This article was written by Michael Clanchy (The Independent Australian 14 October 2017), details why the Commonwealth Bank needs to be put under investigation. A long list of controversies that demand answers. Michael Clanchy is a management and policy development consultant and has authored books including Good Bosses, Bad Bosses: Surviving at Work. Publishers of his feature articles include BRW, The Age, The Brisbane Courier Mail and The West Australian.

Just how many chances will the Commonwealth Bank be given to comply with its statutory responsibilities and social obligations? Just how long will the LNP Government resist widespread calls for a full judicial inquiry or Royal Commission into this privatised giant, which exercises such economic power within Australia and over millions of individual Australians?

The litany of Commonwealth Bank behaviour receiving adverse media publicity over recent years has been long, including:

1. Commonwealth Bank insurance

In 2016, CommInsure’s Chief Medical Officer blew the whistle on unethical practice, alleging the denial of payout entitlements to sick and dying policy-holders, corporate pressure on doctors to change their medical opinions and the use of outdated medical definitions.

2. Commonwealth financial planning and advice

After years of customer complaints and staff whistleblowing, alleging fraud, forgery and shoddy financial advice, resulting in significant customer loss and excessive staff commissions, a 2014 Senate Inquiry Committee report recommended a Royal Commission into the operations and behaviour of the Commonwealth Bank’s financial planning arm.

Understandably, if an investigation were to take place into potential incidences of fraud, the relevant authorities would need to make use of forensic accounting and eDiscovery techniques to conduct an in-depth analysis of all accounts.

Electronic discovery (often referred to as eDiscovery) is the electronic aspect of identifying, collecting, and producing electronically stored information (ESI) in response to a request for production in a lawsuit or investigation. Correspondingly, ESI includes, but is not limited to, emails, documents, presentations, databases, voicemail, audio and video files, social media, and web sites.

You can learn more about eDiscovery by heading to the Eide Bailly website.

So far, the Government has declined to act on this Committee recommendation.

3. An aggressive “profit before people” mentality

Like the other major banks in Australia, the Commonwealth has received its share of customer and consumer advocate criticism. This included criticism about excessive fees and charges, especially high interest charges on credit card debt, record bank operating profits and shareholder dividends, delays in passing on cuts in the Reserve Bank cash rate, and its concerted promotion of bank product sales.

The Commonwealth Bank’s record profits over recent years have particularly hurt its image, as have the nostalgic memories of many older people, who recall when the now private Commonwealth Bank was an asset owned by all Australians and focused on delivering an essential public service to its depositors and borrowers.

4. Anti-money laundering and counter-terrorist financing law

In August 2017, AUSTRAC filed allegations of massive non-compliance by the Commonwealth Bank in relation to anti-money-laundering and counter-terrorist law.

It is the latest of these scandals, connected as it is to national security and safety, which has the potential to generate the most widespread outrage within the Australian community. This is because the implications are universal, rather than being confined to a specific segment of the Commonwealth Bank’s customer base.

The criminal money-laundering and terrorist finance controversy

Simply, and in brief, what is this controversy about?

In August 2017, AUSTRAC (the Australian Transaction Reports and Analysis Centre) filed 53,000 allegations of breaches by the Commonwealth Bank under the Anti-Money Laundering and Counter-Terrorism Financing Act. The allegations focus on Commonwealth Bank reporting failures of transactions moving through its network of “intelligent deposit machines” (IDMs). The Australian Federal Police have confirmed that a number of these transactions were indeed made by persons with known links to organised crime and terrorism.

The acting chief executive of AUSTRAC, Peter Clark, argues the evidence leads him to the following conclusion:

“The effect of CommBank’s conduct in this matter has exposed the Australian community to serious and ongoing financial crime.”

Yet, as Australian Financial Review commentator, Neil Chenoweth astutely points out, ‘the most disturbing’ material in AUSTRAC’s deposition is not about the failed technology in the Commonwealth Bank’s hasty roll out of IDMs, rather it is the allegations of the subsequent delayed, inadequate and self-interested responses by the Bank after AUSTRAC had been alerted in 2015.

Chenoweth details a rapidly deteriorating relationship between AUSTRAC and the Australian Federal Police on the one hand and the Bank on the other, escalating

‘… from increasingly urgent requests for information, to directions, to court orders, to a search warrant.’

What about the statutory banking regulators, ASIC and APRA?

Since this scandal broke two months ago, both banking regulators, the Australian Securities and Investment Commission (ASIC) and the Australian Prudential Regulation Authority (APRA), have very predictably announced urgent and separate inquiries into the affair. The announcements will have elicited the usual knowing smiles from many who work in the finance sector and understand its recent history.

In a significant understatement, Greg Medcraft, chairman of ASIC, noted his surprise the Bank had not confided in the Commission two years ago, in 2015, when it first became aware of its problem. He also expressed concern that there was an industry-wide culture of silence, which undermined trust in the financial system.

For its part, ASIC has determined that it will oversee an “independent”, arms-length inquiry into “the culture and accountability” of the Commonwealth Bank.

With these announcements, our instinctively hesitant financial regulators have once again set the scene for the Prime Minister and the Treasurer to reject the calls for a Royal Commission into the bank, with the well-worn claim Australia already has “tough financial cops on the beat”.

Oh, dear! Australians have heard this sorry storyline far too many times before. They deserve much better.

In conclusion

There is little doubt that the great majority of Australian citizens will dutifully, if reluctantly, come to accept PM Turnbull’s insistence for their driver’s licence photos and details to be entered into the electronic facial surveillance system. They will accept this further loss of privacy and freedom as their contribution to national safety and security.

But these same Australians would be most unwise to expect any reciprocity from the PM in terms of a judicial inquiry or Royal Commission into the major banks, particularly into the Commonwealth Bank and its compliance with its social responsibilities, including community safety.

Within the Liberal Party, there is a long history of adherence to the philosophy of “business is business”, especially if it is “big, private business”. Customers and other citizens unfortunately often become secondary considerations.