Superfund HESTA said on Thursday that it will not budge in support of reappointing Westpac directors unless the bank develops a more specific plan or structure on how it will revamp its governance system and banking practices.
According to the Sydney Morning Herald, the superannuation fund argued in a letter to Westpac chairman Lindsay Maxsted that it needs to see more action from the board on how the Australian bank plans to prevent anomalies from taking place in the future.
HESTA owns around $500 million shares in the bank, thus explaining its concern on how the board will address issues unraveled by financial intelligence agency Austrac in the past week.
HESTA chief executive Debby Blakey said that while it already received a notice for next month's annual general meeting (AGM), the the fund has yet to determine how it will use its voting shares in the bank.
Blakey said the fund "will give careful consideration" on how it will vote for the upcoming AGM "because that's a very important way for us to send a strong message of where our concerns sit."
She added that HESTA was "particularly concerned" about board directors who have been serving their time for many years and those who were given responsibility for risk oversight.
Aside from sending a letter to Maxsted, Blakey said that as a shareholder, she will allow the Westpac board to explain its side and give the superfund a clear path on how it will address the money-laundering and child exploitation issues and how it will improve governance to prevent future breaches.
Blakey's comments came amid mounting pressure on Westpac to overhaul its governance following Austrac's revelations last week that the bank violated anti-money laundering laws over 23 million times.
Austrac also revealed that there were several transactions catered by the bank that showed consistencies with child exploitation in the Philippines. This particular aspect of the probe was dragged into the center of the scandal and advocates have raised concerns about the bank's responsibility in the issue.
Commenting on the issue, tech investor Paul Bassat pointed out that Westpac's current crisis could be an exposé of Australia's weakness: the difficulty in managing the power of rising global disruptions.
According to the Australian Financial Review, Bassat explained at the Future Generation investor forum on Thursday that legacy technology systems are failing to keep up with new laws and regulations.
Bassat's comments came after it was revealed on Thursday that a a glitch in Westpac's computer systems update in 2011 resulted in an auto-turn off for reporting on money transfers with several banks.
Westpac CEO Brian Hartzer already announced his resignation amid the scandal and Maxsted is set to retire earlier than expected.
