Court fines West­pac $3m in rate rig case

The Courier-Mail - - BUSINESS - JEFF WHAL­LEY

A FED­ERAL Court judge says he hit West­pac with a “clearly in­ad­e­quate” $3.3 mil­lion fine for try­ing to rig a key in­ter­est rate be­cause the law stopped him levy­ing any­thing higher.

At the Fed­eral Court in Mel­bourne yes­ter­day, Jus­tice Jonathan Beach said he was ham­strung from ap­ply­ing a greater de­ter­rence.

“If I had been per­mit­ted to do so, I would have im­posed a penalty of at least one or­der of mag­ni­tude above $3.3 mil­lion … but I am not free to do so,” he said. In his lengthy de­ci­sion, Jus­tice Beach said: “Clearly, this is in­ad­e­quate, but there we are.”

West­pac last week re­vealed a cash profit of $8.07 bil­lion for the year. CBA, NAB and ANZ paid a col­lec­tive $125 mil­lion penalty when they set­tled their cases, rather than face court.

The West­pac penalty fol­lows the de­ci­sion in May by Jus­tice Beach that found it en­gaged in “un­con­scionable” con­duct in at­tempts to ma­nip­u­late the bank bill swap rate – a lend­ing rate be­tween banks that in­flu­ences in­ter­est rates paid by con­sumers and busi­nesses.

Jus­tice Beach yes­ter­day said the fine he im­posed would hope­fully send the cor­rect sig­nal to the mar­ket­place in terms of gen­eral de­ter­rence.

The Aus­tralian Se­cu­ri­ties and In­vest­ment Com­mis­sion had on Thurs­day sought to hike the fine from $3.3 mil­lion to $64 mil­lion, but failed.

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