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Westpac CEO to walk away

By Grace Ormsby · November 26 2019
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egg

Borrow

Westpac CEO to walk away

By Grace Ormsby
November 26 2019
Reading:
egg
Westpac CEO to walk away

Westpac CEO to walk away

author image
By Grace Ormsby · November 26 2019
Reading:
egg
Westpac CEO to walk away

It’s been a tumultuous week for Westpac – with its woes now compounded by the exit of its CEO and a subsequent board restructure.

The group’s chief executive, Brian Hartzer, is leaving his role after last week’s revelation that Westpac had allegedly breached anti-money laundering laws more than 23 million times

Current chief financial officer Peter King will be taking over from Mr Hartzer as acting CEO, effective Monday, 2 December.

Current chief operating officer Gary Thursby will act as CFO.

The board of directors will also see a number of changes, with long-standing director Ewen Crouch making the decision not to seek re-election.

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Chairman Lindsay Maxsted has also confirmed that he will bring forward his retirement as chairman to the first half of 2020.

Westpac said this will enable an incoming chairman and the board to oversee the appointment of a permanent CEO.

The announcement comes in the wake of a number of allegations AUSTRAC has made against the bank, with 23 million breaches of anti-money laundering laws.

One of the most concerning examples in the statement of claim was the assertion by AUSTRAC that one customer transferred money to a person located in the Philippines who was later arrested for child trafficking and child exploitation.

Westpac had previously responded to the AUSTRAC statement of claim, with Mr Maxsted saying that “as a board, and as individuals, we are devastated by the issues raised”.

“The notion that any child has been hurt as a result of any failings by Westpac is deeply distressing, and we are truly sorry. The board unreservedly apologises,” he had continued.

“Our board, CEO and management team are fully committed to fixing these issues, and we are taking all steps necessary to urgently close any remaining gaps and fix our policies and procedures so that this can never happen again.”

With today’s announcement from the bank regarding the executive and board changes, Mr Maxsted commented that “the board accepts the gravity of the issues raised by AUSTRAC”.

“As was appropriate, we sought feedback from all our stakeholders, including shareholders. And having done so, it became clear that board and management changes were in the best interest of the bank,” he continued.

The appointment of Mr King to acting CEO has been welcomed by the board, with Mr Maxsted flagging that they have “asked Peter to focus on two immediate priorities: to implement the Westpac response plan and to continue to execute the group’s broader strategy” while a global search process for a new CEO is underway.

“We are determined to urgently fix these issues and lift our standards to ensure our anti-money laundering and other financial crime prevention processes are industry-leading,” the chairman said.

“We are currently working through our response to the statement of claim and will shortly commence the independent review,” Mr Maxsted outlined.

“The board will continue to provide updates on these issues.”

Further board changes needed

The Australian Council of Superannuation Investors (ACSI) has welcomed the action taken by Westpac in announcing the changes to the leadership team but is querying how the issues came to occur in the first place.

ACSI CEO Louise Davidson said long-term investors had made it clear to Westpac that accountability was required. 

She said this includes a preparedness to take proportionate action to improve governance and for the impact of these events to be fully reflected in remuneration outcomes

The actions taken today reflect the seriousness of the incidents and the failure of the bank to meet community expectations.

Noting that it’s still unclear how these significant issues came to occur, and why a fulsome investigation was not initiated earlier, Ms Davidson said investors want to see Westpac’s culture and governance strengthened to avoid a repeat of these issues.

“We believe that this crisis warrants further board renewal in the new year to support rebuilding public trust.”

 

 

 

Westpac CEO to walk away
Westpac CEO to walk away
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About the author

Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

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About the author

Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

Join The Nest Egg community

We Translate Complicated Financial Jargon Into Easy-To-Understand Information For Australians

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