Offshore payments from a Westpac account at the centre of a multimillion-dollar fraud involving notorious conman Peter Foster have exposed another possible weakness in the major bank’s risk monitoring systems.
Private investigator Ken Gamble and Sydney law firm Nelson McKinnon are investigating whether 39 payments totalling more than $8 million sent from a Westpac bank account to Hong Kong could be part of the 23 million transactions AUSTRAC alleges the bank failed to properly vet.
The payments (ranging from $1070.91 to $250,000) were sent from a Westpac bank account between December 2013 and October 2014 under the name of Sports Trading Club to an HSBC bank account in Hong Kong, fronted by Arabella Foster, Mr Foster’s niece.
On more than one occasion two payments of $250,000 were transferred in the same day. In August 2014, 14 payments totalling $3.5 million were sent from the Westpac account to Hong Kong.
The Age and The Sydney Morning Herald do not allege Westpac failed to report these transactions to the AUSTRAC and the payments were not referenced in the financial intelligence agency’s statement of claim against the bank.
There are no allegations regarding those transactions, and ‘tipping off’ laws mean that Westpac cannot comment on whether SMRs [suspicious matter reports] were filed in relation to any customer,” Westpac said in a statement.
The Hong Kong payments have come to light as Westpac’s international transfers and risk management systems are under increased scrutiny. AUSTRAC’s landmark lawsuit against the nation’s oldest bank last month prompted the resignation of former chief executive Brian Hartzer and will lead to the early departure of chairman Linsday Maxsted next year.
If AUSTRAC was not alerted to the Hong Kong payments, Mr Gamble said he would seek to take legal action against the bank directly. AUSTRAC said it would not be appropriate to comment on the payments.
The payments came to light following a judgment handed down in the NSW Supreme Court in late November that found Sydney lawyer Leigh Johnson was a signatory to the Westpac account. The court found Ms Johnson knew conman Mr Foster was involved in the scheme and was also aware he used a fake name and did not inform law enforcement.
The findings against Ms Johnson were made in the civil suit and were not criminal findings.
Sports Trading Club (STC) was a $29 million scam headed by Mr Foster that encouraged individuals to invest between $50,000 and $250,000 it said would be punted on international sporting events.
Investors responded to ads that promised high returns on fully secured contributions of $50,000. There was a detailed proposal document, a physical “trading room” and real-time updates of “trades” on the STC members’ website, according to court documents.
The money collected in the scheme was deposited into the Westpac bank account and then transferred to offshore accounts in Hong Kong, as well as other accounts in the Cayman Islands and Vanuatu.
The scheme was the subject of a 165 person class action, where a judgment in the plaintiff’s favour was handed down in 2017.
Mr Gamble said he would investigate whether the Hong Kong payments were not properly flagged by the bank as suspicious.
“Week after week after week these payments were allowed to be transferred,” Mr Gamble said.
“As far as we’re aware, none of these payments of $250,000 a pop, all 32 of them, it doesn’t appear that any of these transactions were challenged by the bank.
“Surely that must have flagged suspicion from within the bank. Were they ever reported to AUSTRAC?” he said.
Under law, banks are required to track information about payments entering and leaving the country, including who is making and receiving the payments and the purpose of the transaction.
“If we find that these transfers left Westpac and went to a foreign country without Westpac conducting any due diligence on the account holder or whether they didn’t report them as required by law then we’ll be looking towards the bank to restitution,” Mr Gamble said.
The bank has been accused of breaching anti-money laundering laws 23 million times and failing to adopt a “risk-based transaction monitoring program”.
Source: Thanks smh.com