Westpac chairman Lindsay Maxsted has apologised to angry shareholders over the money laundering scandal that has engulfed the bank, admitting the lender has more to do to enhance its culture and improve its systems to fight financial crime.
As shareholders vented during the bank’s annual general meeting in Sydney on Thursday, with some heckling Mr Maxsted from the floor, the chairman acknowledged investors had expressed their “shock, disappointment and concern” to him since the scandal broke last month.
Kicking off a drawn-out AGM, Mr Maxsted also defended the bank’s payment of $2.7 million in lieu of 12 months’ notice to former chief executive Brian Hartzer, and said there was no evidence the bank had ignored a “whistleblower”.
In response to the bombshell lawsuit, which included allegations the bank facilitated payments for child exploitation, Mr Maxsted said the bank took responsibility for mistakes that led to this scandal. Mr Maxsted said every part of the company had been shaken by the events of the last few weeks.
“In particular, as a board and as individuals, we are devastated that anyone may have been exposed to the risk of harm as a result of a failing by Westpac. For this, we are truly sorry,” said Mr Maxsted in his opening address.
However, many of the several hundred shareholders in the room appeared unconvinced that Mr Maxsted – who is stepping down next year – had shown enough accountability.
Some called out “just go” to Mr Maxsted in response to questions over the board’s accountability, and one investor’s call for the whole board to be removed received a round of applause. After close to three hours, the meeting had not moved past the first agenda item: the bank’s financial reports, including the laundering scandal.
Mr Maxsted pointed to an $80 million program to boost its financial crime capability that was unveiled following the scandal, adding “but clearly, we have more to do”.
Mr Maxsted said a key question put to him by shareholders was whether the AUSTRAC scandal reflected a broader cultural problem, and he admitted there was also more to do on this front.
He acknowledged a past review that had shown inadequate treatment of “non-financial risks,” and said the bank was also trying strengthen its “speak up culture,” but more remained to be done.
“A company’s culture is something that requires constant review, and I want to assure you we are taking this seriously and will reassess our approach as we learn more from the findings of the external reviews that I have talked about,” Mr Maxsted said.
The banking giant has endured a tumultuous few weeks since it was hit by a lawsuit from the financial intelligence agency AUSTRAC last month, which alleged it breached anti-money laundering laws 23 million times.
The bombshell claims sparked a boardroom crisis, with big investors pushing the bank’s directors to dump former chief executive Mr Hartzer and forcing the early resignation of Mr Maxsted, who will step down in the fist half of next year. Ewen Crouch, chair of risk and compliance committee, also cancelled his plan to stand for re-election to the board as a result of the crisis.
Facing a barrage of questions, Mr Maxsted defended the bank’s disclosure ahead of a $2.5 billion capital raising last month, and he responded to media reports about former Westpac manager Amanda Wood, saying there was “no question” this was a case of a whistleblower being treated poorly. The chairman also said the payment of $2.7 million as 12 months’ notice to Mr Hartzer was not a case of the bank being “overly generous,” but of it honouring its contractual obligations to an employee.
The board had been under heavy pressure in the lead-up to the AGM, with two leading proxy advisers recommending shareholders vote against the re-election of longstanding director Peter Marriott, and one of them recommending shareholders vote against the bank’s remuneration report.
Interim chief executive Peter King outlined steps the bank was taking in response to the AUSTRAC scandal, while saying 2019 had been a “disappointing” one for the bank in financial terms.
“I don’t underestimate the size of the task ahead. I’m grateful going into this knowing I have the 35,000 people of Westpac behind me,” Mr King said.
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