The
Industry
Carmen Walter sought assistance from the banking industry organisations
that field complaints from customers.
* Terry Boocock, Case Officer,
Australian Banking Industry Ombudsman
(the industry funded scheme that brings a self-regulating dimension to
bank-customer conflicts), replied on 23 May 2001 to a Walter letter and
telephone call of mid-April:
The Banking Ombudsman Scheme provides an alternative and independent
dispute resolution service for customers with relatively small claims
against a bank. The upper limit for any claim is $150,000. …
Based on the information you have provided, it appears you are claiming
for the difference between your valuation of the property on 31 May 1999
at $3.3 million and the amount achieved by the Receiver’s sale of $1
million. This difference of $2.3 million would mean that the Ombudsman
cannot consider your complaint.
I note from your correspondence that the family has commenced a Supreme
Court action and this office considers that such a forum is the
appropriate place to consider the issues you have raise. Accordingly
your file with this office has been closed.
In
October 2002 Ms Walter, as a self-litigant, also sought legal assistance
from the Melbourne office of the Public Interest Law Clearing House, a
body funded by the legal profession to provide pro bono advice. PILCH, via
Ms Natalie Bugalski, initially feigned interest, but then rejected the
Walter request without explanation.
* Natalie Bugalski, secondee solicitor,
Public Interest Law Clearing House,
confirmed an adverse decision to assist Ms Walter, in a letter of 22
November.
While the negative experiences that you have had in relation to your
dealings with the major Banks [EJ: no; specifically the National
Australia Bank] appear to have been shared by others, it would be
difficult to refer your matter to one of our member law firms as a
‘public interest matter’ as the term is defined by PILCH and the
pro bono
schemes of some of our members.
By
contrast, the Sydney office of PILCH has facilitated pro bono advice to
small business bank victims. Ms Bugalski pointed Ms Walter to the Banking
Ombudsman, the Consumer Credit Legal Service, the Consumer Law Centre, the
Victorian Bar Legal Assistance Scheme and the Law Institute Legal
Assistance Scheme. Ms Bugalski would or should already have known that the
first three bodies do not assist business litigants. The latter two
schemes were both administered out of the PILCH offices.
Carmen Walter’s attempt to seek legal assistance proved to be a
time-wasting diversion.17
The
Federal Authorities
Carmen Walter also wrote to various federal authorities seeking assistance
in her fight with the National Australia Bank over foreclosure of the
Walter family business. Excerpts from that correspondence are reproduced
below.
On
17 April 2001, Ms Walter wrote to the Australian Competition and Consumer
Commission seeking assistance.
* Anusha Kangatharan, Senior Investigator,
Australian Competition & Consumer Commission,
replied on 24 April.
Under Part V of the Trade Practices Act 1974 (“the Act”) businesses are
prohibited from engaging in misleading or deceptive conduct. Thus, in
the present case, based upon the information you have provided the
conduct in question may raise concerns under section 52 of the Act.
However, the Australian Competition and Consumer Commission (“the
Commission”) is unable to pursue all matters that are brought to its
attention. Its efforts are aimed more towards achieving compliance with
the Act for the benefit of the public as a whole, than towards achieving
resolution of particular complaints. The Commission’s selection criteria
for matters which it will pursue include the following;
(i) an apparent blatant disregard of the law;
17
It is a coincidence that the PILCH Board President is David Krasnostein,
Chief General Counsel of the NAB.
(ii) significant public detriment;
(iii) the potential for action to have a worthwhile educative or
deterrent effect;
(iv) a significant new market issue; or
(v) an opportunity to test the reach of the Act in appropriate
circumstances.
Furthermore, the Commission does not as a matter of policy become
involved in matters where private legal action has been taken.
Accordingly, I regret to advise that the issue you raise is not one this
office can pursue.
As
the ACCC has been a regular recipient of correspondence from bank
borrowers seeking assistance, it is arguable that there is no more worthy
arena deserving of the ACCC’s resources that would be directed ‘towards
achieving compliance with the Act for the benefit of the public as whole’.
Moreover, most of the criteria listed fit closely the circumstances
complained of by aggrieved borrowers.
In
particular, the Walter case (and others involving the NAB) would have been
ideal to test ‘the reach’ of section 51AC, included in the amended Act in
1998 to extend the coverage of the ‘unconscionable conduct’ provision.
Curiously, Kangatharan does not mention section 51AC as being relevant to
the Walter inquiry.
* Andrew Lumsden, Chief of Staff, Office of the Hon. Joe Hockey,
Minister for Financial Services & Regulation
[Junior Minister to the Treasurer] replied to a Walter letter on 12 June
2001.
The Government encourages financial institutions to be sympathetic and
responsive to small business customers such as yourself as this is
crucial to growth in this vital sector of the economy. However it would
not be appropriate for the government of the day to intervene in private
commercial arrangements between financial institutions and their
customers. The general operation of these institutions, the policies
they adopt and the decisions they take are properly matters for the
management of the particular institution.
As the dispute is the subject of legal action between yourselves and the
NAB, it would be inappropriate to offer detailed comments on the merits
of your case.
PS You might also want to take this matter up with the ACCC. See the
attached press release.
[The press release referred to a minor success of the ACCC against the NAB
with respect to NAB duplicity over a personal guarantee arrangement – that
of Tasmanian Kathryn Ashton as guarantor of securities over husband’s
business (Australian Competition & Consumer Commission, 2001).]
Carmen Walter wrote again to the ACCC, care of Mrs Kangatharan, on 9 July
2001. The essence of the letter was that, if the ACCC could not intervene
in the Walter case, ‘we would expect the responsible government bodies to
take action outside our personal case to prevent matters as ours in future
(sic)’. The ACCC did not reply to this letter. A follow up letter from Ms
Walter on 13 August 2001 met with a similar silence.
On
13 August 2001, Carmen Walter wrote to the Australian Securities and
Investments Commission, seeking assistance.
* Megan Cassidy, Complaints Management Program,
ASIC,
replied on 27 August.
ASIC has conducted an assessment of the issues that you have raised, and
made further inquiries, and has decided not to take action in relation
to your complaint. … Your complaint does not appear to concern a breach
of any of the laws administered by ASIC. … ASIC will not be able to
assist you further in connection with your complaint.
The creation of ASIC (out of the Australian Securities Commission) and the
amendment of its Act in 1998 had led to the responsibility for
unconscionable conduct with respect to financial transactions being given
to ASIC (the new Section 12). When ASIC acquired responsibility for
business to business
unconscionable conduct is unclear, with contradictory claims.18
However, by August 2001, ASIC had certainly acquired legislative authority
for this domain. Given ASIC’s enhanced responsibilities, Ms Cassidy has
been slightly less than honest in her reply, indeed one might say
duplicitous.
18
The
issue is clouded because the authorities for some time implicitly
incorporated ‘small business’ within a generic ‘customer of financial
services’ category centred on retail customers. An ACCC document has the
assumption of responsibility occurring on 1 July 1998, following the 1998
Act that created ASIC (Australian Competition & Consumer Commission, 2004:
38). An ASIC spokesperson has the assumption of responsibility occurring
on 11 March 2002, following the 2001 amendment to the ASIC Act (Tanzer,
2004).
* David Lane, ACTRO Business Centre,
Department of Immigration and Multicultural Affairs,
wrote to Fritz Walter on 22 July 2003:
Notice of Intention to Cancel under Section 116 of the Migration Act
1958 It has come to the Department’s attention that there may be a
ground for cancellation of your visa under section 116(1)(a) of the
Migration Act 1958
…It has come to the attention of DIMIA that the business is no longer
operating
…
You must provide your response in writing by 7 August 2003. If you do
not respond within that time, a decision on whether to cancel your visa
will be made using information already held by the Department.
One is led to ask who contacted DIMIA regarding the status of the Walter
family’s affairs. Representations were made to DIMIA from those
sympathetic to the Walter family experience; no further action has been
initiated by the Department.
Carmen Walter wrote again to ASIC on 10 August 2004, met with ASIC
personnel on 24 September, and wrote another letter on 8 October.
* Philip Laird, National Complaints Management,
Australian Securities & Investments Commission,
replied on 21 December 2004.
In determining which matters we will select for further action
consideration is given to a range of factors, including the likely
regulatory effect of any available action. …
After careful consideration ASIC has decided that we will not take any
further action into the issues you have raised at this time. …
Although we have decided not to investigate your complaint at this time,
this does not prevent you from pursuing any civil remedies otherwise
available to you.
As
with other aggrieved borrowers, the authorities have signalled to the
Walters that self-help is the only solution to their dilemma. Unlike the
August 2001 Cassidy letter, Laird does not deny coverage; rather, with
masterly obfuscation he notes merely that his organisation has declined to
consider her case (we can assume that ‘After careful consideration’ is a
bald-faced lie). The state of relevant federal law and regulatory culture
will be re-visited below.
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9
History of Banking Fraud:
The Coming Battle
