Aussie units of Deutsche Bank, Citigroup face cartel charges

The Australian government accuses the local units of Deutsche Bank (pictured) and Citigroup, as well as ANZ, of forming a criminal cartel to either "directly or indirectly" restrict the supply of ANZ shares or maintain the price of ANZ shares.
The Australian government accuses the local units of Deutsche Bank (pictured) and Citigroup, as well as ANZ, of forming a criminal cartel to either "directly or indirectly" restrict the supply of ANZ shares or maintain the price of ANZ shares.PHOTO: REUTERS

ANZ and six bankers also among the accused in landmark case

SYDNEY • The Australian units of Citigroup and Deutsche Bank faced court in Sydney yesterday, accused of criminal cartel conduct over a A$3 billion (S$2.9 billion) stock issue, in a landmark case being watched around the world.

The Australian authorities filed criminal charges in June against the two subsidiaries as well as Australia and New Zealand Banking Group (ANZ) and six senior bankers over the sale of ANZ shares in 2015, and subsequent trading by the underwriters.

Lawyers jammed into the courtroom in downtown Sydney for the first administrative hearing of the case, which could have major implications for the underwriting business and lead to increased scrutiny from regulators worldwide.

The government accuses the banks of forming a criminal cartel to either "directly or indirectly" restrict the supply of ANZ shares or maintain the price of ANZ shares, according to court documents.

The banks have denied wrongdoing. JPMorgan, which underwrote the capital raising along with Citigroup and Deutsche Bank, has not been charged and has not commented on the case.

Charges have also been brought against six executives - former ANZ treasurer Rick Moscati; former Citi Australia head Stephen Roberts; current Citi Australia head of capital markets John McLean; Citi's London-based head of foreign exchange trading Itay Tuchman; former Deutsche Australia chief Michael Ormaechea; and former Deutsche Australia capital markets head Michael Richardson.

If convicted, the companies could face penalties of up to A$10 million or triple the benefit of the conduct. The individuals charged could face 10 years in jail.

The matter was adjourned until Feb 5 and the prosecution ordered to file the full details of its case by Dec 11. The allegations stem from a probe by the Australian Competition and Consumer Commission.

The banks involved declined to comment on the case.

All six bankers were excused from appearing personally and none were present. Their lawyers pressed the prosecution to file a statement of facts, which would disclose in detail exactly what the banks and bankers are accused of.

Prosecutor Ruth Higgins said there was "no present obligation" to file the details while they were still being compiled.

The case comes as Australia's financial sector comes under intense scrutiny from a separate public inquiry that has uncovered widespread misconduct.

REUTERS

A version of this article appeared in the print edition of The Straits Times on October 10, 2018, with the headline 'Aussie units of Deutsche Bank, Citigroup face cartel charges'. Print Edition | Subscribe