Fraud and misconduct connected to National Australia Bank's 'introducer program' is the first case investigated by the financial services royal commission.
A syndicate of National Australia Bank employees took $2800 bribes for fraudulent home loans with the money exchanged in white envelopes passed over the counter, a royal commission has heard.
The group made up fake payslips, IDs and Medicare cards, a whistleblower told the bank in late 2015.
The syndicate involved 11 people, six of them branch managers, across a number of branches in western Sydney, the financial services royal commission heard as part of its investigation into fraud and misconduct involving NAB's 'introducer program'.
"They charged $2800 bribery for each customer for home loans mainly but also personal loans," senior counsel assisting the commission Rowena Orr QC said on Tuesday, reading from an internal NAB email.
The whistleblower said staff were being promoted on the basis of home loans as they appeared to be "smashing their targets", but some of it was false.
Ms Orr said the whistleblower claimed one customer was told they could borrow $800,000 when the valuation was only $450,000.
"The whistleblower said the money exchanges hands in cash in white envelopes, usually over the counter.
"Money is deposited at CBA so NAB can't detect the deposits. Happening on a daily or weekly basis and has been happening for a number of years."
The commission heard NAB sacked five bankers in November 2015, including one who was the subject of concerns raised by another whistleblower in April that year.
The matter was not reported to the Australian Securities and Investments Commission until December 2015, outside the required 10 days.
"NAB knew enough to sack five employees for dishonesty and for conflict of interest, is that right?" Commissioner Kenneth Hayne QC said to senior NAB executive Anthony Waldron.
"It knew enough by November to sack people for those reasons. Are you telling me it didn't know enough to tell ASIC that there was a problem?"
Mr Waldron, NAB's executive general manager of broker relationships, said he was not directly involved with the assessment and did not know why the decisions were made.
Ms Orr said 60 bankers including branch managers were involved in varied levels of misconduct connected to NAB's introducer program, which pays commissions to people outside the bank such as financial planners and accountants for successful lending referrals.
It included falsified loan documents, dishonestly putting customer signatures on forms approving introducers' commissions and the provision of unsuitable loans.
Ms Orr said the introducer program was extremely profitable for NAB during the period when the misconduct occurred, bringing in more than $24 billion in home loans from 2013 to 2016.
Twenty bankers were sacked or resigned while others were reprimanded.
Mr Waldron said the number of home loans that may have been submitted without accurate information and documentation was believed to be less than 2480.
NAB CEO Andrew Thorburn said the bank had made extensive changes to the introducer program but what occurred was regrettable and unacceptable.
"They should not have happened in the first place, and they show that we haven't always done right by our customers or treated the community with respect," he said in a statement.This article was first published by https://www.news.com.au/
Author: Megan Neil - Australian Associated Press