UK Treasury Committee

A follow-up letter has been sent to the Chairman of NAB, Michael Chaney, seeking an explanation at to whether the toxic “Tailored Business Loans” were marketed in Australia and New Zealand.

If this these toxic loans were not marketed in Australia and New Zealand then what was the reason?

Instead of marketing business loans with a “cap” to protect the borrower, NAB in the UK marketed business loans with a “collar” to protect NAB and to increase profits if interests rates fell in a softening economy.

26 March 2015 NAB Chairman

The letter on the following link has been sent to the UK Treasury Committee who conducted an investigation into the operations of a subsidiary bank of the National Australia Bank.

UK Treasury Committee 25 Mar 15

This letter is reproduced below with hyperlinks to other pages on this website.

The following letter was sent to the Chairman of NAB so as to provide an opportunity of reply.

25 March 2015 NAB Chairman


Attn: Mr Andrew Tyrie MP


UK Treasury Select Committee

Dear Mr Tyrie

Re: Can the Committee Trust NAB?

I refer to the Committee’s report Conduct and competition in SME lending.

Media reports have noted that the Committee was particularly scathing over the conduct of Clydesdale Bank owned by the National Australia Bank (NAB) and the “Tailored Business Loans” which were designed to avoid regulatory scrutiny.

I refer to paragraph 161 of the Committee’s Report:

“161. The lack of public oversight, minimal transparency and limited coverage of the scheme mean that the Committee cannot be confident that Clydesdale’s separate internal review will deliver outcomes equivalent to the FCA review upon which it is intended to be based. If Clydesdale’s aim is to build public trust in its actions, it should address all three of these problems.”

Whether there is an honest attempt to provide adequate compensation will depend on the direction given to Clydesdale Bank management by the Board of the National Australia Bank(NAB).

So this raises the question:

“Can the Board of the NAB be trusted to ensure adequate compensation is provided?”

The answer to this question can be found in my own dealing with the Board of the NAB with respect to the failure of a trustee company owned by NAB to pay widows their pensions.


In order to understand this case it is necessary to go back in time over a century.

One of Australia’s earliest occupational pension funds was established in 1913 by Elder Smith & Co Limited to provide pensions to male officers who completed at least 15 years of service with the company.

Elder Smith & Co Ltd was a pastoral trading company with offices in London and all mainland Australian States. More details on the company history can be found here.

In the 1950’s the pension formula was a amended to provide increased pension benefits in the event that a male officer was retrenched before the early retirement age of 60 and a survivorship pension was added for the widows of the male officers. Member contributions were increased from 2.5% to 5% of salary to pay for the increase in benefits.

In 1963 Elder Smith & Co Ltd merged with Goldsbrough Mort & Co Ltd to form Elder Smith Goldsbrough Mort Ltd (ESGM) and the terms of the trust were amended by the Parliament of South Australia {Elder Smith & Co Limited Provident Funds Act 1963 (SA)}.

In 1982 ESGM acquired Henry Jones IXL Ltd and the CEO of this company, John Elliott, became CEO of ESGM which was then renamed Elders IXL Limited.

In 1986 Elder IXL Limited acquired Courage Breweries in the United Kingdom. This resulted in the famous pension trust law case: Re Courage Group’s Pension Schemes {1987} 1 W.L.R. 495

The original Trust Deed of the Australian pension fund had been drafted by Sir John Downer who co-drafted the Australian Constitution. The Power of Amendment provided in the Trust Deed required a majority of the Directors of the sponsoring Employer to execute any Deed of Variation.

Furthermore the terms of the trust were amended in 1973 to provide a power to the members to remove and appoint two natural person trustees and for the pensioners to remove and appoint one natural person trustee. The sponsoring Employer retained the power to remove and appoint the remaining two natural person trustees.

Therefore prior to 1982 the Fund had a very prudent governance structure with member and pensioner elected trustees and a requirement that a majority of the Directors must execute any Deed of Variation that would amend the terms of the occupational pension trust.

So what could go wrong for the members of this Fund?

Loss of Governance

On 20 December 1982 Mr Elliott unlawfully removed all five natural person Trustees and installed his own private company as the purported Trustee. There were no member or pensioner elected Directors on the Board of this trustee company.

Subsequent amending instruments were not even “Deeds”, as stipulated in the founding Trust Deed, but “Resolutions” that were only executed by one Director and not by a majority.

Therefore the members and pensioners lost oversight of the administration of their fund and the independent Directors on the Board of Elders IXL Ltd had no involvement with purported amendments made to the terms of this occupational pension trust. More details on the loss of governance can be found here.

Over $100 million was then transferred from the Trust Estate to the private company of Mr Elliott between 1982 and 1992. More details on these transfers can be found here.

Members were no longer paid pensions by the purported corporate trustee, but were instead paid a lump sum benefit equivalent in value to around 20% of the pension benefit and widows received nothing. Details of the lawful pension benefit can be found here.

Because superannuation is compulsory in Australia, the Parliament has made it a criminal offence in its own right to conceal the original Trust Deed and any amending instruments from a person who has a beneficial interest in a pension or superannuation trust. More information on the right of access to Deeds can be found here.

National Australia Bank Involvement

The trusteeship was handed over to the legal advisor to Mr Elliott’s private trustee company in 2006 as a reward to concealing the Deeds in legal proceedings in the Supreme Court of Victoria in an action initiated by a member-elected Director in 1996 after the Government introduced the “equal representation rule” after the Robert Maxwell Pension Scandal in the United Kingdom in the early 1990s. More details on the Robert Maxwell Pensions Scandal can be found here.

The member-elected Director asked to see certain “trust documents” in preparation for his first Board meeting, however he was sacked with one day’s notice, effective the day before his first Board Meeting. It should also be noted that file copies of the genuine Deeds held by the drafting solicitors where obtained under false pretences and destroyed.

The new corporate Trustee appointed a subsidiary company of the National Australia Bank to be the fund administrator on 1 July 2006.

Despite many requests the purported Trustee refused to provide me with access to the 1913 Trust Deed, but instead represented a document dated 26 August 1986 as the “Trust Deed” of the Fund. A letter from the former Fund Secretary can be found here.

However I joined the company a year and a half earlier in March 1985!

The document dated 26 August 1986 bears the signature of Ken Jarrett, the former Finance Director of Elders IXL Ltd, who served a term of imprisonment for dishonestly after three major investigations by the former National Crime Authority.The document signed by Mr Jarrett is easily proven to be fraudulent here.

I then wrote to the Chairman of NAB, Mr Michael Chaney, as well as the General Counsel of NAB Wealth.

In the case of trust accounts, a banker has a duty of care to both the Trustee as well as the beneficiaries of the trust, and a banker has a duty to make reasonable inquiries if altered to potential abuse of the trust account.More details on a banker’s duty of care can be found here.

However instead of taking any action to protect the members and beneficiaries of the Fund, the General Counsel pleaded the “Nuremberg Defence”, claiming that the Fund Administrator as an agent of the purported Trustee was only “acting under orders”.

However on 20 January 2014, another NAB subsidiary company became the Trustee of the Fund, so that the “Nuremberg Defence” no longer applies.

The original provisions providing for pensions have never been revoked so the NAB Trustee is a trustee that is simply refusing to execute the trusts associated with this occupational pension trust.

The Directors of the NAB Trustee have been unable to produce any Deeds of Variation that repeal the pension provisions and even if such a document or documents existed, a Court would declare them invalid under the doctrine of a “Fraud on a Power”, unless equivalent or better benefits were provided in the Deed of Variation.

Repeated requests have been made to the Chairman of NAB and other Directors to ensure that the NAB Trustee obtains Judicial Advice on the terms of the trust. The High Court of Australia has made a general recommendation that trustees should obtain Judicial Advice if they wish to be protected from a personal liability for a Breach of Trust. The importance of seeking Judicial Advice is covered in more detail here.

These requests on behalf of the widows entitled to be paid a survivorship pension have been ignored by the Chairman and the Board of Directors of NAB. The Directors include a former Secretary of the Treasury (Australia) and a former Deputy Chairman of the Financial Regulator (ASIC).

The legal relationship between a borrower and lender is much different to that between a trustee and a beneficiary under the trust.

A trustee is the archetype “fiduciary” who must act honestly and in the best interests of the beneficiaries.

The Clydesdale Bank sold a complex financial product without providing a proper disclosure of the risks involved, however it is still a case of “borrower beware”.

The borrowers still signed contracts with the bank, without obtaining their own professional advice of the financial product being sold by the bank.

The actions of Clydesdale Bank were unethical but they do not amount to outright fraud as is the case of a purported trustee who criminally conceals the genuine Deeds of the trust and then refuses to pay widows their pensions.

How can the Board of any bank tolerate such criminal conduct? Especially when the victims are widows and not just small business people who should have some financial skills, but who place their trust in their bank?

So can the Board of the NAB be trusted?

This letter is just a brief summary of my dealings with the Board of NAB and much more details can be found on the victims’ website


I will let the Chairman of the Select Committee and the other members be the judge of the question:

“Can the Treasury Committee trust the NAB?”

Yours sincerely

Phillip Sweeney

{Victims’ Action Group – The Elders IXL Pension Funds Fraud}

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This tab updated on 25 March 2015