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Wednesday, 22 November 1995
Page: 3483


Mr ALDRED (12.58 p.m.) —In rising to speak on Appropriation Bill (No. 3) 1995-96, Appropriation Bill (No. 4) 1995-96 and the Appropriation (Parliamentary Departments) Bill (No. 2) 1995-96, which include the running costs of the Attorney-General's Department, I wish to bring to the attention of the House Westpac's continuing foreign currency loan scandal. Westpac's frenzied attempts to prevent disclosure of the infamous Westpac letters which referred to Westpac's curious and dubious foreign currency loans was one of Australia's biggest banking scandals in the 1980s and has not yet been resolved.

  I do not want to traverse issues relating to a dispute between Westpac and an aggrieved litigant, Drambo Pty Ltd, in Westpac's biggest foreign exchange case which is now before the Federal Court in Brisbane. However, I do wish to refer to Westpac's legal firm in Brisbane, Feez Ruthning, which in November 1995 wrote four letters to people it suspected—I emphasise `suspected'—were financial supporters of a Federal Court suit against Westpac.

  According to press reports, Westpac identified these persons by having a partner of the firm of Feez Ruthning, Mr Richard Gaven, attend the court hearing at which the case was being heard. Westpac may have also used its access to its clients' banking records to determine whether payments had been made, which is a breach of banker-client confidentiality.

  The letter claimed that it would seek orders to disclose the identity of supporters of the action and quoted Singh and Another v. Observer 1989 as the legal justification for its action. The letter from Westpac's solicitors reads:

We understand that you may have been involved in funding the applicants action against the bank. Enclosed for your information is a copy of a letter we sent to the solicitors for the applicant on the 30 March 1995.

This letter serves to give you notice that if the bank is successful in this litigation it will be seeking to recover its cost from any company or person who may have funded the applicants litigation.

A further letter from Feez Ruthning stated the letter was not meant to be `in terrorem' or intimidating, which is precisely the aim of the letters—to intimidate third parties from supporting the case against Westpac. The letter fails to acknowledge the elementary distinction that financing an action is different from being involved in litigation and that those seeking to financially assist the action against Westpac are therefore not liable to costs.

  One of the four letters claimed that the authority for Westpac's action was a case of Singh and others v. Observer, 1989, in England. However, the letter, deliberately or through ignorance of the law, failed to point out that that particular case was overturned on appeal in 1989. I have received advice that Westpac and its solicitors face the grave charges of being in breach of sections 132 and 140 of the Criminal Code; having demonstrated contempt of the Federal Court; breaching section 52 of the Trade Practices Act, which prohibits misleading or deceptive conduct; and being in breach of section 51A of the Trade Practices Act with regard to unconscionable conduct and section 60 of the Trade Practices Act, which prohibits coercive conduct.

  Sections 132 and 140 are particularly relevant. Section 132 refers to a person who attempts in any way to obstruct, prevent, pervert or defeat the course of justice as being guilty of a misdemeanour. Section 140 of the Criminal Code refers to the law that any person who conspires with another to obstruct, prevent, pervert or defeat the course of justice is also guilty of a misdemeanour. Those sections of the Criminal Code carry terms of imprisonment of two years imprisonment with hard labour and seven years imprisonment with hard labour.

  Clearly the letters are intended to defeat the ultimate course of justice by attempting to ensure the abandonment of the case against Westpac. Westpac is, or should be, bound by legislation to observe and adhere to the Banking Act 1959. This act regulates banking to make provision for protection of the currency and of the public credit of the Commonwealth. Part 1 of the Banking Act specifically nominates the interpretation of `prudential matters' in relation to a bank, meaning that the bank should keep itself in a sound financial position, not cause or promote financial instability in the Australian financial system and act with prudence, integrity and professional skill. It is a function of the Reserve Bank to monitor prudential matters, which include the encouraging and evaluating of sound practices.

  Indeed, several persons have declined to provide further funding to assist the case against Westpac as a result of receiving one of these intimidating letters. It is time that Westpac recognised the corporate laws and the courts of Australia. Westpac has a profit of $1 billion per year, yet it intimidates those who have the courage to question its dubious operations which have left too many Australians disadvantaged.

  The government should, by decisive action, at least ensure that Westpac is prevented from further illegal and malicious actions. Sympathetic consideration should be given to the granting of legal aid for those individuals who are attempting to pursue justice against Westpac. The investigatory and regulatory powers of the Australian Securities Commission and the Trade Practices Commission should also be used to ensure that Westpac is made accountable for its actions and that Westpac will cease its program of intimidation against honest Australians. To date, requests for assistance to the TPC and the Attorney-General (Mr Lavarch) have not been replied to. Does the government therefore implicitly support the intimidatory tactics of Westpac and its solicitors?

  In another matter that has been before the Supreme Court of Queensland, before Justice Mackenzie, Mr Lionel Potts had the unfortunate experience of also dealing with Westpac in another foreign loans scandal. The applicant won his case against Westpac and that judgment was subsequently overturned by the appeal court on a two to one verdict. Mr Potts has claimed in his affidavit that four bank officers referred to in this affidavit by their actions created doubt and conflicting views in the minds of the appeal judges. Two of these bank officers, Messrs Imhoff and Look, involved in this case have also appeared as witnesses in other trials related to foreign currency scandals. Westpac has lost every other trial: the Chirabagalio, Potts, Thannhauser and Ferneyhough cases. Westpac lost its appeal against Chirabagalio, won its appeal against Potts and did not appeal the Thannhauser and Ferneyhough decisions. These tactics are obviously meant to deter and harass other litigants by maintaining the Potts appeal judgment as a last full court foreign loans scandal in Queensland.

  The bank officers' actions resulted in the overturning of Justice Mackenzie's judgment, even though the trial judge had the benefit of seeing and hearing the witnesses. Mr Potts claims the innuendo and misrepresentations were calculated to mislead and pervert the course of justice. The Potts case is another example of Westpac acting as the `ugly Australian' by refusing to provide Mr Potts with a Singapore bank account statement, even though Mr Potts requested it as part of the discovery process. Westpac would only provide copies of the transactions that transpired in the offshore borrowing with the Singapore branch of Westpac. I ask: was there a legitimate bank account or were other transactions not known to Mr Potts recorded or registered against that account? Mr Potts's loan was purported by Westpac to have been made from the bank's Singapore branch. Mr Potts claimed that the Singapore branch is not a separate identity and is therefore not properly constituted as a licensed bank.

  During the early 1980s, as we are all aware, the then Treasurer and now Prime Minister (Mr Keating) deregulated the banking system. The sky was the limit for Westpac to lend to Australians from Singapore. Until proven otherwise, much of it may have been using Australian dollars disguised as a foreign currency. If Mr Potts is correct, the Westpac Singapore branch under the governance of Westpac head office in Australia had no legal ability to make such a loan to Mr Potts.

  Mr Potts sought special leave to appeal to the High Court of Australia which was ultimately refused. Mr Potts subsequently settled the appeal process by agreeing to participate in an agreement for a binding expert determination of the dispute with Westpac which was signed on 4 February 1994. Westpac and Mr Potts agreed to Sir Laurence Street acting as a consultant to both parties. He would then resolve the dispute by issuing a certificate stating his determination.

  Sir Laurence Street, by signing an acceptance of this agreement, required each party to agree to comply with such requests that were in accordance with the terms of the agreement. Part D of this agreement states:

The parties agreed to accept the determination in the said certificate as final and binding.

Sir Laurence Street proceeded with the determination and on 2 September Feez Ruthning, acting on behalf of Westpac, wrote to Sir Laurence Street. This letter is very important. It proves a lack of integrity and prudence of the bank officials who instructed their solicitors with no regard for justice.

  The letter attempts to discard Mr Potts's right to submit further evidence to be placed before Sir Laurence Street for determination of the quantum losses which Mr Potts considered just as the Justice MacKenzie and Chief Justice McCrossan figures in their judgment did not reflect an accurate assessment of his real losses in dealing with Westpac.

  Feez Ruthning stated the question for determination be limited to a finding as to whether there is any `new material or matter' as set out in the schedule to the agreement signed on 4 February 1994. They also argued that the agreement does not invite or require any reconsideration of the question of quantum.

  On 8 September 1994 Mr Potts responded to the Feez Ruthning letter protesting it as being deceitful and as having him lulled into the belief that Sir Laurence Street would fully determine the issue of negligence by both Westpac and its officers. Mr Potts expressed disillusionment with the unethical behaviour of Westpac by its attempt to resolve the determination exclusively in its favour.

  On 4 October, Sir Laurence Street handed down his certified determination of the dispute. He said:

There is new material or matter which has emerged as at 10 November 1992, mainly the decision of the High Court in Wardley's case on 28 October 1992 which leads to the conclusion that the majority decision of the full court of the Supreme Court of Queensland was wrong in the sense that the said decision would have been different if this new material or matter had been before the full court.

Mr Potts's lawyers, Bowdens, wrote to Westpac's solicitors quoting the Feez Ruthning letter of 2 November 1994 which contained the following passage:

We [Westpac] agreed to accept Sir Laurence's decision and have thereof restated our willingness to pay you in terms of that decision.

Bowdens stated:

In our view, `in terms of that decision' means something other than what has been offered by your client in their letter to our client dated 31 October 1994. It is our contention that Sir Laurence Street was intending that subsequent upon his determination there should be an assessment of damages based upon the plaintiff's claim under the Trade Practices Act which claim that Justice MacKenzie wrongly held was time barred. The sum plus interest would, in accordance with calculations made by Hall Chadwick, exceed $2 million.

On 1 November 1995, Westpac wrote to Mr Potts repeating an offer of $193,333.30 on the basis:

. . . that you are prepared to accept this offer to settle the matter once and for all without any further negotiation. It is pointless for you to make any further contact with any of the bank's directors or officers. All such communications will be ignored and further correspondence will be returned to you.

Mr Deputy Speaker, the arrogance of Westpac is unprecedented. It is obvious that Westpac has learnt nothing and nor has its conduct changed. Westpac still pursues its favoured course of intimidation.

  Parliament has supposedly enacted legislation to protect Australians from the type of actions I have outlined today. It is about time that this parliament in its proper democratic function put party politics aside and showed its wisdom and power to call Westpac to account. Parliament should take this action through an appropriate standing or select committee by establishing a banking inquiry into the nature of illegitimate Westpac banking actions and their consequences. Such an inquiry will provide a forum in which Australians can tender their evidence for consideration without having to face the fear and intimidation as used by Westpac in the Drambo and Potts cases. In doing this, parliament also has to consider the most practical manner to compensate victimised Westpac clients for losses incurred.

  Banking officials who hide behind the corporate veil of a major bank and conspire to pervert the course of justice must be called to account. Corporate intimidation is simply not acceptable in a civilised and law based society. The time has also come for the Treasurer (Mr Willis) to investigate these claims, as many Australians have suffered enough from the impunity of Westpac's misleading small and medium business proprietors—especially those who borrowed offshore, whether with or against the advice of greedy bankers, in the 1980s—over the last decade.

  Many Australians have lost their homes, many lies have been told, and many jobs and business opportunities have been lost due to Westpac's present new business practices. Sir Eric Neal, past chairman of Westpac, is quoted as referring to an inscription on an early Wales Bank note. I quote:

Let us possess the public confidence so long as, by faithful discharge of the honourable trust reposed in us, we may show ourselves worthy of it. Where any one man says with truth "the bank has broken faith with us", be then our ruin, and as only, the immediate consequences.

Since the 1980s, the conduct of Westpac directors, servants and agents has allowed Westpac to illegally deduct and retain moneys from borrowers' transactions, claiming these moneys were required to fund withholding tax, when there was no legal requirement to do so. It appears impossible for some senior bank officers to avoid charges relating to breaching the various banking, criminal and trade practices acts. Obviously, these officers have conspired to defraud these clients.

  I ask the Treasurer: when was Westpac's banking licence reviewed, and when will it be reviewed next? Westpac should be renamed `the ugly Australian'. It is not a matter of changing the corporate image of Westpac; the Westpac culture needs root and branch investigation by the appropriate authorities, to ensure that it acts in the interests of its customers and shareholders and, above all, to ensure that Westpac obeys the corporate laws of Australia.

  I seek to table the documents that relate to the matters I have raised in my speech, except one document—a confidentiality agreement, authorised by Sir Laurence Street. I have undertaken to check the status of that document before I seek to table it. I do seek to table the other documents.


Mr Lee —The one document that I thought was getting put aside was the determination, because that determination would have been a breach of the confidentiality agreement. If that determination is put aside, the honourable member has assured me the other documents will not breach the confidentiality agreement with Sir Laurence Street. On that basis, the remaining documents are not objected to.

  Mr DEPUTY SPEAKER (Mr Les Scott)—Does that suit the honourable member's requirements?


Mr ALDRED —It does, and that concludes my comments.

  Leave granted.