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Fairfax Media has reported that the Commonwealth Bank “repeatedly ignored evidence of an alleged $100 million fraud that implicated its own staff”.
According to Fairfax, the bank allowed the alleged masterminds of the loan fraud, Bill Jordanou and Robert Zaia, to “continue to broker tens of millions of dollars in loans after failing to heed the findings of an investigation by the bank’s internal fraud division almost seven years ago”.
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The Commonwealth Bank had not responded to The Adviser’s request for comment at the time of publication.
Mr Jordanou, Mr Zaia and three others were charged last month based on an alleged scam run from accountancy firm Zaia Arthur & Associates between 2004 and 2013.
The alleged fraud reached about $100 million, according to prosecutor Luke Excell, and also involved ANZ, Westpac, Bankwest, St. George and Bank of Queensland.
Fairfax Media reported that the Victoria Police investigation started in 2011 after the Commonwealth Bank reported that loan applications had been supported by falsified documents.
However, Fairfax claimed it had seen documents that showed the bank’s internal fraud unit had investigated an incident in 2007 relating to alleged cheque fraud by Zaia Arthur & Associates.
The bank reimbursed a couple who claimed to have had $26,000 taken from their account in “two unauthorised withdrawals”, Fairfax reported.
“Despite the findings of the CBA investigation and the compensation payment, the bank allowed Zaia Arthur & Associates to broker at least a dozen other loans of more than $40 million during the next four years”, Fairfax reported.
“The loans were approved through the CBA’s Box Hill branch, regardless of whether the properties were in Toorak, Brunswick, South Yarra, Mildura or New South Wales.
“Victims have alleged the company had an ‘inside man’ at the branch, who received a share of the profits, luxury goods and holidays as payment.”
A Commonwealth Bank spokesperson told Fairfax: “In regard to your questions relating to events in 2007, you would appreciate that there are currently fraud allegations regarding Zaia Arthur & Associates before the court and as such it is not appropriate for us to comment.”
[Related: Another man arrested in $100m fraud case]
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