The financial services regulator has permanently banned two former employees of National Australia Bank who were found to have engaged in serious fraud involving home loan applications.
Former NAB employees Danny Merheb and Samar Merjan (also known as Samar Awad) have been permanently banned from engaging in credit activities and providing financial services following an ASIC investigation. The ban commenced on 29 June 2018.
ASIC said the pair had “recklessly” given the bank “false payslips, letters of employment, bank statements and statutory declarations” in home loan applications.
NAB reportedly alerted ASIC to the misconduct of its former employees, alleging that bank staff in the Greater Western Sydney area were accepting false documents in support of loan applications.
Mr Merheb, who later went on to become a mortgage broker, was found to have recklessly given NAB false payslips, letters of employment, bank statements and statutory declarations in respect of home loan applications.
Ms Merjan, who later went on to become a bank manager and personal banker at Westpac, was found to have “knowingly and recklessly” given NAB false payslips and letters of employment in respect of personal loan and credit card applications.
The false information and documentation submitted by Mr Merheb and Ms Merjan were primarily provided to them by a third person who had no association with NAB.
ASIC also found that:
• Mr Merheb falsely attributed a loan as being referred to NAB by an introducer who was a friend in order for the friend to receive commissions dishonestly.
• Ms Merjan assisted the third person in the creation of two false documents, which she subsequently provided to NAB in support of lending applications.
• Ms Merjan was twice offered cash by the third person to process lending applications.
Both parties involved have the right to lodge an application for review of ASIC’s decisions with the Administrative Appeals Tribunal.
ASIC’s investigation is continuing.
NAB welcomes bans after it tipped off regulator
In a brief statement in response to ASIC’s action, NAB said it “welcomes” the banning of its former employees, noting that both bankers were “terminated from their employment with NAB in November 2015”.
The major bank said it had reported the pair to ASIC, which then investigated the loan fraud scheme.
“The bans follow NAB’s announcement of a remediation program for home loan customers in November 2017, after an internal review found some home loans may have been submitted with inaccurate customer information and/or documentation, or incorrect information in relation to NAB’s Introducer Program,” it said.
Royal commission uncovers fraud
The bans come after several instances of fraud were found to have occurred at the bank in the past few years.
Appearing before the Royal Commission into Misconduct into Banking, Superannuation and Financial Services Industry during its first round of public hearings in March, NAB’s executive general manager of growth and partnerships, Anthony Waldron, was questioned over the bank’s failure to adequately disclose instances of fraud in its introducer program prior to 2015.
Documents released to the commission, along with testimony from Mr Waldron, revealed that several NAB employees were allegedly “bribed” by third-party introducers.
In its submission to the commission, NAB also addressed misconduct in its introducer program, conceding that there was a lack of accountability, “governance gaps”, over-reliance on banker behaviour, practices that “reduced the probability of misconduct coming to light” and a “lack of due diligence oversight”.
However, the lender claimed that by October 2017, it had “commenced ‘triangulated reporting’ to monitor unusual changes in banker and introducer performance and behaviour”.
NAB noted that triangulated reporting serves as a “mechanism to monitor the relationship” between customers, bankers and introducers by linking “sudden changes in volumes between banker and introducer” and detecting “unusual loan performance”.
In April this year, four Sydney properties — three of which were business premises — were raided by the State Crime Command’s Financial Crimes Squad as it investigated a major fraud involving a NAB supplier.
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