Clik here to view.
Commonwealth Bank in new lawsuit over climate risks
Byron Kaye
8 August 2017
SYDNEY (Reuters) - A husband and wife filed a lawsuit against No. 2 Australian lender Commonwealth Bank of Australia on Tuesday accusing it of failing to disclose investment risks associated with climate change, adding to publicity headwinds for the bank.
The unprecedented lawsuit comes less than a week after a government regulator took the A$140 billion ($111 billion) bank to court for alleged breaches of anti-money-laundering rules, a case some analysts believe will lead to hefty fines.
Both legal actions will overshadow proceedings when CBA reports what is expected to be a record annual net profit on Wednesday.
The legal firm running the environmental case, Environmental Justice Australia, said it was a world first
with potentially far-reaching ramifications for corporate Australia.
It was the first time shareholders of a financial services firm had sued for inadequate disclosure of investment risks associated with climate change, the firm said.
Complainants Guy and Kim Abrahams, who bought CBA shares in the 1990s, decided to sue when the
bank did not agree to name climate change as an investment risk in its annual reports.
“The public interest aspect to the case is quite strong (because) the consideration of climate risk for a major financial institution, let alone company, hasn’t been before the courts in Australia,” EJA lawyer David Barnden said.
“There should be ramifications throughout the listed companies and boardrooms Australia-wide if the
case were to succeed.”
CBA had no immediate comment on the lawsuit.
The Abrahams’ statement of claim accuses CBA of “failing to give a true and fair view of the financial position and performance” of its business by omitting climate risks from its financial statements.
The court must now give a date for a directions hearing.
LOOK AT ALL THE OTHER BANK UNDECLARED RISKS RE MORTGAGE FRAUD AND DERIVATIVE ACCOUNTING AND JUNK BONDS
BFCSA: Do Big Five banks fear levy will expose derivatives danger lurking beneath their books?
Posted on Monday, 22 May 2017 in ROYAL COMMISSION URGENT
..........The growth in derivatives speculation by Australian banks has been extremely rapid since the 2008 crisis, more than doubling from $14 trillion to $35 trillion. These contracts are held “off balance sheet”, and three of the Big Five—CBA, NAB and Macquarie—have stopped disclosing their full multi-trillion dollar derivatives exposure, revealing only the much smaller, tens of billions “credit equivalent” exposure instead.
It is a scandal that this is allowed, especially after the 2008 crash, which proved such derivatives accounting to be fraudulent.
As Financial Instruments Specialist Pauline Wallace of accounting giant PWC said in the 4 November 2008 Sydney Morning Herald, “I’ve always regarded it [derivatives accounting] as a bit of a magic trick. Magicians come to parties, and they make things seem to disappear. The risk is somewhere, but you never knew where,” she said.
The bank levy, if the government insists it apply to each contract, will force them to account for their full liability—both a massive accounting task, and potentially much more expensive for the banks than the initial calculations of what the levy will raise. This will actually test how real the banks’ profits are, which, given their heavy derivatives gambling, are suspiciously high in an Australian economy that is actually collapsing, losing productive jobs and industries left, right, and centre.