Westpac is facing a lawsuit filed by the liquidators of collapsed investment companies who claim the bank ignored red flags while large sums moved through accounts linked to a scheme run by businessman Chris Marco. The case, lodged in the Supreme Court of NSW, accuses Westpac of failing to prevent investor losses and continuing to process questionable transactions after inquiries were made by financial regulators.
Chris Marco, based in Western Australia, operated a scheme over eight years, receiving over $250 million from more than 150 investors between 2010 and 2018. He was recently found guilty on more than 40 counts of fraud. His operation promised investors high returns through private placements but instead funnelled millions into personal expenses and overseas accounts.
At the peak of the scheme, Westpac facilitated significant transactions, including $107 million in deposits and $96 million in withdrawals during the first half of 2016 alone. PKF, the insolvency firm representing creditors, argues that this level of activity was inconsistent with Marco's known financial status and should have prompted internal scrutiny. The suit also details an instance involving $14 million sent to an HSBC account in Jersey, raising doubts about standard compliance procedures being followed.
The legal challenge focuses on whether Westpac failed to address repeated red flags, particularly after the Australian Securities and Investments Commission began contacting the bank in 2017 and 2018 to question the flow of funds. Despite this engagement, liquidators claim Westpac continued handling investor money and transferring large sums for Marco, who was not licensed to offer financial services.
The case could have far-reaching effects on how banks monitor irregular account activity and how they react to regulatory concerns. Westpac maintains that it acted in accordance with customer instructions and denies any knowledge of fraudulent activity. However, the matter may redefine expectations around bank responsibilities in cases involving large-scale financial misconduct.
