An unorchestrated 'litigation lot' of liabilities: Part 4
Quote:
Originally Posted by
Snoopy
The 24th November 2019 Westpac press release indicates that Westpac still expect to be fined, for not having the necessary checks on some accounts. However they have rolled out the following $54m dollars worth of 'good corporate citizen' measures:
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1/ Funding for the International Justice Mission (IJM): Westpac will match IJM's current level of funding, investing $18 million over three years to tackle Online Sexual Exploitation of Children (OSEC) in the Philippines. This will enable IJM to expand on-the-ground initiatives in Southeast Asia to help end child exploitation.
2/ Funding for SaferKids: Westpac will match the Australian Government's current level of funding for its SaferKids partnership with Save the Children, UNICEF and The Asia Foundation, investing $6 million over six years to raise awareness of Online Sexual Exploitation of Children (OSEC) and support programs to protect children in the Philippines.
3/ Prevention: Westpac will seek the guidance of industry experts, through the convening of an expert advisory roundtable, to develop a program of actions to support the prevention of online child exploitation. Westpac will provide funding of up to $10 million per year for three years to implement these recommendations
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In house,
1/ Westpac have closed their "Westpac Australasian Cash Management Product" and "LitePay international funds transfer system". These were two platforms where funds could be transferred with little accountability.
2/ Westpac intend to hire an additional 200 people to add to their financial crime resourcing team. This team has already been boosted by 325, to 750 people over the last three years.
3/ Westpac will invest $25 million to improve cross-border and cross-industry data sharing and analysis to better support regulators and authorities to fight financial crime
Those financial <script src="https://securepubads.g.doubleclick.net/gpt/pubads_impl_2020032401.js" id="gpt-impl-0.981356852904373" nonce=""></script>commitments add up to $79m, excluding Westpac's own incremental internal costs.
The 25th November 2019 Westpac press release contains more details on Westpac's costs for the full support of the anti-pedophile program:
"Westpac has made a number of commitments including to improve its financial crime program, support industry initiatives to enhance financial crime monitoring and provide additional support and resources to organisations that are working to eradicate child exploitation. We estimate these commitments will increase expenses by up to $80 million (pre tax) in FY20 when the majority will be incurred or provided for. These expenses will be included in cash earnings and treated as notable items."
The 'notable items' comment is made in relation to the whole thing being a 'non-operational matter." I would not include it as part of 'normalised earnings'.
I am not sure what kind of fine Westpac may expect as a result of their prior inactions, to be offset by their subsequent make good efforts at least in a judge's eye. I don't think they will get away with a wet bus ticket though. But given that Westpac was a conduit for crime rather than doing the crime themselves, I wonder if it will be somewhat in the order of $20m? That would see Westpac face a total cost of $80m + $20m = $100m for the whole matter. $100m sounds like a good 'headline punishment' to face. Anyone know how this figure compares with existing court precedents?
According to the comment at the end of this article, my total $100m paedophile fine settlement could be some way out:
https://www.finextra.com/newsarticle...undering-rules
"23 million breach occasions @ A$17 - A$21 million penalty per breach occasion is A$391 trillion - A$ 483 trillion."
To put that into perspective, total shareholder funds on hand at EOFY2019 was $65 billion. So potentially WBC could be fined over:
391/0.65 = 600
times the amount of shareholder funds on the balance sheet! That sounds like crazy stuff that would immediately collapse the bank. Hyperbolic surely?
SNOOPY