More directors may depart Westpac’s board following an investigation of the bank’s money laundering and child exploitation scandal by consulting firm Promontory.
Westpac’s board will also set up a new financial crime committee, chairman Lindsay Maxsted said.
Investor pressure following bombshell legal action launched by Australia’s financial intelligence agency last week has forced Maxsted, along with chief executive Brian Hartzer and the head of the board risk committee, Ewen Crouch, to announce they are leaving the bank.
Large investors including the industry super sector and the Future Fund are closely watching how Westpac refreshes its board in the wake of the scandal, amid market talk that more directors should resign.
This is something Maxsted has resisted, telling reporters as recently as Tuesday that further defenestrations would be “very dangerous”.
In a lawsuit lodged with the federal court last Wednesday, Austrac accused Westpac of breaching anti-money laundering and counter-terror finance laws 23m times in transactions worth $11bn.
It also linked Westpac’s failures to thousands of money transfers to the Philippines that it said were consistent with child exploitation.
In addition to lopping heads at board and executive level, the accusations also smashed Westpac’s share price and triggered a raft of additional investigations from the Federal police, the Australian Securities and Investments Commission and the Australian Prudential Regulation Authority.
After discussions with Asic the bank has also been forced to allow mum-and-dad investors who have pledged $500m towards a $2.5bn capital raising to back out of the deal.
It is believed Promontory are to start work on Thursday night.
Westpac said it would also set up an advisory panel of three independent experts to consider Promontory’s report.
The expert panel will “provide recommendations on governance as well as board accountability”.
It is understood “board accountability” includes the possibility more directors might fall on their swords.
The Westpac board’s new financial crime committee will be chaired by Peter Nash, a former KPMG partner who has been on the board since March last year.
Its other members are to be Nerida Caesar, a former Telstra executive who has served on the Westpac board since September 2017, Steven Harker, an investment banker who joined the board in March, and Margaret Seale, a former publishing executive who also joined the board in March.
Westpac shares were down 0.58%, to $24.665, at about 4pm on Thursday.
They were changing hands for $26.55 before last Wednesday’s Austrac lawsuit.
As part of the capital raising, retail shareholders are able to purchase additional shares for either $25.32, which is the price institutions that have tipped $2bn into Westpac’s coffers have paid, or at a 2% discount to the current share price when the offer closes on Monday.
But Westpac said that “following discussions with Asic” it had decided to allow retail shareholders who decided to buy into the capital raising before Austrac announced its lawsuit to withdraw from the deal.
