Westpac chairman could quit early, strongly backs CEO Hartzer
Embattled Westpac chairman Lindsay Maxsted strongly backed the bank’s chief executive but raised the prospect of stepping down from the bank’s board early, as the prudential regulator also launched an inquiry into the money-laundering and child exploitation scandal.
With some commentators and investors predicting chief executive Brian Hartzer would lose his job over the crisis, Mr Maxsted said on Sunday this debate was about whether Mr Hartzer should leave the bank because he happened to be in the job at the time.
“I’m not in that territory,” Mr Maxsted said.
“This chairman, and this board, fully understands that we’re here to act in the best interests of the company. We think at the moment, given that we have no direct evidence of failure by the CEO, and given we think he does a very, very good job and given that we think stability is really important at all times but particular through a crisis like this, it is far and away in the best interests of the company for Mr Hartzer to stay.”
However, there was a caveat before crucial meetings with investors and influential proxy advisers this week that could determine the fate of the bank’s chairman and chief executive.
“But we also know, on the other hand, that if our investors and the community and everyone that’s interested in this says: ‘Well the mere fact of his staying is more destabilising’, then we’re in a different world. We’re not there yet, we don’t think that’s right.”
Westpac’s leadership has been thrown into turmoil by a money-laundering compliance scandal, including bombshell allegations it breached money-laundering laws 23 million times. The regulator AUSTRAC says the bank failed to report millions of payments from overseas and did not properly vet thousands of payments linked to child exploitation.
Mr Maxsted’s statements came as Treasurer Josh Frydenberg raised the pressure on Westpac and revealed that the Australian Prudential Regulation Authority would also launch an inquiry into the bank.
Mr Frydenberg pointed to APRA’s authority to punish companies, directors and executives where there had been a failure to perform their duties.
“There must be accountability and that will obviously involve decisions that they take about the futures of senior management, as well as the board,” he said.
An APRA spokesman confirmed it was looking into the matter.
“APRA is considering whether the alleged breaches (and any potential penalties) have implications under the Banking Executive Accountability Regime, or raise other prudential concerns that might require a response from APRA.”
The developments came as the bank revealed new details of the steps it was taking in response to major failings in its compliance with Australia’s money-laundering laws. These included hiring hundreds of extra staff, establishing a new board committee, cutting bonuses and closing the LitePay system that was linked to child exploitation.
Mr Maxsted also said the bank reiterated its “deep sorrow for failings by Westpac”.
He rejected AUSTRAC’s claim there had been inadequate oversight by the board, but said his future as chairman and that of Mr Hartzer would ultimately depend on what was best for the company. His current term as a director ends in late 2020, when his time as chairman will reach the upper limit of the company’s guidelines.
“Certainly I’ve always worked with my colleagues here that it [leaving the board] would be sometime in 2020. It doesn’t necessarily have to be all the way through to the AGM [in late 2020],” he said.
“Again it will come back to, particularly now that we’ve got this matter that we’re dealing with at the moment, again, what’s best for the company. If it’s best that I go for the full term until the end of the year then I will do that. If it’s best for the company that I go earlier than that, then obviously I will as well.”
Mr Maxsted also strongly rebutted AUSTRAC’s accusation of “indifference” by senior management, saying the board had no evidence to support this claim in relation to Mr Hartzer.
“It’s far from indifference. We say we’ve got absolutely no evidence of indifference at the CEO level,” he said.
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