Audit The Big 4 Banks

The government should direct the Auditor-General to conduct an independent audit of Australia’s Big Four banks, in light of the collapsing property bubble to which the major banks are massively exposed.

Presently the banks are not independently audited. There is an even bigger “Big Four” that sign off on the banks’ books, the Big Four global accounting firms, an accounting cartel which audits 98 per cent of the world’s largest banks and corporations, and actively covers up the fraud and dodgy bookkeeping that has become the defining feature of the global financial system. The four firms are PricewaterhouseCoopers (PwC), Ernst and Young (EY), KPMG, and Deloitte.

An explosive new report commissioned by the UK Labour Party’s shadow chancellor of the exchequer, John McDonnell, called Reforming the Auditing Industry, exposes the Big Four accounting firms as complicit in the crimes of banks and big corporations. These Big Four are supposed to conduct the independent audits of companies mandated by law, but they make two-thirds of their tens of billions in revenue from consultancy services to those same corporations. The banks that triggered the 2008 crash in London and on Wall Street had all received clean bills of health from Big Four auditors—some, like Northern Rock in the UK, just days before they collapsed. The report also documents a “parade of scandals” involving UK and multinational corporations which have collapsed after being looted by their management and major shareholders, robbing employees, pension funds and small creditors of enormous sums of money owed to them. In every case, the Big Four firms covered up the looting. And the Big Four firms have captured governments and regulators, the most glaring example being their influence over tax laws, which they help to write so that they can help their corporate and super-rich clients avoid paying them.

(Click here to read the full report, Reforming the Auditing Industry http://visar.csustan.edu/aaba/LabourPolicymaking-AuditingReformsDec2018.pdf. For a summary of the report click here to read a two-page article in the 16 January 2019 issue of the CEC’s Australian Alert Service, “Criminal masterminds: the real Big Four” “Criminal masterminds: the real Big Four”,http://cecaust.com.au/aas/AASVol21No03_real-big-four.pdf, by Robert Barwick.)

The report calls for the establishment of a statutory (public) auditor, to conduct truly independent and honest audits of all financial companies and the largest corporations, to which the regulators would have complete access. It also calls for the Big Four and all accounting firms to be broken up, to end the conflict of interest of firms that audit companies also providing consultancy services.

Independently audit Australia’s banks!

The Big Four global accounting firms also dominate Australia’s financial system. Most worryingly, PwC audits CBA and Westpac, EY audits NAB, and KPMG audits ANZ. Given their track record laid bare in Reforming the Auditing Industry, the Australian government and public can have no confidence in the Big Four auditors’ reports of Australia’s Big Four banks. Last year’s banking royal commission has already shredded confidence in the major banks, proving that they are not the best banks in the world as was claimed. It’s a small step to go from lying about their behaviour to lying about their financial position, assisted by their corrupt auditors. As the four major banks control 80 per cent of the banking system, and each have over 60 per cent of their assets concentrated in mortgages, with house prices plunging the government must direct the Auditor-General to conduct independent audits of each of the Big Four, to ascertain their true financial position and the level of risk facing the Australian economy.

Such audits would also expose more details of the criminality of the Big Four global accounting firms in Australia. On 29 November 2017, the Greens and the National Party agreed to include the Big Four auditors in their terms of reference for a banking royal commission to investigate; the next day, 30 November, a panicked then-Prime Minister Malcolm Turnbull hurriedly called the royal commission with different terms of reference, approved by the banks, in which the Big Four accountants were not included.

Conducting audits of the private banks was once a standard function of the Auditor-General. It was recommended in the report of the 1937 Banking Royal Commission, and first legislated in the 1945 Banking Act, and reaffirmed in the 1953 and 1959 Banking Acts. It remained a function of the Auditor-General until the establishment of the Australian Prudential Regulation Authority (APRA) in 1998, when the Financial Sector Reform (Amendments and Transitional Provisions) Act amended the 1959 Banking Act to allow APRA to appoint any firm to audit the banks. And which auditors has the failed and discredited regulator APRA chosen to use? You guessed it—the Big Four.

The reason the 1937 Banking Royal Commission report recommended the Auditor-General regularly audit the private banks was so the government bank, the Commonwealth Bank, would know if it needed to take over a failing private bank to protect its deposits, by either fixing up the private bank or closing it down and taking over its customers. Australia must face the reality of likely banking failures today: Australia’s banks are more exposed to the collapsing housing bubble than their US, UK, Irish and Spanish counterparts were in 2008, when they were wiped out in large numbers. No other banks in the world have come close to having 60 per cent of their loans in mortgages; before their crashes, US and UK interest-only lending peaked at 25 and 18 per cent respectively of all mortgages, compared with almost 50 per cent in Australia in 2016; and Australia’s household debt at 190 per cent of household income is much higher than in those other countries in 2008.

The Citizens Electoral Council has issued a five-point program for Australia to survive economic catastrophe, which includes a call for a moratorium on home and family farm foreclosures, to stop the banks from executing a US-style mass-eviction of homeowners in a housing crash. The policy would require the government to take the measures recommended by the 1937 Banking Royal Commission and know if it needs to take over the banks to protect the public’s deposits, and either reorganise them or shut them down. Accurate audits of their books are therefore essential.

Demand your MP support independent audits of the Big Four banks!

Forward this release to your local MP and Senators with the message that they must demand an independent audit of the banks. (Follow up with a phone call to make sure they received it.)

Labor MPs especially should be challenged: with the ALP expected to win the election this year, will they follow the lead of their UK counterparts and take on the real Big Four, or will they let this global criminal racket go untouched?

Banksters Fleecing and Threatening

Banksters Fleecing and Threatening

The Big Four banks have bluntly rejected Commissioner Kenneth Hayne’s mooted changes, in their virtually identical submissions to the banking royal commission’s Interim Report. We should assume that not only were their submissions probably coordinated with each other, they were also cc’d to the Morrison government, as a week later Morrison and Frydenberg reappointed APRA chairman Wayne Byres eight months early to ensure there would be no major changes imposed on the banks.

Hopefully Commissioner Hayne sees through these manoeuvres, but even if he does and recommends sweeping changes, there is no obligation on the government to implement them.

The ball is actually in the Australian Labor Party’s court, which is on track to be the next government: what will it do, to put the banks in their place and ensure Hayne’s inquiry can lead to real changes? Their support for Byres’ reappointment, albeit while questioning the timing, is not a good sign–there is a huge question mark hanging over Byres and APRA from the revelations of the royal commission.

The 8 November Australian Financial Review reported:

Banks hit back at Hayne’s interim report ideas
The big four banks have launched a strident defence of vertical integration, lending benchmarks and executive bonuses.
by James Frost

The big four banks have launched a strident defence of vertical integration, lending benchmarks and executive bonuses in a direct challenge to a series of radical and probing questions posed by Commissioner Kenneth Hayne.

The banks have baulked at suggestions that current practices are in breach of their legal obligations or in conflict with the best interests of customers…

[The banks resorted to threats:]

Commonwealth Bank in its submission has warned the royal commission to tread carefully with its final recommendations around lending or risk a massive transfer of responsibility from borrowers to lenders.

The banks have also pushed back on suggestions that would tilt the playing field too far towards the favour of customers [shock, horror!], warning of higher costs and reduced services.

NAB has warned of higher costs for financial services companies if Hayne was to proceed with a recommendation for structural separation, seeing many Australians priced out of financial advice altogether.

[What conflict of interest?]

Westpac, one of the few banks to push ahead with the vertically integrated model in which banks offer transactional and investment products, argued that conflicts occur everywhere and do not “arise from the structural features of a business”.

http://www.cecaust.com.au/releases/2018_11_09_Banks_Tell_Royal_Commission.html

Say No To TPP II

The National Union of Workers posted on Facebook:

The Trans-Pacific Partnership trade agreement (TPP) has passed its first hurdle in parliament with the Federal Labor Party giving their support in the lower house last week.

The National Union of Workers is deeply concerned about the effects this legislation will have on workers and on our democracy if passed.

Twelve countries signed up to the TPP in February 2016, representing roughly 40% of the world’s economic output. The deal was designed to create a single trading zone, like the EU, to allow goods and information to be passed between countries more freely. The claim was that opening up trade borders would create more jobs.

However, TPP is a deal that puts the profit of large corporations before the safety and security of workers. It would intensify competition between different countries’ labour forces and undermine job security and pay rates for working people in Australia.
It would pave the way for companies to sue governments that change their policy in areas like health, education and worker’s rights. TPP would also make it harder for a government to favour state-provided services over the involvement of private companies.

In short, the TPP begins a process to undermine the social protections for all citizens while big business makes bigger profits and pays less tax.

The NUW has raised concerns around the ratification of TPP in the past and, like many in our movement, are deeply disappointed that this anti-worker legislation is back on the table. It should not be possible for a private company to sue our government for making choices that improve the lives of people in this country.

In the interests of every Australian the ALP must reconsider their support of TPP, rejecting it when it reaches the Senate – the promise of extra protections when in power does not negate the damage this bill will cause to whole communities in Australia.

One commenter wrote, “This is Shorten at his best. Labor stopped being for the worker years ago.”

Another wrote, “Why do people think Labour is any different to the Libs? All work for the same Corporation folks….”

Extend Banking Royal Commission Petition

Banking is an integral part of everyone’s life. Australians all depend on a fair and accessible banking system. A criminal finance sector affects each of us regardless of how much money we may have in the bank.

Public revelations, investigative journalism and the Royal Commission to date have identified bankers involved in; fraud, forgery, money laundering, rate rigging, drug trafficking, dealing with terrorism funds, superannuation rip-offs, financial planning abuses, and insurance scandals. Unfortunately, this is just the tip of the iceberg.

Bankers prefer us in debt, our children in debt and our governments in debt. This affects everyone`s quality of life – cost of living pressure, mortgage stress and a sub-optimal retirement. We need meaningful reforms now.

Rather than providing a relatively simple service of utility to the people and country, the banks – with government blessing – are putting profits and power ahead of the country’s interests.

Commissioner Hayne has the option to ask for more powers and time. We need to make our voices heard to help him make that decision.

The Turnbull Government refused to initiate a Banking Royal Commission until the banks authorised their preferred limited inquiry. The aim appeared to be a short inquiry to be done and dusted before the next election.

If you want a fair banking system, sign our petition to Extend the Banking Royal Commission now.
Commissioner Hayne along with three or more independent Commissioners must fully expose the crimes and dysfunction plaguing the finance system before he can recommend meaningful reforms that will change the culture and give all Australians a fair go.

<a href=”www.bankreformnow.com.au/petition” target=”_blank” rel=”nofollow”>www.bankreformnow.com.au/petition</a>