$5 million boss’s stunning downfall
AS ONE of Australia's banking elites, Brian Hartzer enjoyed a lifestyle most of us can only dream of.
But this week, it all came crashing down.
For days, the Westpac chief executive clung to his job as the 200-year-old lender's money laundering and child exploitation scandal unfolded, seemingly determined to ride out the furore.
But in the end, the crisis claimed the 52-year-old's scalp.
So how did one of our most powerful and successful bankers screw things up so spectacularly?
The crisis began when financial watchdog AUSTRAC revealed Westpac was facing charges after allegedly failing to investigate customers who made transactions possibly linked to child exploitation in the Philippines and South-East Asia.
According to the Australian Financial Review, some of those payments may have gone towards "live-streamed child abuse".
The lender is also accused of breaching money laundering and counter-terrorism finance laws, with Westpac publicly accused of 23 million breaches in total.
The Australian public, already outraged by countless examples of dodgy bank behaviour exposed during last year's royal commission, was appalled by the Westpac scandal, especially regarding the alleged links to child abuse.
But somehow, Mr Hartzer failed to read the room.
This week, Westpac insiders leaked to the press comments allegedly made by Mr Hartzer to high-level staff during a top-secret meeting.
In an explosive report published by The Australian, it was claimed Mr Hartzer argued the debacle "was not playing out as a high street issue" and that the Westpac board "don't need to overcook this" because "for people in mainstream Australia going about their daily lives, this is not a major issue".
The comments were immediately branded "tone deaf" and "wrong" on social media, and were described by ABC News Breakfast host Michael Rowland on Twitter as "Brian Hartzer's 'Prince Andrew Interview' moment".
This week, several PR experts told news.com.au the scandal itself coupled with Mr Hartzer's "out of touch" comments had seriously damaged the lender's public image.
Then, on Tuesday, news broke that Mr Hartzer had been pushed out of the top job, and that he would step down on December 2.
Chairman Lindsay Maxsted will bring forward his retirement to the first half of next year, while director and risk committee head Ewen Crouch will also depart in 2020.
But Mr Hartzer is not leaving empty-handed, and will walk away with the equivalent of 12 months' pay, amounting to $2.7 million - although it's still a far cry from his 2018 salary.
That year, Mr Hartzer took home $4.9 million, which included a $2.2 million bonus.
It was down 9 per cent from the previous year, when he raked in $5.5 million.
The news of Mr Hartzer's hefty payout angered may Australians, with 74 per cent of news.com.au readers believing he "should not get a cent".
The bank's image took further beatings when it emerged the bank had held a lavish lunch dedicated to the fight against human trafficking in 2016, while potentially helping to facilitate child sex trafficking behind the scenes.
Westpac has also released a yearly "Slavery and Human Trafficking" statement touting its "zero tolerance" for the criminal practice, prompting critics to accuse it of "hypocrisy" and "virtue signalling".
HOW DID WESTPAC STUFF UP SO BADLY?
According to The Australian Financial Review, Westpac was actually responsible for 29 million breaches in total - six million more than was previously reported.
However, those extra six million can't be prosecuted because they fall outside the statute of limitations.
Citing documents which summarise Westpac's own investigation into the problem, the publication also alleged a bungled 2011 IT update meant certain payments known as international funds transfer instructions (IFTIs) with a number of banks weren't being automatically reported to AUSTRAC, as legally required.
The issue went undetected for six years, and then took an extra year to be fixed - but by that time, Westpac already racked up a "theoretical" $40 trillion penalty - because every time a IFTI is not reported to AUSTRAC, it attracts a fine of up to $21 million.
The documents also allegedly show a number of junior staff members discovered that some payments weren't being reported, but the information was not escalated.
On top of those revelations, The Australian also claims an internal Westpac breach system memo shows the bank knew the "end-to-end" process for reporting international transfers to AUSTRAC was "not clearly understood" by high-level staffers as far back as mid-2017.
In other words, the issue was caused by both software problems and human error, and was also not taken seriously enough when it was first uncovered.
THE HIGH LIFE
American-born Mr Hartzer arrived in Australia about 25 years ago, and was educated at the elite Princeton University in the US.
His first job in Australia was at ANZ, where he quickly rose through the ranks - but in 2007 he was snubbed by the board when it came time to promote a new ANZ head, and two years later, Mr Hartzer left Australia for a gig in London at the Royal Bank of Scotland.
After his marriage broke down and his wife returned to Australia with the couple's four children, Mr Hartzer eventually followed after securing a job at Westpac in 2012.
He became Westpac CEO in 2014 following the departure of previous boss Gail Kelly.
According to The Australian Financial Review, Mr Hartzer and his second wife celebrated by moving into a luxurious $12.75 million Vaucluse mansion that same year and later snapped up another $6.8 million property at Pittwater's McCarrs Creek.
A former colleague told the publication Mr Hartzer enjoyed the high-flying lifestyle that came with his executive role, claiming "he does enjoy the trappings, no doubt about that".
Now his multimillion-dollar salary has dried up, Mr Hartzer may have to learn to live without those trappings for the foreseeable future.