo was a career criminal and not their private $100 million wealth client.

A classic Queensland thriller.

Natasha Chadwick and Arthur Brotherhood

Proprietors IBIS Care, 2007; ANZ.

CEO: Mike Smith.

The IBIS Care nursing home founders took on ANZ capital as an equity partner at the bank’s invitation in March 2007.

Mike Smith became ANZ CEO in October 2007 and decided overnight to divest the bank of its "cottage industries".

The bank rebuffed a management buyout by Chadwick and Brotherhood, heaped avoidable costs onto their ledger, then brutally marginalised and removed the founders in 2011. Chadwick and Brotherhood are representative victims of the cavalier whims of successive bank CEOs.

BankWest customers

Close to 1,000 mostly developers & hoteliers, 2008; CBA/BankWest.

CEO: Ralph Norris (to 2011). Accessories: Ian Narev (directing the BankWest takeover; CEO, post-2011), David Cohen (group general counsel), Jon Sutton (CEO BankWest, 2008-12), Rob de Luca (CEO BankWest, 2012-). Legals: various (including Ashurst Australia, Norton Rose Fulbright, Gadens). Receivers: various (including PPB, Korda Mentha, Taylor Woodings).

The CBA bought BankWest from its struggling parent, HBOS, in late 2008, with government and regulatory approval. The CBA then engaged in a mass default and foreclosure of BankWest customers, mostly via the arbitrary devaluation of customer assets that triggered "unacceptable" loan to valuation ratios. The latter with government and regulatory indifference to date. A variety of receivers proceeded to plunder the businesses, with perennial sale under value of the borrowers’ assets.

ANZ clean out of farmers

Frank Bertola, Bruce Dixon, Rodney Culleton, etc., farmers, WA; the Freemarks, farmers, Tasmania; the Brownings, Charlie Phillott, farmers, Qld, 2010s; ANZ.

Bank CEO: Michael Smith. Receivers: various, includes PPB.

Large scale clean out of farmers by the ANZ, under unconscionable conditions. Drought conditions in Queensland have been used as general excuse in that State, but regardless of particular circumstances of the farmers. ANZ bought the Australian Wheat Board’s financing subsidiary, Landmark, in early 2010, formally to expand its presence in the agriculture sector overnight. Insiders knew that the Landmark loan book was ‘poor’ (read, facilities more generous than on ‘normal’ commercial terms). Evidently planned beforehand, the ANZ unilaterally changed many former Landmark borrowers to more stringent and impossible terms, initiating default and foreclosure.

Gary Parker

Farmer, Qld, 2000s; Rabobank

Bank CEO: Bruce Dick; Accessory: Peter Knoblanche (GM Rural).

Gary Parker, a significant bean producer, borrowed $1 million from Rabobank in 1996. Parker won a long court over faulty irrigation equipment, but his steeply accumulating debt to Rabobank consumed all his damages award of $2.3 million (the usual fraudulent penalty interest rates involved). 

The bank continued to pursue Parker for claimed ongoing debt, refusing to supply statements that in turn caught up Parker in being pursued by the Tax Office as well.

Milton Wilde

Investment property owner, Victoria, 2010s. Bendigo & Adelaide Bank.

Bank CEO: Mike Hirst. Legals: Piper Alderman. Receivers: Rodgers Reidy.

In August 2012, the Wilde facilities on a commercial investment property expired and BAB advised that they would not be renewing them, breaking a previous commitment. Refinancing in the middle of a Market Rental Review (required under the Lease by the Small Business Commissioner) was impossible because the necessary valuation had to follow the Review.

Without notice, in October 2012, BAB repossessed the property via "controllers" Rodgers Reidy. The bank claimed to have sent a notice, but it was to a previous address known by the bank to be vacated. Two other banks had agreed to re-finance the BAB facilities, requesting BAB to remove the receivers for 30 days to enable them to go unconditional. BAB’s response was ‘they did not have to and therefore they wouldn’t’.

BAB was never at risk, with a loan to valuation ratio of 64% and ample income to satisfy loan repayments. The loan, contracted at 5.75% interest, was dropped into an overdraft and charged at 14.16%. The $115,000 rent along with $450,000 in penalties and fees went straight to Rodgers Reidy. BAB renegotiated the lease and sold the property under value in October 2013. Losses totalled $1,415,000, comprising $850,000 on the property sale and $565,000 on bank and controller theft.

Milton Wilde

Investment property owner, Victoria, 2010s; CBA/BankWest.

CEO: Rob de Luca, BankWest. Accessory: Ian Narev, CEO CBA. Legals: Corrs Chambers Westgarth. Receivers: Cor Cordis.

After the above, BAB notified CBA/Bank West, which commenced similar action against the Wildes on another commercial property in December 2013.

BankWest engineered a default, appointing Cor Cordis as controllers. The receivers terminated a Wilde-organised agency agreement to sell the property by auction in March 2014, terminated all leases and changed the locks, arguing (against all commercial agents’ advice regarding a tightly held location) they were better off going to market with "vacant possession".

The auction in late April failed to reach the reserve of $1.575m, attracting only $1.28m. In late June 2014 they sold the property privately for $1.28m, making no effort to re-let the premises. Independent valuations were at $1.75 - $1.85m. The $128,000 in GST proceeds of the sale were not remitted, but illegally retained by Cor Cordis. This property is now back on the market at $1.8m.

Despite numerous requests, original loan applications were only belatedly provided in April 2015. The documents proved to be substantially altered and, in some cases, completed by the development manager at Bank West with fabricated and inaccurate figures. An intended personal loan of $100,000 was structured as a company overdraft, meaning that the Wildes lost protection under the Consumer Credit Code. The original property loan, offered at 4.99% fixed for 12 months, increased to near 8% within 3-4 months.

When challenged, BankWest replied that nothing that the then loan manager had offered in writing or verbally was relevant as that manager was no longer with the Bank. Losses included about $520,000 on under value sale and receiver "costs" of $870,000.

Barry Kriedemann

Farmer, Qld, 2010s; Suncorp.

Bank CEO: Patrick Snowball. Legals: Allens. Receivers: Robson Cotter; Ernst & Young. Accessory: John Gillam, CEO Bunnings.

Kriedemann Farms started a sugar cane mulch processing business in 1992, supplying nurseries. In 1998, Bunnings approached them to supply them when they opened stores in Brisbane. Kriedemann Farms became more dependent on Bunnings as it killed off nursery competition.

In 2010, Bunnings told Barry Kriedemann that he would have to pay the freight for interstate transport, an impossible impost. Barry Kriedemann called in a receiver in 2011, whose malevolent incompetence exacerbated financial problems. Suncorp then put in its own receiver, ditto, with all the conventional unearned financial extractions.

Suncorp sold off multiple Kriedemann properties at significantly under value. Suncorp then claimed that Kriedemann was liable for capital gains tax, which he wasn’t. Following the under value property selloffs, Kriedemann Farms’ artificially reduced residual balance of $1.3 million continues to be held by Suncorp. The sum includes $750,000 for the so-called capital gains tax owing, a lie, and the rest held as ‘contingency’ in case Kriedemann takes legal action against the bank.

Suncorp’s lawyers demand that Kriedemann sign a deed indemnifying all guilty parties before they return the balance due. Barry Kriedemann refuses to sign.

*****

These crimes listed above, representative of a larger crowd, remain without justice. More, injustice has been delivered with regulatory and judicial assistance.

Note that there is no bank – repeat, no bank – that one can trust on a business loan. All bank advertising in this domain is a lie, arguably actionable.

These and comparable stories are a natural consequence of the corporation possessing not merely extraordinary power (reinforced through multiple domains) but also the amorphous status of a person at law.

Coming soon: Part 3 How to make corporate punishment fit the corporate crime?

Creative Commons Licence
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License

Monthly Donation

$

Single Donation

$

Down with the corporatists. Subscribe to IA for just $5.

 
Recent articles by Dr Evan Jones
Fairfax, the Israel lobby and unchallenged propaganda

Dr Evan Jones discusses the way Australian media frequently channels an unashamedly ...  
The neoliberalist downfall of energy and the NBN

Dr Evan Jones continues his examination of the effects of neoliberal economic ...  
The trickle-down ravages of neoliberalism

Dr Evan Jones examines the deep-rooted and devastating effects of neoliberal ...  
Join the conversation
comments powered by Disqus