Exposing shocking tactics of Australia's ruthless big banks | 60 Minutes Australia

[Music] from cans in tropical North Queensland to the lofty heights of the Commonwealth banks Sydney office a showdown is brewing between a battler businessman Roy Lavis and the bank he accuses of shafting his business the whole nation is being held to ransom by the banks because they are not doing the right thing by small business to grow and prosper how are you how are you the hot seat please from its corner the Commonwealth Bank denies it's done anything wrong did you destroy Roy Leigh versus business that is a view that we completely disagree with tonight what the bank didn't want you to know we believe if the Commonwealth Bank hadn't acted the way they did his business would have survived the definitive findings of the government's small business Ombudsman condemning the bank and backing its victim unconscionable conduct is illegal but the only people who can determine unconscionable conduct is the court now how is Roy or any of these other people who have been hurt going to take a bank on in court at 70 Roy ladis is a devoted husband father and grandfather in 1977 he started with nothing but a vision and the support of wife Alma but over three decades he built up one of northern Australia's biggest construction businesses the cec group it's been tough hasn't it it's been very tough would have been the last moments what watching my family what's my family goes through it you were the provider with you that's right well that uh supposed to provide for my family Roy Lavis helped build this city from major roads to entire suburbs even the iconic Cannes Esplanade there's not a lot of cans since 1977 that was built that we didn't have some part of the bloke who built cans yeah we were a property developer we were a civil contractor and we were construction material business what's your proudest achievement the proudest achievements is employing so many people in cans at its height Roy's CEC group was worth a quarter of a billion dollars employing 750 locals and listed on the stock exchange we bought this as the dishes came farm and in 2007 it went into property development buying land to build housing estates like this from scratch you'd put in the curves and the guttering in the roads and the surge and the plumbing yeah all that was part about our organization we supplied our own concrete Quarry products bitumen it was the beginning of the global financial crisis but the Commonwealth Bank still enthusiastically supported the businesses growth offering a 60 percent increase to Roy's business loan to 161 million dollars by the end of 2007 that's a lot of money Roy that's right were you worried no essentially there was a vote of confidence in your company wasn't it a normal wolf Bank they were thinking this guys are sure bit we were putting a million dollars a day into the Cannes economy you were one of their golden boys that's correct I was being presented as being the company to invest in but in the space of two months Roy says everything changed he says that having approved the additional funds the bank thinned backflipped in late February 2008 demanding that Roy more than half his borrowings in the next eight months what happened I don't know overnight they wanted me to go to Brisbane I went to Brisbane and in a meeting they said we want you to reduce debt so effectively within a year they were wanting you to have you dead that's correct they they'd offered you the money they're practically throwing it at you that's wrong what did they say when you said look I'm paying my interest I'm paying my principal what did they say though is sign if we don't reduce well a receiver would be brought in [Music] here in Cannes what still bewilders ROI Lavis is that through three decades of his company's operations he never once defaulted on the repayment of his business loans principal or interest and for that reason like most of us would he thought that meant he'd be safe he says though that what finally pushed him into financial default was the bank's relentless demands that he keep on reducing his debt to the point where he could just no longer pay his bills to meet calm banks hefty demands Roy was forced to sell his most lucrative assets a waste management facility and concrete plant cash flow dried up and in May 2011 the receivers were sent in just got to a point where the payments was squeezing the lifeblood out of the ability for the company to operate I'm sure I speak for everybody at home I'm asking why why did the bank do this I think it's quite as simple as the bank decided that construction in North Queensland was risky cuz there was a number of other cases in the same sort of industry that they wanted to reduce their risk ratios which reduces the cost of capital and Roy and others were collateral damage is that fear no or reasonable or ethical in explosive criticism of calm bank Australia's small business Ombudsman kate canal describes the bank's treatment of Roy's business as highly unreasonable and potentially unconscionable which could mean the bank acted illegally unconscionable conduct is conduct that expect weed or perceive was unethical immoral and wrong now the problem comes is that all of those those words are just used are in the eyes of the beholder a bit so the court system have to determine the big guy acted really badly and illegally in the space do you think the Commonwealth Bank acted really badly against Troilus any doubt of this I mean this guy was growing his business with the bank right beside him egging him on encouraging him saying you're fantastic right and literally within weeks they changed the the goalposts and that's so unfair coming up why the Ombudsman once the bank's put on trial people really were treated unfairly and really do need to have some justice and confronting the Commonwealth Bank raises real questions as to whether the small business on the students office actually has the skills and the knowledge and the understanding toward a case like this that's next on 60 minutes you proud of what you've done here right oh very proud battler businessman Roy Lavis used to run one of far North Queensland's most successful construction companies the cec group and this is all yours we did all work the business collapsed in 2011 and Australia's small business Ombudsman has now found that if not for the actions of the Commonwealth Bank Roy's company would be thriving today well it's perplexing to us as to how the small business Ombudsman could come to these views because they don't marry at all with offense the Commonwealth Bank is so defiant it did nothing wrong it's Chief Risk Officer David Cohen is speaking out to publicly defend his bank the small business Ombudsman says were it not for the actions of the Commonwealth Bank Roy Leigh versus business would have survived she flatly accuses you of destroying Roy's business it raises real questions as to whether the small businessmen's business Ombudsman's office actually has the skills and the knowledge and the understanding to look at a case like this the fact of the matter is that if it was not for Commonwealth there CEC would not have survived for as long as it did all these years later the bank no claims its crippling debt reduction was actually the idea of roil Avis and the CEC group all along it was not Commonwealth Bank telling CC that need to reduce debt in fact it was a reverse CC came to come wealth Bank in December 2007 saying we need to we need to David that's not correct nobody's saying that the chairman of the committee kept the company at the time roy latest the chief executive they say in mid february 2008 you did a complete backflip on an agreement to provide a 160 million dollar loan facility and pulled the pin on that insisting in a dramatic reduction in debt well that is simply not true but Ombudsman kate Connell is backing roy latest and CEC's version of events there is nothing in any of the significant amounts of documents we've looked at to indicate that Roy didn't have the capacity to continue to trade so let me be clear about this you believe that the Commonwealth Bank shut roll Avis done for no good reason I think that by doing what they did to Roy remember requiring him to pay back money in really short periods of time with no real evidence on why this needed to happen this caused a scenario where Roy's business went into due to decline and went into liquidation when Roy lay versus company was wiped out in 2011 it impacted an entire region 750 locals lost their jobs and thousands more subcontractors and mum and dad shareholders made huge losses when it happened was it hard for you to walk the street here in Cannes no definitely because you know I've filed people who I employed the people who I was doing business with somebody's suppliers the people that I encouraged to invest in our company the local federal MP were an inch was on the board of CEC from what happened to Roy it's out right when he says the company collapsed under the weight of calm banks demands they were just focusing on exiting this region and they were going to create an excuse to do it come hell or high water and that's exactly what they done and you blame the bank oh it was totally engineered by the banks there's no question about it that's one hell of an allegation no word it's a fact the bank says it's done nothing wrong let me tell you these agreements that the banks get you to sign they could take you out to the back of the shed and shoot you literally shoot you and they could argue successfully that it's within the terms of agreement I mean it is so much one-sided there is nothing that the banks could not do that they couldn't argue they're doing legally because it's in the terms it because it's within the terms of agreement when I started in this process for this banking inquiry I believed that you know that there'd be two sides to every story I believed that you know that banks wouldn't operate this way I just believed that it was just the the more we got into these stories like yours the more I realized people really were treated unfairly and really were hurt and really do need to have some justice welkom Bank is our biggest Bank it has I think an obligation a moral obligation to you know to settle with people like Roy both Cate Carnell and Warren inch are backing calls for a bank tribunal with the power to investigate cases like Roy's and to levy penalties against bad banks the banks do need to be held to account and if we can't do that with a tribunal then the only other option is a Royal Commission something tells me David this is going to end up in the banking tribunal they want rule a versus case to be test case number one are you worried about that we are very happy to appear before any tribunal so just to be clear Commonwealth Bank made no mistakes in royal a vs. case Commonwealth being supported CEC for three and a half years to enable it to survive we sought to work with CC to help it survive did you make any mistakes we continued to support CEC throughout the three and a half years for Roy his battle with the Commonwealth Bank is far from over if nothing else he's determined to keep fighting for change so that no other or Australian business suffers the same fate the whole nation is being held to ransom by the banks until that stops as a nation we're gone no way if you had the opportunity to to stare down the men I'd love to would you say that I'd say you bastards look what you did to so many people in Cannes and the whole Cannes community and what are you doing to the rest of the people in Australia you know stories there every day to thank pastor duty hello I'm Tara Brown thanks for watching to keep up with the latest from 60 minutes Australia make sure you subscribe to our channel you can also download the 9 now app for full episodes and other exclusive 60 minutes content

Channel: 60 Minutes Australia

Views: 401,149

Rating: 4.8074422 out of 5

Keywords: 60 Minutes, 60 Minutes Australia, Liz Hayes, Charles Wooley, Tara Brown, Liam Bartlett, Allison Langdon, Tom Steinfort, Ellen Fanning, Peter Overton, Peter Stefanovic, Jana Wendt, Jeff McMullen, Richard Carleton, Tracey Curro, Paul Barry, Peter Harvey, Michael Usher, Ross Coulthart, George Negus, Ian Leslie, Gerald Stone, Sarah Abo, big banks, commonwealth bank, boom to bust, cairns, australian banks, banking

Id: 2w6q9WLZbzI

Length: 15min 40sec (940 seconds)

Published: Thu Aug 15 2019