Mr HARDGRAVE (4:45 PM) —Banks in Australia have a lot to answer for. In particular, I have a definite matter of grievance about the conduct of National Australia Bank. They have profits some 100,000 times the amount of money involved in the particular matter that I raise today which affects a constituent of mine, Mr Keith Smith of Robertson. William Keith Smith has had very little education. He left school in the fifth grade at the age of 13 and went to work for Hancock and Gore as a labourer. He eventually received an apprenticeship as a fitter and turner and joined the Royal Australian Air Force in 1942 at the age of 18. He was discharged in 1946. Since 1957 he has been mainly involved in the hotel industry, either by way of hotel lease and/or ownership. He held numerous hotels in this manner spanning some 25 years.

On giving direct hotel involvement away, Keith decided to try his hand at hotel brokering. During Keith's hotel involvement years, he had several dealings with National Australia Bank managers and had always found them to be people of integrity and trust. If he borrowed money, he paid it back. However, it would be fair to say that he was commercially illiterate. Like so many people who have lost so much through crooked bankers, he in turn also trusted the bank manager.

This particular story commences a long time ago, in early 1984, and it is illustrated by Keith's own record of events in a letter that he sent to the banking ombudsman dated 27 July 1990. This letter of complaint sets out the facts very plainly. As a matter of interest, Keith also furnished a submission concerning his case in a letter dated 3 December 1990 to the Martin inquiry chaired by the member for Cunningham. In essence, it is very similar to the letter of complaint to the banking ombudsman. The ombudsman said that they could not investigate Keith Smith's complaint because the legislation did not allow them to go back to a complaint originating in 1984. The Martin inquiry referred the matter to National Australia Bank and they replied that on investigation everything was okay, which turned out to be a pack of lies.

The bank manager at the Sunnybank branch of National Australia Bank was transferred out under a cloud. The bank manager's customer interview record records the circumstances of Keith's execution of a guarantee for $15,000 as follows:

"22 April 1984 CGB International:

The Company Secretary, John McPherson, called together with Kel Sweeney, the Managing Director, and Keith Smith, our customer, the hotel broker.

The firm is buying a series of hotels and borrowing overseas.

They left an extensive rundown in the form of a presentation. Kel Sweeney and Keith signed a Guarantee for $15,000 and they had to issue a cheque for $10,000 to their agent to go to Hong Kong to negotiate their overseas loan.

At the time the National Australia Bank branch manager could not approve an unsecured loan in excess of $1,000. Yet here he was approving one for $15,000. He took no statement of position to confirm the sufficiency of whether Keith was safe for the $15,000 as a guarantor. The normal standard bank guidelines at the time were that, if a proposed guarantor's principal asset was the matrimonial home and it was in joint names, then the bank's guarantee was to be executed by both. If this were not the case, it would need to be fully explained by way of customer review record.

The fact is that the National Australia Bank bank manager was in on the deal in some way. The interesting fact is that in the preceding months to February 1984 the National Australia Bank was dishonouring Keith Smith's car lease payment for $396.68 monthly. So NAB were not prepared to meet a payment of around $397 per month when there was insufficient funds in the account, but the local bank manager was prepared to accept an unsupported guarantee from Keith Smith for $15,000. Have you ever seen anything so ridiculous, especially when you bear in mind that the co-guarantor, Kelvin Sweeney, was an undischarged bankrupt and had a criminal record? Both the company manager and company accountant now have criminal records for stealing offences from other matters.

The brief details of the case can be described as follows: Keith accompanied Sweeney and McPherson to NAB, and there was a statement by the latter to the effect that bank manager Sutherland `owes me a favour'. At the beginning of the interview in the manager's office, a manager by the name of John Patterson was also present. During the initial interview discussions in which Keith did not take part, there was never any mention of bank lending or the guarantee. The relieving manager, John Patterson, has con firmed the contents of the above by way of affidavit in a statement to the police. I think Patterson himself was being used by the manager Sutherland.

In Patterson's statement to the police he said:

McPherson and Sutherland did all the talking. The discussion was about the hotel purchase and lasted about 15 to 20 minutes.

At that time I was called away for an interview. I did not see McPherson, Sweeney or Smith from then on that day. There was no discussion of the guarantee and indemnity while I was present.

After Patterson leaves Sutherland's office, a typist brings in a document which Sutherland casts his eye over and verifies is okay. The document is placed in front of Sweeney to sign, which he does. The document is then placed before Keith Smith. The company secretary, McPherson, then asks him to witness Sweeney's signature, which he does. Keith cannot read the document, as he has only his driving glasses with him. He has a special pair for reading. He signs where McPherson requests, not realising that McPherson has placed his finger over the word `guarantor' just above where he signs.

This all happened in front of the National Australia Bank bank manager. In normal banking procedures, the bank manager, Sutherland, should have explained the importance of the document. For instance, Sutherland should have made Keith Smith aware of the nature and extent of his liability under the guarantee. Smith must act under his own free will. Should there be suspicion that he was acting under duress or undue influence from the customer or anyone acting on the customer's behalf, and if Sutherland considered that Keith had failed to understand his responsibilities, then he should have told Keith to seek some independent legal advice.

Sutherland completely disregarded normal banking procedures. He did not obtain a statement of position from Keith Smith. He was, after all, a National Australia Bank customer, yet the NAB manager failed his duty of care. This was a bank manager that Keith Smith trusted; a bank that he trusted. The manager did not even question that the company CGB International was in the course of buying hotels with aggregate consideration of about $25 million, and yet it could not raise $15,000 set-up costs. This was an NAB manager whose category C unsecured lending authority most definitely did not exceed $1,000. In other words, this manager exceeded his authority by at least 1,400 per cent.

After Keith Smith witnessed Sweeney's signature, he left bank manager Sutherland's office. The company accountant immediately drew a cheque for $10,000 which he signed, and the manager then issued a bank cheque in replacement, despite the fact that the bank's own authority for CGB International required two authorised persons to sign. It is quite easy to see that it was a con job right from the outset.

The company accountant, John McPherson, was once an NAB employee and had, in fact, reached the status of branch accountant. So he fully knew the ropes and, what is more, he could have quite easily worked with Sutherland. The National Australia Bank has expunged McPherson's personnel records from their resigned officers' files. I have spoken with ex-NAB staff who, in turn, have spoken to current and past NAB employees who have worked alongside McPherson.

Shortly after Sutherland permitted the deceitful transaction, he was transferred and it was left to his successor at the Sunnybank branch to inform Keith of his obligations under the guarantee. To the best of Keith Smith's knowledge, the bank has never attempted to claim any type of reimbursement from Sweeney—the company owner, the company manager. In fact, the NAB told Keith that it was only interested in chasing him. Bank employees acted wrongfully, yet Keith Smith was left holding the bill.

Keith's involvement with the legal profession is a story in itself. He was ripped off once again. The trouble was that one of his solicitors permitted the opposition to gain a judgment by default and, from that time onwards, he has had his back to the wall. For instance, the bank's documents were never called for in the discovery exercise. The NAB has simply wrecked Keith Smith's life. That he received brummy legal advice was an additional advantage that NAB used to punish Keith Smith further. Keith never did anything of his own volition; it was always on legal advice. For instance, he was advised to pay the judgment debt and follow up with the appropriate proceedings, and when it came to the appropriate proceedings he was advised that he should not have paid the judgment debt in the first place. It would seem at times that his counsel was working for the other side. When Keith Smith witnessed Sweeney's signature, he was not to know that it was going to cost him almost $36,000 all up.

Given that National Australia Bank is the most profitable bank in Australia, it is worth reflecting on its arrogance and the way that it has no doubt trampled on the lives of others like Keith Smith to make its billion-dollar-plus profit a year. Keith is a war service pension recipient. He deserves better. Our nation deserves better from one of our largest corporations. The NAB has acted like thugs in this case. Perhaps NAB's performance was based more on the fact that, should Keith Smith be given the dignity he deserves, the floodgates would open as other claims are made.

This is an old story, going back almost 15 years. The NAB will have a go at me for raising it again today, but it is a matter that keeps on coming back. That Keith Smith has lived a horrible life over the last 15 years and that his family have suffered is a matter that I personally will not forget. I have known Keith for about 11 years. I first highlighted this story when I was working as a journalist at Channel 7, and I am pleased to have the opportunity to raise it again here in the House of Representatives today.