The case for re-nationalising the Commonwealth Bank of Australia (CBA) is becoming stronger every day. The latest in a string of scandals to hit "Australia's leading bank" is the revelation the CBA is facing allegations that its Intelligent Deposit Machines (IDMs) were used by money launderers and criminal gangs to process millions of dollars in cash.
The federal money-laundering agency Australian Transaction Reports and Analysis Centre (AUSTRAC) has filed charges against the CBA of "serious and systemic non-compliance with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006," involving more than 50,000 reportable transactions of $10,000 or more that went unreported. More than 1600 of them related to apparent money-laundering activity now being investigated by the Australian Federal Police.
On August 9 the Sydney Morning Herald editorialised: "The bank's alleged failures hindered law enforcement and exposed the community to 'serious and ongoing financial crime', AUSTRAC says. If the charges stick, the Commonwealth Bank faces fines big enough to wipe it out, though a court is unlikely to order such a massive destruction of shareholder value that would destabilise the banking system.
"The bank has blamed the reporting failures for IDMs on a computer coding error. For an explanation of why the bank failed to report transactions identified as suspicious by its systems, we may have to wait until the court case."
This latest scandal follows a series of revelations about the Commonwealth Bank (and the other Big Four banks) involving financial mismanagement (in particular at the CBA's insurance arm Comminsure), rip-offs of depositors and mortgage-holders, and attacks on bank staff jobs, rights and conditions.
The CBA board of management has attempted to deflect widespread criticism after the latest scandal by trimming their own directors' fees and cutting the bonuses of top bank executives, which were worth $16 million to the 12 most senior executives last year. Altogether, they were paid more than $44 million in remuneration in 2016.
However, fixed executive salaries and longer-term bonuses paid to senior bankers will not be affected by the cuts. Last year, CBA chief executive Ian Narev was paid a salary of $2.65 million, and six other senior CBA executives received salaries of more than $1 million each.
There have now been widespread calls for Narev to resign or be sacked and for the entire CBA board to be removed. South Australian Senator Nick Xenophon has called for new, tougher legal penalties, including imprisonment, for crimes committed by bank executives and directors.
Jeff Morris, a whistleblower who exposed the recent financial planning scandal at CBA, said if the allegations were proven, the board "should examine its own position”. “It has sat there complacently through scandal after scandal, with fairly superficial assurances that all is well," he said.
Now, to add insult to injury, CBA announced on August 9 a record full-year after-tax profit of $9.93 billion — a 7.6% rise, almost three times current inflation. So, while acting as a major "fence" for big crime syndicates, the CBA continues to rip off its customers and the public at an all-time exorbitant rate.
All of this means that the call by Labor and the Greens for a full-scale royal commission into the banks is now essential and urgent. Such a commission could begin the process of revealing the truth about the crimes and rip-offs of the big banks, leading onto more radical countermeasures.
In particular, CBA should be re-nationalised immediately. The CBA was only fully privatised 20 years ago under the Howard Coalition government. But the process of selling off Australia's only national public bank was started under the Labor government in the early 1990s. The sale of the CBA gained the federal treasury a total of less than $8 billion — compared with almost $10 billion in profit for its private owners last financial year alone.
A royal commission into the banks could play an important role in publicly exposing the facts about the profit-gouging of Australia's private financial sector. It could provide the evidence for charges to be brought against the banking moguls who profit from these crimes.
One of the worst decisions of the previous Hawke-Keating Labor government in the 1990s was to privatise the CBA. If it had remained in public hands, the financial position of the country's public sector would be much stronger than it is now, after years of neoliberal assault by governments of all persuasions.
It is time to launch a counter-offensive against privatisation and public sector cutbacks, and begin to take back the wealth and the people's assets that have been stolen by the big corporations over the past several decades.
Let's start with CBA. It was a vital institution of Australia's public sector, until it was gradually corporatised over many years, and finally sold off to the big investors.
With the CBA renationalised, under community and workers' control, its massive assets could be used to serve the public interest — including cheap housing loans to first-home buyers, cuts to interest rates on credit cards, low-cost small-business loans (including to family farmers), and investment in socially valuable and environmentally sustainable public infrastructure, such as education, health and public transport.
A renationalised CBA could be a financial powerhouse for the re-building of the embattled public sector in this country, and a springboard toward taking back the ill-gotten wealth of the 1% in the interests of the 99%.
[Jim McIlroy is a member of the Socialist Alliance.]
Socialist Alliance policy on bank nationalisation
Socialist Alliance supports and campaigns for:
1. A comprehensive royal commission into the banking and financial sector, with full powers to enforce testimony and information from bank CEOs and managements.
2. Put the big banks into public hands. Nationalise the Big Four, under workers' and community control. Full compensation to ordinary small investors.
3. Place the banks' massive assets under public ownership, to be used for the good of the community and the environment. These funds could be used to build public works, and fund public housing, education and transportation.
4. Placing banks in public hands, under community control, could provide essential services to meet society's needs. Executives would not be paid millions, jobs would stay, interest rates would not be manipulated for profit and fees could be cut.