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Banking royal commission: For Bankwest 'victims', the conspiracy gets bigger

Inquiry rejects BankWest 'ulterior motive' theories Inquiry rejects BankWest 'ulterior motive' theories

The day after the banking royal commission finally nailed the lie that the Commonwealth Bank of Australia maliciously bankrupted Bankwest borrowers, one of the class action litigants against the bank wouldn't let go of the conspiracy theory.

"The royal commission has committed a criminal offence by making that decision without reading a syllable of evidence," northern Sydney property developer Jim Neale said in a phone call. "The bank has got a $20 billion incentive to make sure no one listens to the evidence."

Neale passionately believes that the banking system is stacked against honest businessmen like himself. In Bankwest's case, he and other borrowers  developed a theory that the Commonwealth Bank sent good construction projects bankrupt to drive down the purchase price of Bankwest in 2008.

They found a powerful political ally in Philip Ruddock, an MP from Sydney's northern suburbs who served as federal attorney-general from 2003 to 2007. Ruddock became a behind-the-scenes champion of the complaints, which were led by three property developers who happened to presidents of Liberal Party branches in Ruddock's electorate.


Bankwest bank branch in Brisbane in 2016. Glenn Hunt

Constructive default theory

When a parliamentary inquiry couldn't stack up the "constructive default" theory, Ruddock convinced the Coalition government to accept another. Even the inquiry chairman, Liberal Senator David Fawcett, didn't know about Ruddock's political connection to some of the witnesses.

The inquiry became a platform for Bankwest borrowers to unleash, sometimes in personal terms, their anger and frustration on to top Commonwealth Bank executives.

"The big question is: did the CBA deliberately default loans in order to reduce the purchase price it paid for Bankwest?" developer and Liberal branch president Peter McNamee told the inquiry. "The answer to this has to be yes."

Portraying himself as an impartial bystander, Ruddock said during McNamee's evidence that "it appears to suggest that there has been a degree of manipulation".

Former Attorney-General Philip Ruddock with BankWest borrower Yves El Khoury, in white, on a boat cruise to celebrate the anniversary of his parliamentary service. Facebook

Manipulation of the political system

The real manipulation may have been of the political system. After Fawcett's inquiry failed to accept there was a conspiracy against the Bankwest borrowers, Small Business Ombudsman Kate Carnell was asked to examine their complaints.

Even Carnell, who had slammed the Commonwealth Bank on 60 Minutes in a separate but remarkably similar case, didn't accept the case that the bank engaged in constructive defaults.

With the economy on the brink of recession in 2008 and property prices falling, the Commonwealth Bank assessed the loans and decided it didn't want to risk more money on apartments, nursing homes, hotels and other developments. There has been no legal determination that the bank did anything unlawful, although the borrowers would passionately argue that if it didn't, the law is wrong.

Even though he is out of Parliament, Ruddock's political career is thriving. Alex Ellinghausen

In reality, Bankwest became an endless argument about use of market power and ethical business practices. Seeking compensation, the property developers had little or no incentive to give up.

The bank, which felt it had behaved professionally under difficult circumstances, was determined not to succumb to what it saw as political blackmail.

Conspiracy extension

Staff at the banking royal commission examined 67 Bankwest cases and found all were already in deep financial strife when the Commonwealth Bank cut off credit.

"He couldn't have put it better really," a spokesman said. David Rowe

After one of the royal commission's barristers, Michael Hodge, on Monday said there hadn't been a campaign to get Bankwest more cheaply by sending borrowers broke, managers at the bank felt vindicated by the rare good news out of the inquiry. "He couldn't have put it better really," a spokesman said.

The Bankwest "victims" have yearned to tell their stories at the royal commission, which has had a powerful effect on public opinion. Now rebuffed, they suggest the inquiry has been drawn into the same conspiracy that let the Commonwealth Bank off.

"I was asked to answer questions by the royal commission and only given 400 words to answer," Neale said. "How can they make a decision when they haven't seen all the evidence?"

"They have shut the two motivations down but the elephant in the room is that something clearly went on, whatever it is," said another Bankwest agitator, Rory O'Brien. "Too many people have been screaming for too long and are not going away until it's resolved."

For his part, Ruddock doesn't accept he did anything wrong, and he isn't backing down on his "manipulation" accusation of three years ago. Alex Ellinghausen

Not backing down

For his part, Ruddock doesn't accept he did anything wrong, and he isn't backing down on his "manipulation" accusation of three years ago.

"Any suggestion that there were [ulterior] motives involved would be quite flawed," he said. "When people come to me – friend or foe – if they have got a just case I would always look at it.

"It is very very clear that in relation to the loan book at Bankwest there were people whose loans were impaired when they were meeting their obligations, paying when required to pay and were constructing buildings that could be sold at a profit and the bank paid back.

"The people were in my view treated very unjustly."

Even though he is out of Parliament, Ruddock's political career is thriving. The 75-year-old is president of the NSW Liberal Party and mayor of the city of Hornsby, the municipality where some of those Bankwest borrowers worked and lived.

with James Eyers
This article was first published by
Author: Aaron Patrick
Last modified onWednesday, 30 May 2018 21:21

1 comment

  • Evan Jones
    Evan Jones Thursday, 24 May 2018 02:45 Comment Link

    This article is a scandal. The Fin has fallen to the standards of the gutter press. Words like ‘lies’ and ‘conspiracy theory’ have no place in a detached reporter’s repertoire.
    Two Parliamentary inquiries failed to pin the CBA default of almost 1000 Bankwest victims on the purchase agreement or on capital ratio imperatives because such Inquiries have no powers to subpoena records.
    The article is also defamatory towards Philip Ruddock. I have no time for Ruddock, but here he is representing his bank victim constituents, unlike other MPs. At the inquiry concerned (Impairment of Customer Loans) Ruddock was the model of caution, undesirably so.
    This large scale default was a scam on a grand scale.
    Customer assets did not fall precipitously post GFC as the bank claims. Valuers corruptly devalued customer assets.


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