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NAB controls ‘not adequate’ to stop multimillion-dollar fraud

A major bank has detailed to a parliamentary committee how a top staff member was able to get away with a multimillion-dollar fraud, conceding that its ordinary compliance controls did not at the time extend to the office of the chief executive.

NAB came under questioning at a recent hearing of the House economics committee by Labor MP and committee deputy chair Andrew Leigh as to how the bank had not detected millions of dollars in inflated invoices being processed by the bank’s chief of staff Rosemary Rogers, who was recently sentenced to eight years’ imprisonment.

“Would NAB’s internal accountability and governance mechanisms have discovered this activity without the tip off of an external whistleblower?” Mr Leigh asked in questions on notice to the major bank.

NAB said it was “not prepared to speculate” on whether the fraudulent scheme would have been detected without the assistance of a whistleblower, but said the scenario demonstrated “the value of having a trusted whistleblower system in place and that it works”.

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The bank went on to say that “the controls in the office of the CEO, at the time of the fraud, were not adequate and further, that the usual controls that operated in other areas of the bank were not at that time operating in the office of the CEO”.

“Regard must be had to the circumstances of the fraud. As chief of staff to the CEO Ms Rogers was in a senior and trusted position and was found to have used her delegated authority, seniority and influence in an improper manner,” NAB said.

The bank said Ms Rogers was given a delegated expense authority of $20 million in her role, and “the manner in which the fraud was perpetrated meant that Ms Rogers was able to avoid internal oversight” of her expenses.

Ms Rogers received millions of dollars in kickbacks for processing the inflated invoices on behalf of event management company Human Group, whose director she had a close personal relationship with, according to court documents. She spent the payments on luxury cars, home renovations and extended holidays.

NAB said following the detection of Ms Rogers’ fraud, it had undertaken an internal audit of third-party vendor selection and contract management in the CEO’s office and tightened due diligence on its supplier management processes.

“Since 2018, we have also seen a nearly 40 per cent increase in the size of the team responsible for investigating internal fraud, corruption and serious misconduct concerns,” the bank said.

NAB controls ‘not adequate’ to stop multimillion-dollar fraud
NAB
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