BENDIGO and Adelaide Bank will be ordered to appear before a Senate committee to explain its behaviour towards thousands of investors who put $1.8 billion into the failed Great Southern managed investment scheme.
Labor senator Sam Dastyari said he would summon executives of Bendigo and Adelaide Bank to front the committee into forestry managed investment schemes within the next week, after accusing the bank of “negligence or complicity”.
The decision follows reports in The Australian on Tuesday that thousands of small investors stand to lose homes or be bankrupted under a settlement between some investors, former directors, liquidators and the Bendigo and Adelaide Bank set to go before the Victorian Supreme Court on October 28, with almost $400 million still owed.
Senator Dastyari, who is chair of the Senate Committee into forestry managed investment schemes, said he had been inundated with complaints about Bendigo and Adelaide Bank and its debt demands on investors.
In many cases they were being asked to pay three or four times their initial investment in Great Southern because of interest and exit fees.
“Unfortunately what we have seen in Great Southern is not an isolated incident, but it is increasingly part of a pattern ... I think it’s time the behaviour of Bendigo and Adelaide Bank was called into question,” Senator Dastyari told The Australian.
Senator Dastyari said he believed the behaviour by the bank was “unconscionable”, especially given the scheme was facilitated by financial adviser practices and corporate structures now deemed illegal.
“I believe we also have to be asking a higher test; that is, how is it acceptable that we are allowing a handful of banks to profit from behaviour that we now deem illegal?” Senator Dastyari said.
He added that he thought the banks either knew the state of Great Southern — described by investors as a Ponzi scheme — before becoming involved, or they were not exercising due caution for shareholders.
“The question has to be this: either the banks were not aware what was going on in places like Great Southern … or they were completely aware of what was going on when they became involved,” he said.
“Frankly, both of those outcomes result in questionable banking behaviour.
“On the face of it, it would appear it is negligence or complicity.”
Notices would be sent to Bendigo and Adelaide Bank next week informing them of the need to appear, with the committee hearings to take place as soon as practically possible, given the urgency of many debtors’ situations.
So far the committee has been focusing on the collapse of forestry managed investment scheme Timbercorp. However, after being overwhelmed with investors’ stories the committee will now turn its sights on Great Southern and the role the bank played.
Liberal senator Bill Heffernan also called for a full parliamentary inquiry into the issue, similar to the recent inquiry into the behaviour of Commonwealth Bank financial planners.
Bendigo and Adelaide Bank is not commenting, saying the matter as it is still before the courts.Author: Leo Shanahan
Source: The Australian