Pat Viceconte’s Story
My family was the victim of a predatory loan we signed with Bankwest for $9.7M in July 2008. I had then several businesses: Building and Land development, Livestock Farming, Import and Export of Livestock, and Commercial Property Rentals. I needed the funds to pay out my NAB facilities.
On 14 June 2008, before we went to Bankwest, the Manager Craig Sherman requested me to change the cash flow to show higher sales figures, which Sherman knew were false.
Bankwest approved the funding request on 1 July 2008. The approval was to build a subdivision in Mulwala and refinance the debt with NAB. I understood that Sherman took the file and information with him to Bankwest when he was the Westpac manager.
On 12 February 2010, we were served with a notice of Breach of Covenant by Craig Sherman. The interest cover was not met as they had 2.0 cover, EBIT. I advised Bankwest as they were higher than other banks at 1.5 times the cover. On 18 March, our accountant, Cara Hall, sent a response to show her calculation did not agree with Bank.
Craig Sherman replied asking that any further questions required best be handled by phone. Of the breach notice, we had to sell our land and buildings. We were cooperative and yet the bank continued the pressure to sell properties. There were additional charges for my overdraft, including penalty interest.
On 16 June 2010, we met at the farm with Sherman, his assistant, and Peter Alcock from Western Australia. They wanted to ensure we sold the properties, etc. In August, there was an auction of our farm, but the property was not sold. The stress and pressures continued by the bank, with increasing interest rates and fees.
From June to August 2011, we sold our buildings in Charles Street Launceston which all went to debt reduction. Our business collapsed when we paid out Bankwest in October 2013. All that remained were the Land Development in Mulwala and one commercial building. On 31 October 2013, Bankwest was paid out after we withdrew funds from our super fund.
I filed complaints to Bankwest and Commonwealth Bank’s officers and executives, but I have not received a suitable response yet. I suggest they compounded or concealed these crimes, and they were willing to risk their license.
This is my story and my suffering from dishonest lenders.
In May 2008, Riverland Gardens Development budgets were provided to Craig Sherman as part of my loan application to Bankwest. The budget included 84 lots to be sold from July 2008 to November 2012, and sales totaling several millions of dollars. The profit from 197 lot sales was estimated to be $11.9M. I believe Sherman knew that initial sales would need to be reinvested in further developments, not as repayment of the principal debt. Riverland Gardens’ development increased to 236 lots in 2018.
On 6 June 2008, Sherman and the bank required a 12-month cashflow budget for the 2009 financial year as part of the bank’s credit process. I prepared the consolidated budgets for the 2009 financial year and emailed them to Sherman on 9 June 2008.
My budget had $1.3M in outflows and $1.1M in inflows, but included the proposed Bankwest loan repayments, leaving a cash deficit. Sherman also asked why Alpaca sales declined from $1.9M in 2006 to $834,000 in 2007. On 13 June 2008, Sherman, when reviewing my forecasts, asked me to change the cash flow to show a better result.
On 8 October 2008, Commonwealth Bank of Australia Limited (“CBA”) acquired Bankwest, and on 7 November 2008, our Bankwest Loans drawn-down was $10.1M. On 12 February 2010, Sherman emailed me in relation to Bankwest’s credit review. He said, “you have met all commitments when due on all Bankwest borrowing arrangements to date”.
On 24 February 2010, Cara Hall, of Richmond Sinnott & Delahunty Chartered Accountants, wrote to me regarding our December 2009 interim reports. As per her calculations, the ICR was above 2.00 for the 2009 financial year and the 6 months to 31 December 2009. I attempted to explain quarterly ICR covenants were inappropriate for primary production and property development, as income fluctuates over a 12-month period. Taking a short 3-month period is not a suitable sample reflecting profits with a long-term business or development. I noted that the Westpac offer did not include an ICR covenant.
Bankwest forced me to sell valuable property and buildings, which was distressing, especially the Farm, which was listed for $13.3M.
On 16 June 2010, I met with Sherman and his assistant, and Peter Alcock (“Alcock”) from Bankwest. The bank was only interested in the sale of my properties, rather than trying to work with me and discuss alternative strategies to mitigate current cashflow issues. The Bankwest experts applied significant pressure: increasing interest rates and fees, which were unjust and harsh compared to previous loan commitments.
On 23 June 2010, our borrowing limit was $10M, down from $10.12M. Among special conditions, Bankwest required our monthly Mulwala (Riverland Gardens Development) sales to reduce the principal debt. In August, the Farm was passed up at auction.
In October 2010, I had a meeting with Sherman and Alcock in relation to their introducing a possible buyer of the Farm. The potential buyer was Trevor Delroy, a horse trainer from Perth. He inspected the Farm with a Romsey real estate agent. He then inspected it again with Gisborne real estate agent John Keating.
Among other financial and non-financial undertakings, Bankwest listed a Special Undertaking if there were no Lancefield property sales by 30 June 2011, with a revaluation of the properties to be instructed. Further, Special Undertaking by 15 May 2011 stated that if Joint Venture (JV) did not enter the Riverland Gardens Development and sale of Lancefield properties, the interest margin would increase by 0.5% pa on all facilities. Bankwest created these Special Conditions knowing that I would not be able to meet them within the short one-month timeframe.
On 27 June 2011, 66-68 Charles Street was settled for $743,485, with $739,841.44 being paid to reduce Bankwest’s debt. On 17 August, 76 Charles Street was settled to reduce Bankwest’s debt and the bank required 100% of the proceeds from the sale to reduce principal debt.
In October 2013, the Farm settled for $5.2M, and Bankwest was paid out in full, but I had to withdraw $370,000 from superannuation to repay the debt. With the sale of the Farm, I lost future income from the Farm and its Quarantine Stations. I believe the Farm was undersold, as it was originally listed for $13.3M.
On 6 November 2013, the principal of $6.5M on the Bankwest Flexi-Protect loan was repaid, and on 2 April 2014, I filed a complaint with Financial Ombudsman Service (FOS), but my allegations were not investigated.
In December 2021, I filed complaints with Australian Financial Complaints Authority (AFCA). AFCA advised that the complaint was outside its jurisdiction. Since January 2022, I have written to Commonwealth Bank’s officers and executives requesting the events outlined in my complaints be reviewed and investigated. There has been no response yet.
On 14 July 2022, I sent Catherine Livingstone and Matt Comyn a copy of my financial loss report, but neither provided a response within 21 or 45 days. It meant that under clause 35 in the 2004 Code, Commonwealth Bank and Bankwest cannot challenge my report.
I have evidence of the bank’s misconduct, including:
- providing me with predatory or pure-asset loans,
- manipulating cash flow budgets to meet serviceability requirements,
- misleading by way of not disclosing clear contract terms and conditions,
- creating debt facility breaches by way of not being a prudent and diligent lender and overall incompetence due to a lack of understanding of the overall group structure,
- applying undue pressure on me to sell assets for which I had no intention of selling,
- breaching the loan contracts by withholding documents pertinent to the bank’s rights,
- not acting in good faith or ethically by way of increasing interest margins and charging excessive fees, and
- causing material financial losses and irreparable reputational damage.
In July 2022, I filed complaints with ASIC Deputy Chair, Sarah Court, and its Chair, Joseph Longo, and later with APRA Chair, Wayne Byres. I suggested:
Small businesses and farmers in all states of Australia, like me, were damaged by the Bankwest and Commonwealth Bank’s decision to adopt the 2004 Code without including ASIC Regulatory Guide 165 (2001) in clause 35.1(b).
I believe customers like me who signed loan contracts with these two banks believe that by omitting this regulatory guide from the 2004 Code, the banks had a clear intent to commit a crime.
On 28 August 2022, I wrote to ASIC Commissioner, Sean Hughes, because he was the regulator’s most respected executive. I noted:
My family and I were victims of predatory loans . . .
Our cash flows and tax returns submitted to Bankwest and Commonwealth Bank demonstrated that we could not support the borrowings at that time.
However, the loans were supplied because of the noted strength of our assets. After 14 months we were served with a notice of default, albeit our financial position had not changed. Soon thereafter interest rates, margins and fees all increased dramatically. Our farm [was then] sold to a related Bankwest client.
The one property that gave reason for the bank to withdraw its loans, has saved us and has shown that if the bank had followed the 2004 Bank Code and provided, negotiations with reasonable time frames we would not have needed to sell any of our assets.
We have lost $19.9M as found by a Forensic Accountant . . .
This complaint has previously been lodged with ASIC and no follow-up, other than the ID number provided, to date.
With the new cabinet and proposed Integrity Commission, I was concerned that customers who suffered damages as a result of Australia’s greatest crime may not be heard. The small businesses and farmers who met at Parliament House in 2018 would also have been concerned if the National Anti-Corruption Commission (NACC) was transferred to the Secret National Anti-Corruption Commission (SNACC).