The Unpleasant Truth About Australian Banking

Archer Field’s Story

In 1990, a 99-year lease of Caves House was granted to Jenolan Caves Resort Pty Ltd (JCR), and subsequently, Jenolan Caves Reserve Trust (the Trust) Board was set up by an earlier Liberal Government. Silkbard Pty Ltd (later renamed JCR) and the Trust were members of a Public Private Partnership (“the PPP”). I purchased the shares and units of PPP with the NSW government in 1994.

The PPP members were bound by conditions in 3 commercially defining documents: the Lease, the Service Agreement, and the Plan of Management.

In 1996 the Trust Board was reconstructed, removing the commercial members. The performance of the Trust suffered, and infrastructure maintenance backlogs occurred.

In 2001, the 99-year lease of Caves House was worth $11.33M according to my bank because it was developed from a zero-star rating to a superior 4-star standard. The bank then increased my loan to $5.8M.

From early 2002 onwards, there were frequent and serious breaches of the Trust’s obligations to maintain the infrastructure in the village and provide clean water as required by the Services Agreement and the Plan of Management.

In December 2003, the Trust, without my knowledge, met at Wombeyan Caves, Taralga, NSW. Bob Debus, Member for Blue Mountains, and Attorney General attended, as did Prof. Richard Mackay, Chair, Jenolan Caves Reserve Trust (the Trust), and his board. At the meeting, Mackay and the Trust Board agreed not to be reappointed. They would have known that the 99-year lease, developed to a high standard, but was now worthless due to their decision.

In February 2004, Andrew Fletcher, Trust, General Manager commented on the decision at Wombeyan to not reappoint the Board. He said, ‘an Administrator can be appointed pursuant to Section 58ZE of the NPWS Act’. However, Mackay and his board did not protect the business owners when agreeing with the government, in December 2003, to not-reappoint the Board.

In May 2004, I signed a new loan contract with my bank. It included the bank’s essential documents, a Facility Offer, the St George Bank’s General Standard Terms, 2003 Code of Banking Practice, and its valuation of $11.33M (dated 18 February 2001), carried out by its valuers, A D Magin, Val No.2568, and R E Roberts Val No.1593.

Prior to my signing this new contract, the bank had reviewed events at Jenolan Caves but did not provide me with its report. I read the bank’s contract and under clause 25.1 of the 2003 Code of Banking Practice (‘the 2003 Code’) it had to, ‘exercise the care and skill of a prudent and diligent banker in selecting and applying credit assessment methods and forming an opinion on my ability to repay the loan’.

In July 2005, Gail Kelly and her directors would also have found this when the bank carried out another review of the Jenolan Caves businesses. Again, they did not provide me with a copy of their review. Jeff Shaw, who was acting for me, at that time, claimed that under the Act, governments and banks must comply with the law. He was previously NSW Attorney General and claimed the new government could not sell or transfer the lease.

In September 2005, my company could not continue paying the bank’s interest. The bank then appointed Receivers and Managers, despite knowing that Jenolan Caves visitor numbers had fallen from 270,000 in 1995 to 210,000 in 2004. The visitor number declined when the government relocated the administration and senior executives to Oberon and then to Bathurst. During this period, visitor numbers declined by 20%,

In November 2005, I wrote to Gail Kelly and requested ‘a meeting to address a preferred way forward that maintains the value of the asset and protect the rights of our companies, and to ensure all parties are protected.’ There was no reply, suggesting the bank’s dispute resolution procedures were not protecting customers like me. We later found that the bank misled millions of customers because none could resolve disputes free of charge.

The bank did not comply with the 2003 Code. Since 2003, Westpac’s managing director Dr. David Morgan knew that the federal government published recommendations made by John Howard’s Taskforce on Industry Self-Regulation. It states:

The promotion of dispute resolution schemes is both beneficial for industry, and to the consumer. For industry, a dispute resolution scheme can be used as a marketing tool to differentiate itself from competitors. Whereas, for consumer, the promotion of a dispute resolution schemes informs them of their rights (p.116).

In June 2003, John McFarlane, Westpac’s current Chairman, also knew that the dispute resolution schemes inform customers of their rights. He was also the bankers’ association chair that published details of how the code will be monitored. Richard Viney, the association’s code reviewer, commented on this. He said:

The code has real teeth as I know of no other banking code in the world that is enforceable as a contract by the customer.

The 2003 Code, however, was dishonest, as small businesses and farmers could not resolve disputes free of charge. McFarlane and Morgan knew that the bank had provided a code that was not enforceable. It was, in fact, a dishonest scheme, or fraud.

In December 2005, the bank appointed Grant Thornton, Receivers and Managers. It required Paul Billingham, its director, to deal with serious misconduct that was happening at that time. Billingham did not comment on what caused the damages when my business relied on the Trust, but it was operated without a Trust Board. At that time, all documents filed at Caves House were retained by Grant Thornton.

Prior to March 2006, everything the bank, the Receivers and Managers, and the Trust did was done secretly. I wrote to Philip Crawford, Director, Henry Davis York, the bank’s external lawyers, and noted this but he did not respond. I wrote to Kelly requesting a meeting ‘to discuss an arrangement that will satisfy banks with minimal damage to both our businesses.’ Gail Kelly, like McFarlane and Morgan, would have known the bank’s dispute resolution procedures, published by the Australian Bankers’ Association (ABA), were a dishonest scheme.

On 6 June 2006, Billingham wrote to me, in my capacity as a director of Jenolan Caves Resort (JCR), and made a distressing statement. He said, ‘the lease has not been offered for sale and no unsolicited offers were received. A few days later, I wrote to St George Bank’s Chair, John Thame, claiming the bank had not complied with the 2003 Code.

On 27 June 2006, without telling me, St George Bank signed the ‘Jenolan Deed’ with NSW Government, thereby agreeing to sell and transfer my property. This was kept secret, which was intentional. When discovered, it took the businesses in the Jenolan village 10 years to access the Deed when a Tribunal ruled in our favour. We could now consider options to recover damages when the bank transferred the $12.5M lease to the NSW Government without, according to Billingham, offering it for sale.

Then the bank’s lawyers commenced an action in court to bankrupt me. At that time, we could not prove the bank had acted dishonestly or misled the court. In 2009, we could not prove the Internal Dispute Resolution (IDR) procedures were deceitful and we could not resolve disputes free of charge. The late Jeff Shaw, before he retired, could not prove that the bank’s directors had betrayed me and their other customers.

In October 2007, the bank and its lawyers again betrayed me. I filed complaints with the Code Compliance Monitoring Committee (‘CCMC’). The compliance monitors were required to ‘investigate and make a determination on whether my allegations were fair’. In 2012, the business owners were still angry about dishonest practices by the government and the bank. We met Steven Munchenberg, ABA, Managing Director, who offered to contact Westpac on behalf of Rosemarie Bayne, a Jenolan business owner, because the bank would not investigate our complaints free of charge. The bank, however, did not respond.

About ten years later, in October 2018, Jenolan business owners encouraged me to write to the Office of Australia Information Commissioner (OAIC) to obtain documents held by CCMC in relation to the bank’s misconduct. The documents noted Westpac and CCMC had concealed, or compounded crimes and that their lawyers and government were complicit. The OAIC noted the bank applied the 2004 Code in my case which was not part of my contract, and neither the government nor the bank was willing to pay us compensation as set out in CCMC’s Constitution. The parties alleged to have been involved were Dr. June Smith, Brian Given PSM, Nicola Howell, Carmel Franklin, Angela Green, and Ralph Haller-Trost.

Also, in 2018, I attended a protest meeting with several hundred small businesses and farmers at Parliament House. They claimed banking practices were dishonest, and they wanted to expand the Royal Commission. Some of them filed submissions with the Parliament and others with Commissioner Kenneth Hayne. In documents we discovered there was a clear intent by the bank when directors took an oath but tried to avoid telling the truth, the whole truth and nothing but the truth. We believe the bank misled Kenneth Hayne by failing to provide all documents in relation to its misconduct and practices that fell below community standards since 2008.

We suggest Westpac did not include allegations that it had not always resolved disputes free of charge since 2008. We also believe Brian Hartzer misled Kenneth Hayne when questioned by Rowena Orr QC, in January and February 2018.

In 2019, Tasmania Small Business Council (TSBC) obtained crucial documents. In July, TSBC was advised by ASIC that there was a document omitted from clause 35.1(b) of the Code. It was ASIC Regulatory Guide 165 (2001).

In November, TSBC’s Chair, Geoff Fader, was advised by Sean Hughes, ASIC Commissioner, that banks must comply with the code in place when loan contracts are signed. This supported Fader’s view that banks must comply with the code, otherwise, they would be attempting to obtain a financial advantage.

My financial loss report notes that my damages were $64M. Westpac should have dealt with this immediately. The Prime Minister should accept Prof. John Hewson’s views of 15 October 2022 when he suggested Australian banking misconduct is a problem that must be rectified.

Prime Minister Albanese and NSW Premier Dominic Perrottet will have to address these deceitful practices, so Australia does not become Banksters’ paradise.


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