The shock allegations that a key executive from the inner sanctum of the National Australia Bank has been defrauding the bank for years, is hugely embarrassing but it’s not one for the royal commission. If proven it’s straight out theft.
It is not a result of the bank behaving badly - indeed in this case the bank is allegedly the victim of Rosemary Rogers, who was involved in defrauding NAB of millions of dollars.
If the bank is culpable to any extent, it would be that its chief executive Andrew Thorburn misjudged her character and gave her too much autonomy.
In Thorburn's defence, Rogers had worked as chief of staff for the previous two chief executives, Cameron Clyne and John Stewart.
As is so often the case the bank became aware of the alleged contract kickbacks Rogers received only after it was brought to its attention by a whistleblower last December.
Having been immediately called back from holiday leave she promptly left the company.
In his note to NAB’s leadership team at that time, Thorburn said a “lapse of judgment” was the trigger for Rogers’ departure, according to media reports.
Detectives raided properties in Sydney over allegations an NAB employee obtained commissions for approving over-inflated invoices to an executive events firm.
But NAB started an investigation and within a few months this ‘lapse’ had been reported to police who this week raided Rogers’ home.
No charges have been laid.
It is claimed Rogers teamed up with an events management contractor, Human Group. The bank was allegedly overcharged for the contractor’s services and Rogers allegedly received kickbacks. Human’s offices have also been raided as has a storage facility in Sydney’s Moorebank.
Thorburn, who referred to the alleged scam as a breach of trust, is clearly shaken in large part because it has been perpetrated right under his nose. He described Rogers as a person with whom he "had a longstanding personal relationship".
Over recent weeks the bank royal commission has heard of poor risk controls at NAB and a fraud ring that was operating in the Western Sydney region. Clearly those involved in that scam were operating a long way from the head office at branch level.
The brand of fraud, which is the subject of this week’s headlines, is anything but unusual particularly among large complex companies. And it’s undoubtedly underreported.
Earlier this year police established Strike Force Napthali to investigate allegations of corrupt commissions being paid for contracts - the NAB raids were executed by this group.
In a lesser publicised case before the courts this week a similar brand of fraud was being adjudicated.
This time it was the Commonwealth Bank and it was in the information technology division.
The court heard that Jon Waldron, who was CBA's IT general manager at the time, and the bank's executive general manager who cannot be named for legal reasons, used CBA funds to purchase $10.5 million worth of software called McAfee and Pivotal from US-based software company ServiceMesh. Both software products were allegedly unnecessary for the bank.
Former CBA executive Jon Waldron.
At the time this came to light in 2015 Waldron and another more senior IT executive allegedly amassed millions in kickbacks in return for awarding CBA technology contracts to the US cloud services company.
Both executives were sacked by the bank and one, who can't be named for legal reasons, who was charged in 2015, was effectively second-in-command to the head of IT – one of the most important and high-profile jobs in the bank.
The court also heard that Waldron and his colleague allegedly split the $10.5 million payment into smaller transactions of less than $1 million each, so that it could be signed off by the executive general manager and bypass the ordinary processes at CBA, including sign-off by the then chief executive, according to reports.
Clearly the alleged perpetrators had taken serious steps to remain undetected.
But in neither NAB or CBA’s case does this mitigate the embarrassment of senior trusted executives allegedly successfully scamming their employers over protracted periods.
As Thorburn said on Wednesday - the amounts are not material but it’s material to the bank’s reputation.This article was first published by https://www.smh.com.au/
Author: Elizabeth Knight - Elizabeth Knight comments on companies, markets and the economy.