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ANZ Bank cartel charges expected to be filed this week

By Clancy Yeates
3 June 2018 — 10:19pm

Details of the explosive criminal cartel allegations against ANZ Bank, Citigroup and Deutsche Bank are expected in coming days, with the Commonwealth Director of Public Prosecutions (CDPP) tipped to formally file charges this week.

ANZ has said it would defend against allegations it was "knowingly concerned" in cartel conduct.

ANZ has said it would defend against allegations it was "knowingly concerned" in cartel conduct.
Photo: Glenn Hunt
After the three banks on Friday said they expected to be charged over a $2.5 billion capital raising in 2015, banking sources thought it likely the case would be filed this week, with some expecting the charges to be laid as soon as Tuesday.

The allegations centre on the banks' behaviour following the issue of new ANZ shares to institutional investors, when Citi, JPMorgan and Deutsche acted as underwriters and ended up holding almost $800 million in ANZ shares.
The Australian Competition and Consumer Commission says it expects charges to be laid against the ANZ Bank, over an alleged criminal cartel arrangement.

JPMorgan, which has declined to comment, is reportedly co-operating with the Australian Competition and Consumer Commission, the agency that investigated the conduct.

ANZ has said it understood the CDPP also intended to bring charges against its treasurer, Rick Moscati, and the ACCC said charges would be brought against "a number of individuals".

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ANZ, Citi and Deutsche Bank have said they will defend the allegations, in a case that comes as the banking industry is already facing an erosion in public trust, a royal commission, and a backlash from politicians.

It is the first criminal cartel action in Australia to focus on conduct in the financial markets, in an area of the law regarded as highly technical. Although the precise allegations are not public, ANZ has said it is alleged to have been "knowingly concerned" in cartel conduct when the investment banks reached an "understanding" over how to offload the ANZ shares after the raising.

Some observers suggest the case will focus on whether the banks sought to restrict the supply of ANZ shares, in order to keep the price higher. Citi last week responded to such a claim by saying it needed to be seen against the fact hundreds of millions of dollars in ANZ shares were traded every day.

Companies face maximum penalties of 10 per cent of annual turnover, or three times the benefit gained from criminal cartel behaviour, while individuals can face up to 10 years' jail if they are found guilty.

Citi has said the case deals with a "highly technical" part of the law that had not previously been addressed in guidance notes, but experts said CDPP would only bring criminal charges if it had a reasonable case.

Unlike other high-profile cases against the banks, it is expected the case would be tried before a jury.

The evidence against the banks is not known, but the ACCC can ask the Federal Police to use phone taps and other surveillance techniques in some cartel cases, according to the regulator's website.

The case is tipped to have major implications for how investment banks carry out capital raisings, and news of the action reignited calls for reform of the current system, which critics say favours big shareholders over small investors.

Australian Shareholders' Association director Stephen Mayne said the charges against ANZ presented an opportunity for "serious reform" of the capital raising system used by large listed companies. It wants to see the elimination of institutional placements – where companies run a book build to issue new stock to big investors.

Stephen Mayne of the Australian Shareholders' Association.

Stephen Mayne of the Australian Shareholders' Association.
Photo: Louise Kennerley
"We see this is a big opportunity for meaningful reform of the book build system," he said. "Hopefully this is the final nail in the coffin of ASX100 placements."

The ASA is pushing for possible legislative reform, and for boards of directors to steer clear of institutional placements, which Mr Mayne described as a "black box" process that showed no respect for existing shareholders in a company. When it ran the placement, ANZ also offered retail shareholders the opportunity to buy discounted stock through a share purchase plan.

In conversation with investigative journalist Adele Ferguson
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Mr Mayne could not recall another top 10 ASX company since 2010 undertaking an institutional placement. On Friday ANZ revealed there had been a shortfall of almost $800 million, an amount that was picked up by the investment banks, and Mr Mayne said the bank should apologise for not disclosing this fact at the time of the raising in 2015.

"Who on earth thinks they can hide an $800 million shortfall – the biggest shortfall in Australian history? Come on."

Clancy Yeates writes on business specialising in financial services. Clancy is based in our Sydney newsroom.


Interesting Articles:

 Oct 20 2014 at 7:46 PM
Updated Oct 22 2014 at 5:13 AM

Employee on murder charge is no banker: ANZ

ANZ Bank has clarified that Kyle Zandipour is not an investment bank with the financial group, but based in a call centre.

by Rachel Nickless
ANZ Banking Group says the so-called ANZ “investment banker" charged with murder on the weekend has a far more junior role at the bank than the media and his lawyer suggested.

Kyle Zandipour, 27, was charged on Sunday over the violent death of 21-year-old university student Joshua Hardy. After an altercation inside a St Kilda Rd McDonald’s restaurant in Melbourne late on Friday, Mr Hardy was brutally attacked and died in the early hours of Saturday.

Mr Zanipour’s lawyer George Defteros reportedly described Mr Zandipour as an ANZ “investment banker" in court on Sunday, but the bank’s spokesman Stephen Ries told The Australian Financial Review he was “absolutely not an investment banker", but rather worked in an in-bound call centre role in small business sales.

Mr Defteros has since clarified to the Financial Review that his client is a “small business investment consultant" for ANZ.

Mr Ries said  “it’s too early to comment on Mr Zandipour’s employment status with ANZ given he is now the subject of criminal charges currently before the courts".

Mr Defteros said his client would not be required to enter a plea until a committal hearing, but he was pleading not guilty to murder. Mr Zandipour has been remanded in custody to appear in court again on October 24.

ANZ bank chief Mike Smith paid $9.7 MILLION for just three months' work - or 123 times the average Australian wage
•Mike Smith took home 'grand total remuneration' of $9,712,312 in 2016
•This included cash bonus of $2.4 million, termination pay of $1.35 million
•Paid huge sum for working just three months as CEO in financial year 2016
•Rewarded with $3.9 million in performance even though profit fell 18.3 %
•English-born banker has received $100 million from ANZ since 2007

By Stephen Johnson For Daily Mail Australia

Published: 20:09 EDT, 7 November 2016 | Updated: 00:19 EDT, 8 November 2016

Former ANZ bank chief executive Mike Smith took home $9.7 million, or 123 times an average Australian full-time annual salary, for doing just three months' work.

The English-born banker was paid $105,569 a day for turning up at his old Melbourne office from October 1 to December 31 last year before going on gardening leave for six months.

His 'grand total remuneration', which included a cash bonus of $2.4 million and termination benefits of $1.35 million, were outlined in ANZ's annual report for financial year 2016, released on Monday.

Former ANZ chief executive Mike Smith (pictured) was paid $9.7 million in the 2016 financial year, ending on September 30, despite only turning up for work for three of those months

ANZ's annual report (pictured) has details of Mike Smith's sizable package on pages 52, 53

Mr Smith, a classic car enthusiast who has a fleet of Aston Martins, has pocketed almost $100 million since he took over as ANZ boss in October 2007, after a decade holding executive roles with the Hong Kong and Shanghai Banking Corporation.

His total remuneration package of $9.7 million is 123 times greater than the average full-time Australian salary, which stood at $78,832 in May 2016.

The resident of upmarket Toorak in Melbourne was paid an even more lavish $10.8 million during the 2015 financial year to run Australia's fourth biggest bank.

The 60-year-old London-educated banking veteran was generously remunerated even though ANZ's cash profit dived by 18 per cent, to $5.9 billion, in the year to September 30, 2016.

ANZ also shed 3,600 jobs, or 7 per cent of its workforce during that year.

For most of that time, Mr Smith was on so-called 'gardening leave,' which means he was paid to stay at home until July 7.

Mike Smith was paid $105,000 a day to turn up to work at ANZ's World Headquarters at Melbourne's Docklands building, on the Yarra River, between October 1 and December 31 last year, before going on leave and retiring as the bank's chief executive after eight years

A classic late 1950s Aston Martin DB4 outside Mike Smith's Toorak mansion in Melbourne, which he bought in 2007 before moving from Hong Kong

He handed over to Shayne Elliott on January 1 this year.

Mr Smith's successor, a former chief financial officer with the bank, was paid $5 million during the 2016 financial year.

Mr Elliott's direct competitors at the other major banks were even better remunerated.

Commonwealth Bank chief executive Ian Narev, who was paid $12.3 million in the 2016 financial year, is due to face shareholders in Sydney on Wednesday.

Westpac CEO Brian Hartzer was paid $5.74 million in the 2015 financial year while his NAB counterpart Andrew Thorburn was remunerated $5.48 million during the same time period.

The bosses of smaller banks were also well paid in the 2016 financial year, with Bank of Queensland's Jon Sutton pocketing $3.09 million and Bendigo Bank's Mike Hirst taking $2.73 million.

Mike Smith (pictured) posed for a photograph at New Dehli, India, in July 2015 just five months before he finished his eight-year tenure as ANZ chief executive

Mike Smith was generously remunerated even though ANZ's cash profit dived by 18 per cent to $5.9 billion during the 2016 financial year. Annual report pictured.

The Toorak mansion in Melbourne where Mike Smith spent his spare time when he wasn't running the operations of the ANZ bank

ANZ's annual report for financial year 2016 showing new chief executive Shayne Elliott, who took over from Mike Smith on January 1, was paid $5.069 million

Under Mike Smith's watch as chief executive, ANZ changed its logo and sold its old Gothic-style headquarters in Melbourne (pictured)
Banker leaves haunting final social media post before death
Neil De Graff

Ian Bolland Profile Pic

Ian Bolland

2 years ago

A haunting affair.

In a haunting final social media post, the man who deliberately set fire to a Brookwater (Australia) home, and ultimately himself, said he was "going to achieve something great this year".

The Queensland Times reports that Neil De Graaf, a senior relationship manager with Healthcare at ANZ, died overnight in Royal Brisbane Hospital from the burns he suffered in the attack on Monday night.

De Graaf had rammed his black BMW into the mother of his former love interest April Laing's home and poured two canisters of accelerant around the two-storey property before setting it on fire with the family still  inside.

But two days earlier he had said he was on the cusp of greatness on his Facebook page.

"I'm feeling inspirational, like I'm going to achieve something great this year," he wrote on Saturday at 8.20am.

Neil De Graff

To access the complete Queensland Times article hit the link below:

Dead arsonist's haunting final facebook post