ANZ CEO Shayne Elliott who is fronting the parliamentary inquiry reviewing the actions of the major four banks this week has said the bank should have never lent $900 million to Indian billionaire Pankaj Oswal.
The bank recently settled a deal with the Indian billionaire couple Pankaj and Radhika Oswal after a bitter legal dispute in the Victorian Supreme Court.
As per a report by ABC News, when ANZ CEO was questioned by Labor's Matt Thistlethwaite about a $900 million loan from the bank to the Oswals, the bank chief told the hearing that in December 2009, "Mr Oswal admitted to senior executives at ANZ that he had falsified the documents" relating to the loan.
Mr Elliott also admitted that the bank did not take that alleged admission to the corporate regulator, the Australian Securities and Investments Commission (ASIC), for about six months.
"He withdrew that admission soon afterwards and said that it was not true," Mr Elliott told the inquiry.
Mr. Elliot then said Mr. Oswal and the bank shared a complex relationship.
"This is a colourful character who admitted all sorts of things. It was a complex relationship."
Mr Thistlethwaite responded, "shouldn't you be wary of loaning $900 million to colourful characters?"
"No, we shouldn't have [lent the money]. We made a mistake, this is wrong absolutely, and we're not debating that for a second, and we let ourselves down in terms of our processes here," Mr Elliott replied.
Mr Elliott also told the enquiry why ANZ continued to do business with the Oswals.
Hr said the bank was tipped off by a whistleblower in 2008 and yet the bank chose to continue to do business with the Oswals.
"A half-finished fertiliser plant is worth less than a vacant piece of land, so it was in everybody's interests that the project get finished," Mr Elliott said.
"That is in the interest to secure the value of the project that it should continue.
"Just because we received an allegation I'm not sure that's grounds to stop funding what is essentially a billion-dollar project.
"We were cautious clearly, but we continued."
ANZ reached a settlement with the Oswals last month following which the Oswals have left Australia.
Their dream house – The Taj on Swan in Perth was demolished by the council last week.
