In a landmark case for corruption and criminal activity, representatives from major worldwide banks Citigroup and Deutsche Bank have appeared in Australian court to explain alleged criminal cartel activity that enabled the laundering of $3bn AUS in stock.
The issue in question revolves around a stock sale back in 2015. Earlier this year, Australian authorities filed charges against the two banks in question as well as Australia and New Zealand (ANZ) Banking Group and several senior bankers involved with the sale.
With the subsequent trading activity following the sale under scrutiny, the courtroom was full as many lawyers watched to get a feeling of how this landmark case could affect the business of underwriting. The case could also lead to a knock-on effect of other countries around the world stepping in and analyzing past business transactions, with increased regulatory procedures rumored to be on the horizon.
Australian authorities maintain that those on the dock were complicit in creating a cartel to enable criminal activity, with the purpose of controlling the share price of ANZ or preventing the sale of some shares to create an artificial market value.
The banks were quick to deny any wrongdoing, and JPMorgan, the company that underwrote the actual funding, has not faced charges in any capacity. The company has also yet to comment on the case.
Six executives are also under the spotlight, and these individuals face up to ten years in jail. The banks can expect a fine of up to $10mAUS or may have to increase the benefit of conduct threefold.
The executives in question are from ANZ, Citigroup and Deutsche Bank. Their roles involve Forex and Australian financial markets.
The court has adjourned until early February 2019, while the prosecutors have until December of this year to file their reports.
The Australian Competition and Consumer Commission (ACCC) first raised the alarm regarding these allegations, and the investigation stemmed from there.
None of the banks commented specifically on the court hearing, but a statement from Citigroup referenced an earlier statement about how it had “operated successfully in Australia in this manner for decades.”
Calling this a “highly technical area,” the bank said that “if the ACCC believes there are matters to address, these should be clarified by law or regulation or consultation.”
The executives in question were excused from appearing in court. In their absence, their lawyers asked the prosecution to provide them with a full statement of facts so that they could clarify exactly which charges their clients are facing. None of the bankers involved have commented thus far.
Prosecutor Ruth Higgins said that the defense will not receive these details at the moment, given that there is “no present obligation” and the report is not yet complete. Ahead of the December deadline to submit reports before the courts, it would appear that more data will become part of the proceedings.
This case marks another notable aspect of the current wave of financial misconduct measures reported by regulators as the fallout from the ongoing Royal Commission inquiry continues.