A former National Australia Bank branch manager has pleaded guilty to a fraud offence after an investigation found he lied to earn commissions for introducing new customers through a business called "Suit Club".
Mathew Alwan on Tuesday pleaded guilty in the Local Court of NSW to one count of ‘intention to defraud by false or misleading statement’.
An investigation found that over an almost two-year period between 2012 and 2015, Alwan claimed an "introducer" had referred 101 loans. Introducers are people working with the bank finding leads for new loan customers. As a result of the referrals, $186,725 in commissions were paid out by the bank.
The Australian Securities and Investments Commission investigation found that 24 of the 101 loan applications contained false information, and that Alwan was aware that the information was false.
Alwan had admitted to the Australian Securities and Investments Commission that the introducer he claimed had assisted him with providing the loan application leads was his uncle, operating under the business name "Suit Club".
As a result of the fraud involving the 24 applications, NAB paid Suit Club $56,995 in commissions.
Late last year, Alwan was permanently banned from engaging in credit activities or providing financial services by the corporate regulator.
Alwan will be sentenced in October.
NAB reported a cabal of staff to police in 2015 after uncovering the alleged fraud. An internal bank investigation found at least five branch managers in NSW had been allegedly involved in introducer fraud.
NAB and other big banks had been working to stem an increase in so-called liar loans as people went to great lengths to secure a home loan during the property boom.
Analysts at investment bank UBS have estimated that Australia's pool of liar loans could be as big as $500 billion - 30 per cent of the $1.7 trillion home loan market.
A liar loan is a loan that has been issued to a borrower after a bank is supplied with false information about the borrower’s income and employment history. Such an approach means many people who would not otherwise be approved for a loan receive one.
In response to concerns from the royal commission and market watchers, the big four banks have tightened up their lending processes so that more customer information is verified before the bank approves a loan.
In March, NAB said it would be no longer running its introducer program.
“Like other businesses, we will still welcome referrals and will continue to build strong relationships with business and community partners. However, there will be no ‘Introducer’ payments made,” then acting chief executive and chairman designate Phil Chronican said at the time.This article was first published by https://www.smh.com.auAuthor: Sarah Danckert
Sarah Danckert is a business reporter.