When trader Etienne Alexiou was poached from Barclays to join Australia's third largest bank ANZ (Australia and New Zealand Banking Group) in 2011, he was paid about 3.7 million Australian dollars (€2.4 million) to compensate for the bonus and share incentives he would no longer be getting. After that, the money got serious.
Between 2012 and 2014 Alexiou got bonuses from ANZ of A$11.3 million in cash and deferred shares. He lived in a mansion worth A$7.2 million in Point Piper, Australia's most expensive street, where one of his neighbours was prime minister Malcolm Turnbull.
Life was good. Until it all came apart.
Alexiou was sacked last September for “serious breaches of ANZ’s code of conduct, policies and values”. His mansion is for sale and he is suing ANZ for A$30 million to cover deferred shares, bonuses and the loss of future income.
On the evening in June 2011 after Alexiou signed his contract with ANZ, the bank’s then global head of fixed income Rob O’Callaghan met the new employee.
According to court documents the pair, accompanied by two female human resources employees, celebrated Alexiou’s recruitment at a lap-dancing club near the bank’s then headquarters in Martin Place, the heart of Sydney’s financial district.
Though Alexiou was suspended in 2014 during investigations into alleged manipulation of trading, the reason cited for his dismissal was the use of “highly offensive and inappropriate” language in emails and on an instant messaging service called Bloomberg chat. According to ANZ’s termination letter submitted to the Fair Work Commission, the Australian government’s industrial relations body, the chats included comments disparaging to women and references to strip clubs and drugs.
Within months of starting at the bank, at least one colleague was concerned about the tone of Alexiou’s conversations.
“I can imagine ANZ and CBA [Commonwealth Bank of Australia] compliance guys reading this chat,” the colleague reportedly said. But Alexiou allegedly reassured him, saying the messages were “not exactly sackable”. He was right. At least for time being.
Shocking allegations
Two years later, in August 2013, ANZ claims that in a chat about drugs, Alexiou said: “I admire anyone that can win Tour de France on drugs, I usually cant [sic] find my door keys when I am on drugs.”
Firing back against his former employer, Alexiou's statement of claim before the court makes some shocking allegations. He says he told senior ANZ management on at least three occasions about unethical treatment of clients, including a complaint in October 2014 to head of governance John Chase and head of global markets compliance Fred Pucci, in which he raised concerns about the bank potentially breaching Australia's Corporations Act.
After a “white substance” was found in the male toilet of the bank’s dealing room floor, documents filed by Alexiou allege a senior ANZ markets trader said: “What a waste, it should have been sprinkled on a birthday cake.”
Alexiou claims he was “exposed to a culture” at ANZ that “openly condoned” behaviour which went against its code of conduct, values and policies.
His submission claims what he calls a “living culture” over-rode ANZ’s official code of conduct, which includes principles such as “We act with honesty and integrity”, “We treat others with respect, value difference and maintain a safe working environment” and “We immediately report any breaches of the code, the law, or ANZ policies”.
Existing culture
Alexiou was tested on the code in September 2011, three months after starting at the bank. He scored 50 per cent, but says he was not required to undertake any further training. He claims the test consolidated the opinion there was “an existing culture within ANZ Global Markets that condoned behaviour inconsistent with the code”.
Eddie Listorti, acting head of global markets at ANZ, signed Alexiou's termination letter. He rejected Alexiou's allegation that the actual or "living" code of conduct was at odds with the official code and said as a "highly remunerated" executive, Alexiou was responsible for setting the culture.
In what may not augur well for Alexiou’s case, a claim by another former ANZ trader, Patrick O’Connor, has been dropped. O’Connor, who was sacked last October, was suing the bank for about A$5 million and claimed the bank “created, supported and encouraged” a “toxic and unsafe culture”. He had worked for the bank for 10 years and was fired for allegedly running up corporate credit card expenses of A$37,000, including A$18,000 on rare coins and A$2,740 on alcohol.
ANZ said O’Connor “decided to discontinue his legal action” and no payment had been made to him. Each party would meet their own legal costs, the bank said.
O’Connor, who had promised to reveal more embarrassing details about the behaviour of the senior ranks in the bank through the court process, said he had “thought long and hard about the undoubted very difficult fight ahead and the financial and emotional resources needed to continue my legal action . . . Reluctantly, taking many matters into consideration, I have decided that I am not prepared to put my family through that.”
For ANZ it is a case of one down, one to go. Before O'Connor withdrew his claim, the bank's chief risk officer, Nigel Williams, defended ANZ in a statement to the Australian Financial Review newspaper. "ANZ will be vigorously defending both their court applications," he said. "Mr O'Connor and Mr Alexiou's claims are difficult to read for all of us at ANZ but common sense says their behaviours are not consistent with our code of conduct and cannot be tolerated."
Williams said ANZ recognised Alexiou and O’Connor’s claims came at a time of “community concern about behaviours in some financial markets businesses around the world” and as the Australian Securities and Investments Commission conducts an investigation into the bank bill swap rate.
“We want to be known as a bank with a strong focus on culture, ethics and fairness,” he said.
ANZ made A$7.4 billion in cash profits last year. If it wants to retain that level of profitability, it must be hoping Alexiou’s claim soon goes the way O’Connor’s did.
