A Westpac risk manager claims to have been ignored and bullied for raising red flags on alleged shortcomings on a technology project at the bank.
The Westpac staff member, who requested anonymity and has reported the matter to the Australian Prudential Regulation Authority and SafeWork NSW, said his treatment was an example of a poor risk culture at Westpac, including covering up bad news and ostracising staff who raise problems via official reporting channels.
“I don’t trust HR will protect me, but I am just doing my job,” the risk manager said. “I want to do my job properly and I don’t expect to be abused for doing it.”
A spokesman for Westpac said the bank “believes in having an environment where it is safe to speak up. We see this is fundamental to fostering a culture of ethical behaviour, strong corporate governance and effective compliance and risk management.
“All allegations are taken seriously and are investigated.”
ANZ, Commonwealth Bank of Australia, National Australia Bank and Westpac are preparing reports for APRA that will be submitted by the end of November to self-assess their risk cultures and governance against the 35 recommendations made in a damning prudential inquiry into CBA.
The Westpac risk manager said none of his managers had taken responsibility for the concerns expressed in his report on one of the bank’s big technology projects and it appeared his performance reviews were adversely impacted after he raised red flags.
In September, the manager said he had been ranked “high exceptional” in a performance review, putting him in the top 5 per cent of the bank’s performers, but after he delivered the report flagging concerns about the project, his December review saw a downgrade to “underperformer”. The staff member said he could think of nothing else to explain that, and he was given no evidence of poor performance, just his manager’s opinion.
The aggrieved staff member said he then went up the management chain, all the way to chief executive Brian Hartzer, whom he contacted last month. He said Mr Hartzer sent his concerns back to human resources. At the end of last month, the manager said he was approached at his desk by a member of the bank’s human resources team and taken to a meeting room where another HR member told him to take “enforced sick leave”, which he refused.
“No one has taken responsibility and someone needs to be accountable,” the risk manager said. “This is an example of poor risk culture.”
On Thursday, he was told by HR to go onto “paid special leave” so his bullying complaint can be investigated.
The interim report of Commissioner Kenneth Hayne’s inquiry was critical of APRA’s enforcement of risk culture in the banks.
Until it decided to establish the prudential inquiry into CBA in August 2017 – a response to its failures to identify money laundering, which saw it fined $700 million in June – Commissioner Hayne said APRA “had taken no public step pointing to any deficiency in the governance and risk culture of any of the major banks or any of the other large financial services entities falling within APRA’s remit”.
The royal commission uncovered various problems in the major banks, including charging fees for no service, poor information systems which saw customers overcharged, and failures to properly assess loans.
“As this report records, other entities have engaged in conduct of the kinds that led APRA to conduct its inquiry into CBA,” the interim report said. “The conduct suggests that there has been insufficient attention given within those entities to regulatory and compliance risk.
“It suggests want of attention by those entities to reputational risk. Some of the conduct suggests want of proper governance in the entity.”
The bank CEOs will front Commissioner Hayne in November.
Mr Hartzer recently briefed all of the bank’s 40,000 staff on risk culture, telling them he was concerned bad news does not bubble up to senior management at Westpac. But the risk manager said: “Westpac is not walking the talk. Brian is telling staff to have the courage to speak up, but when I did, this happens.”
The Westpac spokesman said the bank has revised its whistleblower protection policy and continues to promote “our speak up culture and whistleblower channels” with regular awareness campaigns.
The bank also has a whistleblower protection officer.
A paper on risk culture published by APRA in October 2016 said the 2008 financial crisis overseas revealed a poor risk culture and weak risk management led to unbalanced and ill-considered risk-taking, to significant losses and, in some cases, to institutional failures.
“Unfortunately, a poor risk culture can persist for some time without detection or immediate damage,” APRA noted.
“Typically, it will be when a poor risk culture is combined with adverse market conditions and/or other stresses that there is greater potential for a build-up of unbalanced and ill-considered decisions to result in significantly adverse, and potentially crippling, financial outcomes.”
“Good times will often mask poor practices. In an Australian context, where the domestic economy has enjoyed 25 years without a serious recession, this should sound a clear note of caution against complacency.”