Australian bank blames money-laundering scandal on software
In a run-down mall in one of Sydney's biggest Chinese neighbourhoods in 2015, 29-year-old Jizhang Lu showed up at the top-floor offices of a meat export company carrying a carrier bag stuffed with hundreds of thousands of dollars in cash.
According to police documents filed in court and reviewed by Reuters, Lu said he made the trip to the shopfront of CC&B International eight times over three weeks. Each time a CC&B employee would hand him a receipt showing a different company had bought tens of thousands of kilogrammes of meat.
The cash - as much as A$530,200 (€353,800) at a time - was then deposited at a Commonwealth Bank of Australia (CBA) branch, according to the police statement of facts agreed by Lu.
But the apparent purchases were fake, and last year Lu was jailed for two years after pleading guilty to helping launder A$3.2m police allege were proceeds from an international drug syndicate.
The police case against Lu is now one of several being cited by financial intelligence agency AUSTRAC in its statement of claim against CBA, the largest civil court action of its kind in Australian corporate history.
AUSTRAC has accused CBA of "serious and systemic" breaches of money-laundering and counter-terrorism financing rules, alleging the country's second biggest mortgage lender failed to detect suspicious transactions nearly 54,000 times. Fines could potentially run into billions.
CBA said on Monday its CEO Ian Narev will retire by June 2018, the bank has said it will fight the AUSTRAC lawsuit, saying it would never deliberately undertake action that enables any form of crime. CBA said a coding error with new automated teller machines was behind most of the breaches but that it recognised there were "other serious allegations" in AUSTRAC's claim were unrelated to that software problem. It declined to comment specifically about the police case against Lu.
AUSTRAC's lawsuit against CBA asserts that, in total, A$17.7m was deposited at the bank from February to August 2015 on behalf of a company identified in the earlier criminal case as CC&B.
Lu was identified in AUSTRAC's statement of claim against CBA, which also specified the time and length of his sentence. A subsequent Reuters search of the criminal case against Lu provided further detail of his operation, including the name of CC&B.
The records of Lu's criminal case, provided to Reuters by a communications officer for the court which convicted Lu, showed that he pleaded guilty.
A call to the phone number listed on CC&B's website went unanswered. A Reuters visit to the address where Lu said he dropped off bags of money, at Lemon Grove shopping centre, showed no sign of CC&B - other than a mention in an old store guide for shoppers.
Calls over two days to Lemon Grove also went unanswered.
Australian company filings showed CC&B's corporate address as "Sunnyside Accountants". A woman who answered the phone at that firm said CC&B was a former client but that she could give no further information because the organisations had parted ways. Sunnyside hasn't been named in AUSTRAC's suit.
Lu, a Chinese national on a business visa, described himself as a "net engineer", according to the police document filed in court. He had no involvement in the meat export industry and earned 60,000 yuan ($9,000) a year in his home country, he told police.
Lu said he met another Chinese man while grocery shopping in the Sydney suburb of Chatswood, where CC&B was based. Lu agreed to help "because the man asked him", the police statement said, without elaborating.
He told police he didn't understand the receipts because they were written in English. (Reuters)