Contributed by Jim Hayes
In the wake of the recent money laundering scandal, where Commbank has been caught allowing its payment machines to channel proceeds from illegal activities to other accounts, Australia’s biggest bank faces what could prove to be the largest scale class action in Australian history.
Commbank is to be taken to court by legal firm Maurice Blackburn, on behalf of a large number of shareholders. The case is expected to cost the bank more than $100 million.
The proposed action will allege CBA breached its obligations by failing to inform the market about the money-laundering allegations when they were first made in 2015.
“The CBA [Commbank] admitted in an ASX announcement on 9 August of this year that it was aware of its failures in relation to the anti-money laundering and counter-terrorism financing legislation in the second half of 2015,” Maurice Blackburn national head of class actions Andrew Watson told a news conference on Wednesday.
“But at that stage, it made no announcement to shareholders of its awareness of those breaches. In fact, on the contrary, it said nothing for nearly two years,” Andrew Watson said.
“Worse, on its website and in repeated statements to the market, it asserted its compliance with that legislation. The truth is it was not in compliance.”
There are more than 800,000 small shareholders, who have suffered a significant share price drop, in the wake of the launching of procedures in the Federal Court by AUSTRAC. They fell by 3.9 percent in one day. If multi-billion dollar penalties are incurred, share prices will fall further.
Public anger against the Commbank is rising and is likely to cause a considerable loss of business. It’s recent announcement of a record full year profit of $9.8 billion has not helped. Alleged illegal activities, other questionable practices and record profit together and it spells out what looks like out of control greed and the pressure is on the government to do something to bring this and the other major banks to account.