The Facts

Error by staff member creates vulnerability in bank's systems

In March 2010 a 22-year-old customer of St George Bank opened a new account at the bank's Goulburn branch. The new account was marketed – all too aptly, as it turned out – as a "Complete Freedom" account and was essentially a savings account with no overdraft facility.

However, the staff member who opened the account wrongly marked it as having a "relationship officer" assigned to it. The role of the bank's relationship officers was to approve or disallow withdrawals beyond the available credit limit of the accounts for which they were responsible.

The bank did not normally assign relationship officers to retail accounts such as the Complete Freedom account. The absence of a relationship officer meant that the customer was able to withdraw money which he did not have.

Customer becomes aware of glitch and withdraws increasingly large sums

The customer became aware of this glitch in the bank's systems some months after opening the account and proceeded to withdraw increasingly large sums via electronic transfers, cash withdrawals and direct debit facilities until August 2012, when the bank finally discovered the extent of his indebtedness.

By this point the account was overdrawn by $2.18 million, which included a substantial sum for interest that the bank had charged on the withdrawals that the bank itself had permitted.

By the time the man was arrested, he had spent the withdrawn funds buying an Aston Martin, a Maserati, a Hyundai, an Alfa Romeo and a 6.1 metre boat, as well as paintings, jewellery and memorabilia.

The man was charged with dishonestly obtaining a benefit by deception and dealing with the proceeds of crime. He pleaded not guilty and so it was up to the court to decide his innocence or guilt.

Case a - The case for the defence Case b - The case for the prosecution
  • I opened the bank account in my own name using legitimate identification and conducted all transactions under my own identity.
  • Everything I did was easily traceable.
  • I didn't do anything to cause the bank to let me withdraw money I didn't have.
  • None of my actions involved any breach of trust and there was nothing covert about my behaviour. I didn't lie to the bank at any point, I didn't forge anything and I never used an alias or a disguise.
  • I didn't deceive the bank by making withdrawals which the bank's own systems permitted me to make.
  • The customer knew that he was not entitled to withdraw money which he did not have.
  • His actions were systematic, calculating and sustained over a period of two years.
  • His method of channelling the money via PayPal to other sources is proof of his dishonesty.
  • His assertion that he thought he could do what he wanted with the bank account because we didn't query or stop him is so unconvincing as to be laughable.
  • His increasingly audacious behaviour in withdrawing larger and larger sums from the account is inconsistent with his claims.

So, which case won?

Cast your judgment below to find out

Vote case A – The case for the defence
Vote case B – The case for the prosecution

Fouad Awada
Criminal law
Stacks Heard McEwan

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.