Leo Shanahan
THE AUSTRALIAN
APRIL 4, 2016
ANZ’s deputy chief executive and acting chief financial officer has been quizzed over the bank’s holdings in Malaysia’s AmBank amid the multi-billion dollar 1MDB corruption scandal engulfing that country’s government.
Appearing at a Senate committee looking into constructive default loans, Graham Hodges defended the role of ANZ in sitting on the board of Malaysian bank AmBank which held billions in the 1MDB funds at the centre of a global financial scandal.
With ANZ holding almost a 25 per cent shareholding in the Malaysian bank, ANZ has three permanent positions on AmBank’s board, which will soon include Mr Hodges himself and, formally, ANZ’s chief executive Shayne Elliott.
Under questioning from senators Mr Hodges described as “simplistic” allegations ANZ had governance questions to answer over AmBank and the scandal involving state investment fund 1MDB.
“Clearly the directors on that board are not at liberty to talk about what goes on … we do not control that bank. We are directors on that bank, it is a separately listed public company,” Mr Hodges told the committee in Sydney.
“As an ANZ executive and one which is a shareholder in that are we happy with that? Certainly not. But that’s different to implying that the culture or the integrity of one of the people who sat on the board is less than it should be because they’ve sat on the board.”
The scandal surrounds money transfers totalling more than $US1 billion alleged to have flowed into Malaysian prime minister Najib Razak’s bank accounts between January 2011 and April 2013 — much of it from 1MDB.
The scandal has rocked the Malaysian government and triggered financial investigations by authorities on three continents.
Mr Najib has denied any wrongdoing and in January his hand-picked new Attorney-General, Mohamad Apandi Ali, demanded all Malaysian investigations into the transfers be closed, declaring the bulk of the money a gift from Saudi royalty.
The ANZ has been a major shareholder in Malaysia’s AmBank for almost 10 years, after buying a 24.9 per cent stake in 2006.
A partnership agreement drawn up after the acquisition and lodged with the ASX not only gives ANZ seats on AmBank’s board and empowers it to parachute its staff into key management positions, it also obliges the Malaysian institution to follow its Australian partner’s rules of probity and core policy “to the extent appropriate in Malaysia”. It must also consult ANZ before approving any business plan, major mergers, disposals, acquisitions or changes in capital structure or direction.
Mr Hodges told the Senate committee that ongoing banking scandals in Australia, including in financial planning and insurance, had hurt the bank’s public reputation and said the banks did have serious questions to answer to the public.
“We all have a heightened sense of focus around where customers have found themselves in difficult situations where it relates to the bank. I don’t think that’s recent, but there have been a lot of recent examples, and I think the banks have something to account for. Banks are acutely aware of this and I can’t say any of us enjoy having these circumstances to be honest,” Mr Hodges said.
“So whether it’s for us, we’ve had issues of managing Timbercorp, as you’d be very aware. There’s recent issues around insurance, or the impaired loans here. You can go back further as well to financial planning. So there’s a clear range of issues which have emerged.”
Ah….the more you start talking to the press, the more pressure you will get from the Malaysian end to sell your shares. Name your price, Mr Hodges. It’s worth stopping any leakages back to Oz.
The Panama Papers lately revealed that offshore banking and creation of empty shell companies have become ‘popular’ tactics for those who want to dodge taxes and make a quick buck – even among high profile people.
The fact is ANZ had management control over the bank. They had 25% of the shares, but had the right to second senior managers to the bank, which they did. They allowed politicians to open accounts with the bank, and transfer billions into these accounts. That was why virtually all the senior managers of the bank were fired or told to retire. It doesn’t absolve the bank of the crime of allowing money laundering to occur during ANZ’s watch.