Furious shareholders front 'incompetent' Westpac executives at AGM

Furious shareholders in scandal-ridden Westpac have blasted the bank’s board and management as “incompetent” – or worse – over its handling of the money laundering and child exploitation scandal arising from breaches of Austrac obligations at its annual meeting in Sydney on Thursday.

The mood was grim among the approximately 600 shareholders in attendance at the International Convention Centre. They heckled the board with cries of “just go” and saved their applause for calls from the floor for more of the bank’s directors and executives to leave the bank over the scandal.

It was Lindsay Maxsted’s last AGM; he will step down next year as part of a clean-out that has already seen off chief executive Brian Hartzer.

Non-executive director Ewen Crouch, who chaired the bank’s risk committee, was due to face re-election at the meeting but withdrew his nomination in the face of investor anger.

Related: Culture of impunity: how Australia dropped the ball on policing the banks

In a lawsuit lodged last month that has ravaged Westpac’s share price and shaken Australia’s oldest bank to its foundations, financial intelligence agency Austrac alleged the bank had committed 23m breaches of money laundering laws involving $11bn in transactions.

The most damaging allegations related to a few thousand transactions in which Westpac customers sent money to people in the Philippines in a way consistent with paying for child sexual abuse.

Apologies from Maxsted, who admitted the bank had not acted quickly enough to deal with the crisis, and interim CEO Peter King were not enough to stem shareholder outrage.

The scandal, which is set to cost Westpac more than $1bn to settle with Austrac, came on top of more than $1bn set aside to remediate customers ripped off by the bank.

About 35% of shares were voted against the remuneration report, down from about 60% last year but enough to trigger a second “strike” and an automatic motion to spill the board.

The spill motion was comprehensively defeated with more than 90% of shares voted against.

Long-serving director Peter Marriott, who was targeted by proxy advisors, survived despite a hefty vote of about 40% against his re-election.

Under intense pressure from investors, Maxsted was forced to concede that Westpac’s culture might be to blame, and promised that a review by consultants Promontory would get to the bottom of how the bank failed to obey the law and who was responsible.

“Is there something fundamentally wrong with the culture of Westpac that these issues aren’t coming up through the board?” he asked.

Investors also called for wages to be clawed back from executives responsible for the mess, expressed anger at the $2.7m Hartzer is to be paid for doing nothing for the next 12 months, and asked why they were not told of the potential scale of the disaster before tipping $2.5bn into the bank in a capital raising last month.

In an angry speech from the floor, shareholder and former Labor senator Chris Schacht said he did not want to be a member of a company that helped child sexual abuse.

He said one of the customers singled out by Austrac, who sent $115,000 to the Philippines, did so allegedly “to get access to the most vile abuse of human rights short of murder”.

“The man we let spend $100,000, he was sending money to the Philippines, and then they would download that to his computer in Australia, live action of children being abused, live action,” Schacht said.

“How the hell did this go on for five years and Austrac warned you last year and the year before?”

“What are we going to do to the restitution of our reputation?”

Shareholder after shareholder lined up to the microphone to blast the board, who were described as “over-paid, short-term mercenaries”, Hartzer, whose reluctance to participate in a deep dive exercise ordered by the prudential regulator drew sharp questions, and the bank’s auditor, PwC partner Lona Mathis, over disclosure of the potential scale of the disaster in its most recent annual report.

Related: How did Westpac wind up in a child exploitation scandal?

One shareholder pointed out that every member of the board sat on the risk committee – and earned an extra fee for doing so.

“Nice work if you can get it,” he said.

“What are all these committees doing that we are paying money for?”

He said Westpac’s directors had the benefit of knowing about a $700m fine paid by CBA for 53,000 Austrac breaches and that the bank was on a similar path to a fine.

“Presumably it will be billions,” he said, before asking for an assurance that shareholders would not have to pay for another committee to fix the problem.

“The only additional committee will be the financial crime committee, which we’ve already formed,” Maxsted replied, drawing groans from the audience.

Another shareholder told Maxted: “You, sir have comprehensively stuffed up and so has your board.”

“You all should go,” he said, to applause and cries of “chuck them out”.

“Before you go, as a person with ethics, if you have any, you should return your fees,” the shareholder said.

“I have no faith in you. You have lost all credibility.”

Maxsted said that the board had never seen Westpac as “anything but an organisation with good ethics and very high culture”, but the bank’s culture would be part of the Promontory review.