Ponzi operator David Ross in August 2013. Photo / Mark MItchell
Ponzi operator David Ross in August 2013. Photo / Mark MItchell
COMMENT:
Should the New Zealand public have confidence in our banking system and the banks?
Why is ANZ Bank continuing to try to hide the facts about its role as banker to the largest ever Ponzi scheme in New Zealand?
These are questions that arose this week as the ANZtries to strike out a class action against it relating to its role as Ross Asset Management's former banker.
Ever since the Financial Markets Authority began investigating this role, ANZ has put up the shutters.
It spent 3-1/2 years using shareholders' money fighting to stop the regulator from disclosing its findings to RAM investors.
Now facing a class action from RAM investors for more than $100m (including interest), ANZ is once more throwing its financial might around.
The investors claim that ANZ knew that certain payments misapplied RAM client funds, and therefore the bank dishonestly assisted RAM's breaches of trust, benefitted from charging fees and interest through RAM's misused overdraft, and breached a duty of care in negligence.
RAM was the country's largest Ponzi scheme when it collapsed in late 2012. More than 800 investors believed more than $450m was being managed on their behalf, but actual losses were closer to $100m. About $10m has been recovered. Ross himself spent six years in prison.
Just ahead of the court case this week, ANZ unsuccessfully attempted to stop broadcast media from filming or recording the strike out hearing before Justice Mellon.
The bank then successfully managed to get suppression orders from media reporting on certain documents, including internal emails, allegedly showing what the bank knew about RAM at the time.
What did emerge was that ANZ Bank oversaw payments from RAM's client account which paid for a BMW, wages, ACC levies and other office expenses such as alcohol.
Of course, ANZ feels uncomfortable about this.
But as the largest financial institution in this country, should it be allowed to simply use its financial muscle to suppress information that's integral to public confidence in our banking system?
In a recent Herald interview the newly elevated CEO of ANZ Bank NZ, Antonia Watson, told Tamsyn Parker: "In New Zealand everyone knows everyone so if you do the wrong thing it will be your mother's next door neighbour. That smaller society means you can get your arms around a bank of ANZ's size — and are less likely to have rogue areas.
"That said I completely appreciate banks have had a bad rap and that is for us to make sure we are telling the story about all the good we do in communities and that we do care about people's financial wellbeing."
Antonia Watson, chief executive of ANZ Bank New Zealand. Photo / Michael Craig
If ANZ truly believes it is a victim, despite losing nothing in the collapse of the RAM Ponzi scheme and in fact profiting over the years, surely it would want the facts of what it knew and what it did available for the public to judge its actions?
Simplicity founder and banking critic Sam Stubbs says he's surprised the case hadn't been settled already.
"If they have nothing to hide then why would they not let the documents be available?" He says.
"It's interesting to watch and see what it tells us about the culture of banks and there seems to be an attitude to try to wear down anyone who takes them on."
"It amazes me that a bank can handle that much money with so few controls and not be worried or raise concerns."
ANZ's attitude to this case looks like it still has plenty of work to do on that culture, so brutally exposed by Australia's Royal Commission and the Hisco affair in New Zealand.
