Westpac has launched an internal investigation into allegations of widespread fraud involving millions of dollars in unchecked loans, which are suspected of financing non-existent “ghost” trucks in suburban Melbourne and supporting a money-laundering ring in Western Australia. This probe has already led to the suspension of at least four employees, and two formal complaints have been lodged with the Australian Securities and Investments Commission (ASIC) and Crime Stoppers by an employee detailing these fraud claims.
The complaints, submitted anonymously and obtained by this publication, allege that a toxic and high-pressure sales culture within Westpac’s small- to medium-business banking division has driven the fraudulent activities. Westpac has confirmed an internal review that identified a small number of customer loans for further investigation, resulting in the introduction of new policies.
“We’re proactively engaging with regulators and we’ve acted to improve our controls and processes,” a Westpac spokesperson said. “We’re frequently updating our policies and processes, and when we find wrongdoing we take action to put things right.”
Background and Previous Scandals
This development follows five years after Westpac was fined $1.3 billion, the largest penalty in Australian corporate history, for breaching anti-money-laundering laws 23 million times. These breaches included failing to properly vet customers, allowing payments for child exploitation material in South-East Asia. The current investigation spans fraudulent loans approved by the Simple+, start-up, and equipment financing teams.
Two Westpac employees, speaking on condition of anonymity, claimed that customers used fake documents to secure loans through expedited approval processes without adequate checks. They alleged that Westpac prioritized volume over compliance, enabling crime rings to launder money through the bank.
“All they have to do is provide cash flow forecast for the next two years and some kind of business plan,” said one source about Westpac’s start-up loan scheme.
Internal Culture and Allegations
The allegations point to a cut-throat culture within Westpac’s business bank, particularly in Victoria, where a “don’t care how you do it, just get it done” attitude prevails. This approach has reportedly led to the approval of loans without thorough checks to meet aggressive sales targets.
Westpac has defended its lending standards, claiming that its sales targets align with industry competitors. “We reject the allegations made in relation to workplace culture,” the spokesperson stated. “Westpac has zero tolerance for inappropriate behaviour and we encourage our people to speak up when things don’t seem right.”
The suspected fraud was detected as loans defaulted across several Westpac business banking loan schemes, including the Simple+ campaign, which offers new customers up to $5 million in loans through a “fast-track” approvals process.
Impact and Investigations
Loans under Westpac’s start-up loan scheme are also under scrutiny. According to multiple sources, new customers could access up to $500,000 of unsecured loans over five years with minimal documentation. “Customers were coming to Australia, registering a business, taking $50,000, going back offshore and having no plan to repay those loans,” said one staff member.
In Western Australia, it is suspected that this became a money-laundering ring, with businesses registering, obtaining funds, and then moving offshore. Investigations are also examining potentially fraudulent loans approved through the bank’s equipment financing team, particularly in Melbourne’s Tarneit and Point Cook, where fake documents were allegedly used to secure loans for non-existent vehicles.
“Our policy at Westpac allowed customers to purchase vehicles up to $500,000 per vehicle, up to $1.5 million in total, without actually going out and inspecting the vehicle,” the source said.
Westpac equipment finance manager Ming-Jin Liaw reportedly held a meeting to raise awareness of increased fraud through vehicle financing and introduced new checks to mitigate it. Liaw did not respond to requests for comment.
Looking Ahead
Westpac has already stood down several managers over the alleged fraud, placing them on leave or forcing them out of the company. However, sources claim these employees have “taken the fall” for senior management, who remain unaccountable for promoting the Simple+ scheme.
The bank’s spokesperson stated, “We’re unable to comment on individual employees or on actions taken. The small-business lending leaders identified have recorded very high levels of engagement and leadership in recent employee surveys.”
These allegations of fraud and a toxic internal culture come as Westpac continues to rebuild trust after its previous scandal. The bank’s recent financial results showed a 15% increase in business lending, highlighting fierce competition among banks to lend to small and medium enterprises.
As the investigation continues, the implications for Westpac’s reputation and operations remain significant, with potential regulatory actions and further scrutiny from both the public and authorities.
