SYDNEY (Reuters) – An Australian investigator who helped bring criminal cartel charges against Citigroup Inc (C.N) and Deutsche Bank AG (DBKGn.DE) told a court on Wednesday he felt “pressure” after his boss made public comments suggesting imminent prosecutions.
The disclosure in a pre-trial hearing relates to a central plank of the defence in Australia’s biggest white collar criminal case, over a controversial 2015 stock issue for Australia and New Zealand Banking Group (ANZ.AX): the banks’ lawyers want to show investigators used tainted evidence and deviated from regular process due to pressure.
The matter of Australia vs Citi, Deutsche, ANZ and several of their current and former executives is being closely watched by investment bankers around the world because it could have implications on the way they are allowed to run share sales. If found guilty, the banks face hefty fines while the individuals face prison time.
Citi, Deutsche, ANZ and their senior staff are accused of colluding during a 2015 stock issue for ANZ to withhold unsold shares and keep the stock from falling. Though none of the defendants has entered a formal plea, all have said they will plead not guilty.
In his third day testifying at the hearing, Australian Competition and Consumer Commission (ACCC) enforcement director Michael Taylor said that while he was looking into the capital raising the regulator’s chairman made public comments “saying we had some criminal prosecutions in the works”.
Asked by ANZ’s lawyer, Tim Game, if the comments had created “pressure from above”, Taylor replied: “in general terms, the chairman had been saying, ‘we’ve got a number of criminal cartel investigations…that are nearing completion’.
“Would that constitute pressure? I think yes,” Taylor told the packed court room.
Taylor did not describe the chairman’s comments further. The ACCC has declined to comment on the matter while it is before the court.
Taylor was also asked about a witness statement made by an executive at a third investment bank, JPMorgan Chase & Co (JPM.N), which worked on the same share sale but agreed to cooperate with the authorities in exchange for immunity.
An early draft of the JPMorgan person’s statement had said the banks acted as a “syndicate” and it was impossible to predict what effect it would have if they sold their ANZ shares. Those remarks were not there in the final statement.
Game, ANZ’s lawyer, asked Taylor if he had removed the passage because it “counters the idea that there was a cartel to fix the price”.
“I would have liked it to stay in the statement,” said Taylor.
“It shows a disorderly market,” said Game. “You didn’t want this in the document.”
Taylor said he had “absolutely no issue” whether the passage was in or out of the statement and the witness alone chose to remove it.
“I’ve had no preordained conspiracy theory here,” Taylor said.
The hearing continues on Wednesday.