ANZ, Citigroup and Deutsche Bank executives charged with criminal cartel offences

| 06.06,18. 01:30 PM |

ANZ, Citigroup and Deutsche Bank executives charged with criminal cartel offences

Photo: ANZ and two global investment banks will face criminal cartel charges over a $2.5 billion share sale in 2015. (Reuters: David Gray)

The ranks of Australia's top bankers have been shaken by the Australian Competition and Consumer Commission's (ACCC) decision to lay charges against chief executives and other senior staff caught up in allegations of running a criminal cartel during a $2.5 billion dollar share deal.

The ACCC confirmed it had laid charges criminal cartel charges against the ANZ, Citigroup, Deutsche Bank and six senior executives in relation to raise extra capital by selling shares to big institutional investors in 2015.

The charges involve some of the biggest names in Australian investment banking, including Citigroup's former country head for Australia, Stephen Roberts, Citigroup's current managing director John McLean and global head of foreign exchange trading Itay Tuchman.

Deutsche Bank's former Australian chief executive Michael Ormaechea and Michael Richardson, who has also left the bank, have also been charged, along with ANZ's global head of treasury Rick Moscati.

Mr Richardson is now head of Australian global capital markets at Bank of America Merrill Lynch.

The charges relate to the sale of $2.5 billion ANZ shares to institutional investors in August 2015.

The sale was organised and underwritten by Citigroup, Deutsche Bank and third big global bank JP Morgan to boost ANZ's balance sheet in accordance with demands from the bank regulator APRA.

JP Morgan has not been charged.

The three banks all strenuously deny the allegations and say they will vigorously defend themselves and their employees.

In an earlier statement Citi said there was no precedent for the action and there had been no guidance notes issued by the ACCC to the banks over their underwriting activities.

Two-year investigation

The ACCC and the Australian Securities and Investments' Commission have been investigating the disposal of about $790 million worth of shares the banks did not manage to sell in the initial auction to big institutional investors on August 6, 2015.

At the time, the market had not been informed about the overhang of unsold stock.

"This is a highly technical area and if the ACCC believes there are matters to address, these should be clarified by law or regulation or consultation," Citigroup said.

"Underwriting syndicates exist to provide the capacity to assume risk and to underwrite large capital raisings, and have operated successfully in Australia in this manner for decades."

ACCC chairman Rod Sims said: "These serious charges are the result of an ACCC investigation that has been running for more than two years.

"Charges have now been laid by the Commonwealth Director of Public Prosecutions and the matter will be determined by the court."

The matter is listed before the Downing Centre Local Court in Sydney on July 3.

Under the Competition and Consumer Act, individuals found guilty face up to 10 years in jail and/or fines of up to $420,000 per criminal cartel offence.

Institutions face fines of up to $10 million per offence.


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