Former Westpac banker permanently banned for mortgage fraud

According to an ASIC investigation, Mr Pudun “knowingly or recklessly” gave false documents and information to Westpac to help his clients obtain home loans on 24 occasions.

It is also alleged that he “provided confidential customer information to third-party brokers”.

ASIC found that Mr Pudun:

• helped create false supporting documents including payslips, employment letters and rental estimate letters; or
• accepted documents he knew were false; or
• was reckless in not investigating whether they were false.

In one instance, Mr Pudun requested that the employment positions on customers’ employment letters and payslips be changed. The change saw a director be named as a “marketing manager and IT programmer”.

According to ASIC, Mr Pudun said in an email that he did not want the “deal to stuff up”, and if the customers were referred to as directors, Westpac may ask for tax returns.

Mr Pudun also reportedly asked third parties to create false letters in support of loan applications, which contained weekly rental estimates for various properties.

Further, the regulator found that Mr Pudun had provided example documents to customers so that they could create false documents to support their loan applications.

Mr Pudun also breached Westpac policy in sharing personal client information including internet and telephone banking passwords, customer account opening forms, transaction histories and identification documents with external third parties.

ASIC found that Mr Pudun was repeatedly dishonest in his dealings with his customers, Westpac and external third parties.

Therefore, the corporate regulator said that “he is not a fit and proper person to engage in credit activities”.

Mr Pudun’s permanent banning is effective from 24 July 2018.

Westpac has contacted 161 affected customers

Westpac has acknowledged the action taken and has said that it contacted 161 affected customers to “apologise for the privacy breach and put appropriate protections in place to protect these accounts”.

The bank released the following statement:

“We have no tolerance for fraud and have sophisticated systems in place to identify and thoroughly investigate any potential misconduct.

“Once our systems identified Mr Pudun’s behaviour, we took disciplinary action including terminating his employment and conducting a full investigation.”

The big four bank said that it “proactively notified” ASIC in August 2016 and “co-operated fully with its investigations”, adding that it also voluntarily advised the Office of the Australian Information Commissioner (OAIC) after it “confirmed the mistreatment of certain confidential customer information”.

Westpac continued: “ASIC has found that during his employment at Westpac, Mr Pudun deliberately misused his position by providing confidential customer information to third-party brokers and submitting loan applications to Westpac that he knew were supported by false information and documentation.

“Westpac contacted 161 affected customers to apologise for the privacy breach and put appropriate protections in place to protect these accounts.

“We completed a full review of these customer accounts and found no evidence of suspicious activity related to this incident (such as unauthorised transactions or identity misuse).”

It continued: “We take our customers’ privacy extremely seriously. We have rigorous security measures in place that protect the privacy and confidentiality of our customers, as well as safeguards that constantly monitor for fraudulent activity.

“Since this matter was identified, we have further strengthened our internal controls by introducing new systems, monitoring procedures and training for employees to further protect our customers’ information. To date, no customers have been identified as having experienced a financial loss as a result of the actions of Mr Pudun, and Westpac has completed its investigation.”

ASIC’s investigation is continuing and Mr Pudun has the right to lodge an application for review of ASIC’s decision with the Administrative Appeals Tribunal.

Royal commission uncovers fraud

The bannings come after several instances of fraud were found to have occurred at several lenders in the past few years.

Appearing before the Royal Commission into Misconduct into Banking, Superannuation and Financial Services Industry during its first round of public hearings in March, NAB’s executive general manager of growth and partnerships, Anthony Waldron, was questioned over the bank’s failure to adequately disclose instances of fraud in its Introducer Program prior to 2015.

Documents released to the commission, along with testimony from Mr Waldron, revealed that several NAB employees were allegedly “bribed” by third-party introducers.

In its submission to the commission, NAB also addressed misconduct in its Introducer Program, conceding that there was a lack of accountability, “governance gaps”, over-reliance on banker behaviour, practices that “reduced the probability of misconduct coming to light” and a “lack of due diligence oversight”.

However, the lender claimed that by October 2017, it had “commenced ‘triangulated reporting’ to monitor unusual changes in banker and introducer performance and behaviour”.

NAB noted that triangulated reporting serves as a “mechanism to monitor the relationship” between customers, bankers and introducers by linking “sudden changes in volumes between banker and introducer” and detecting “unusual loan performance”.