The Australian Securities and Investments Commission has begun considering whether to charge First Republic Bank $1bn over its alleged role in the “bail-in” of $US400bn ($1.6bn) of loans.
The $US40bn bail-in, which began on June 12, was intended to cover the aftermath of the global financial crisis and the ongoing sovereign debt crisis.
The ACCC was criticised for not acting more quickly on allegations of fraud and corruption in the scheme.
ACCC chair Rod Sims has already told the Senate he is considering taking the case to the ACCC’s independent board, which will determine whether to take it to court.
ACCCs interim report on the Bail-In was published on Tuesday and the ACCCs chief enforcement officer, John Stewart, said the findings from the review were “very concerning”.
He said the ACCs “longstanding culture of integrity and professionalism” required that all investigations be “transparent and transparent”.
“We have a long tradition of working in an open and accountable manner, ensuring that all matters are thoroughly investigated and appropriately dealt with,” he said.
ACCs interim report into the Bails In (pdf) ACCC interim report (PDF) ACCCs review of the Bays National Bank (BNS) and its subsidiary First Republic (FIR) in relation to the Bains National Bank Bays (BNB) (in NSW) (PDF, 1.3MB) and First Republic National Bank Bank Bains (FNNB) (NSW) (pdf, 1MB) (2017) ACCs review of First Republic and its subsidiaries in relation of the Second National Bank, First National Bank of Australia (BNBA) (IN) (2016) ACCS review of Bays-Bain National Bank Ltd (BBNL) (BAL) (2018) ACC reviews Bays and Bains Bays Regional Bank Limited (BBRL) Ltd (BEIRL) Limited (2016), First National National Bank Corporation Limited (FNBCL) LP (2017), First Republic Financial Corporation Limited Ltd (FNFCL) BBL Limited (2017 and 2018), First Reserve Bank Limited BRL (2017-19) First National Financial Corporation BRL Limited (2018-19), First State Bank Limited NLB (2017, 2018, 2019, 2020, 2021 and 2022), First South Australian Bank NLB Limited (2015), First Australian Bank Limited Limited BBLBBLB (2018), First Southern Bank Limited ALBBLBL (2016, 2017, 2018), Bays Reserve Bank NLBL (2018 and 2019), First Regional Bank BBL (2017); First South Bank NL (2017).
In the report, Mr Sims said the review of both banks had “unprecedented scope” and would consider “many relevant matters”.
ACCC assistant commissioner James MacKay said there were “a number of issues that are relevant to the review”, including “the alleged breach of the securities laws, breaches of the Australian Financial Reporting Standards and the integrity of the process for issuing banknotes”.
He did not give further detail.
“We’ve got a whole range of issues we need to look at,” Mr MacKay told reporters at Parliament House on Tuesday.
Mr Sims declined to comment.
ACCS deputy chief enforcement, John Lewis, said ACCC officers had “been working on the review” since the beginning of the year.
Mr Lewis said the investigation had “given us a very high level of confidence that the institutions that we are considering taking this case to court are doing the right thing”.
“It’s not just about whether they are, or whether they haven’t been, doing the correct thing in relation with this, it’s about whether the institutions have the integrity, and I think that’s the issue here,” Mr Lewis told ABC Radio.
“I think this review is going to give us a fair amount of confidence about whether or not they’re doing the appropriate thing.”
Mr Sims told the House of Representatives on Tuesday that he would not make any further comment on the ACC’s review until after the investigation was complete.
ACC’s interim report to Parliament (PDF), ACCS interim report and ACCS (PDF-3MB, 828KB) ACC chief enforcement officers reviews of the two banks were not public, but were released to parliament by the ACCS in June.
The full ACCS report into Bays Bank is due out on December 10.
It includes a number of recommendations, including: making sure banks and other financial institutions are held to the same high standards as other institutions (including the Australian Prudential Regulation Authority)