The chief executive of Australia's Westpac Banking Corp. resigned on Tuesday over money laundering scandal involving child exploitation, just a day after he told the staff it was "no big deal" and that he intends to stay.
The nation's financial crime regulator, Australian Transaction Reports and Analysis Centre, is pursuing Westpac in the Federal Court of Australia for allegedly failing to report millions of global fund transfers, including payments allegedly linked to child exploitation in Southeast Asia.
Financial planner AMP Ltd lost its Chief Executive, chair and several board members over accusations of doctoring a supposedly independent report to a regulator.
Mr Hartzer will forfeit 636,540 unvested share rights worth $15.56 million before Tuesday's open and - with his FY19 short-term bonus already scrapped - will also go without short-term bonuses for FY20 and FY21.
"As appropriate, we solicited feedback from our stakeholders, including shareholders, and it became clear that changes to the board and management were in the best interest of the bank", mentioned Maxsted.
Mr Hartzer will step down next week and be replaced on an interim basis by chief financial officer Peter King, while Mr Maxsted is no longer seeking re-election at next month's AGM and will retire in "the first half of 2020". King announced his retirement in September but will remain until a eternal replacement is appointed.
Westpac released a statement outlining its response plan to AUSTRAC's legal action, with chairman Lindsay Maxsted saying the bank was "determined to urgently fix issues".
Australian Prime Minister Scott Morrison had called on the bank to consider the CEO's future last week after the country's financial crime agency, AUSTRAC, made the allegations in a lawsuit against Westpac.
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But in its submission to the Federal Court, Austrac noted that each of the 23 million breaches it said Westpac had committed can carry a civil penalty of A$17-21 million.
In theory, Westpac could face a fine up to 483 trillion Australian dollars (US $330 trillion).
"The behaviour at Westpac under Brian Hartzer's leadership was nothing short of disgraceful", shadow treasurer Jim Chalmers told reporters in Canberra.
"I had conversations with Westpac and these discussions were constructive", he added.
"It follows the strongest, clearest comments from the prime minister and the treasurer about community expectations, and government expectations, in the face of what is a serious and profound breach", he said. Westpac's competitor Commonwealth Bank paid a A$700m fine for similar breaches past year. He negotiated a settlement of 700 million Australian dollars.
The financial institution's then chief government Ian Narev had his retirement introduced ahead, whereas Nationwide Australia Financial institution chief government Andrew Thorburn and chair Ken Henry departed within the aftermath of the royal fee.
Maxsted had initially stood behind his CEO and commenced a string of meetings with institutional investors in an effort to stave off a shareholder backlash against the board at the bank's annual general meeting on December 12.