Westpac chief executive Brian Hartzer has stepped down from his position on Tuesday, following accusations that the bank may have been involved in money-laundering activities. Chairman Lindsay Maxsted is also set to resign from his post earlier than expected.
According to The Guardian, the bank announced that it will pay Hartzer $2.69 million after his resignation. He will not do anything involving running the company for a year and he will not get a short-term bonus for 2019.
In a statement on Tuesday morning, Westpac also said Hartzer will not receive any long-term bonuses that he has not already vested during his term as the CEO. The official announcement for Maxsted's resignation has yet to be made.
News of Hartzer and Maxsted's exit from the international bank came after financial intelligence agency Austrac launched an investigation on the financial institution's activities.
Austrac alleged that Westpac violated over 23 million anti-money laundering finance laws as well as several counter-terror policies. The breaches were allegedly committed in over $11 billion worth of transactions.
Last week, Hartzer said he admits his accountability in the investigation's results. He said, "it is clear that we have fallen well short of what the community expects of us."
Hartzer's comments came amid further allegations that Westpac may have failed to keep watch of transactions involving the transfer and sending of money to Southeast Asian countries such as the Philippines wherein the transactions were consistent with child exploitation activities.
According to the Sydney Morning Herald, the Australian bank will put chief financial officer Peter King as the acting CEO while the firm searches for a replacement that will serve for long-term.
King announced in September that he will retire from the financial institution with a 12-month notice. However, in light of the recent situation that put him up as acting CEO, King revealed that he would stay until the bank finds a suitable replacement for Hartzer.
As for the incoming chairman, the company has yet to make an announcement. However, it is expected that the candidate will be announced anytime soon as the bank is faced with mounting pressure both from regulators and investors.
Following Austrac's legal filing against Westpac, the Australian Prudential Regulation Authority (APRA) said it has started to investigate the bank. The Australian Securities and Investments Commission (ASIC) also said on Monday that it will look into the bank's potential breaches of laws.
The Australian Financial Review reported on Tuesday that Maxsted said during a press conference that the company has "deep remorse for our errors." King echoed the outgoing chairman's statements in the said media briefing.
Maxsted also revealed that he will not be involved in the process of choosing the next CEO to replace Hartzer.
