A rebel member of Australian Prime Minister Malcolm Turnbull’s coalition government is circulating a draft bill to step up pressure for an official inquiry into the country’s scandal-hit banks.
Although the prime minister has staked much political capital on defending the banks, his government’s control of parliament is teetering over a citizenship crisis, giving the bill a chance of passing by the end of the year.
A banking inquiry would turn up the heat on the country’s “Big Four” banks, which have been grilled by cross-party parliamentary committees over scandals including providing misleading financial advice, insurance fraud and rate-rigging.
The draft bill, reviewed by Reuters, was being circulated late this week by Barry O‘Sullivan, a senator of the junior coalition partner, the National Party. It calls for a wide-ranging inquiry to appeal across the political divide.
Turnbull has previously rejected public and opposition calls for an inquiry into the banks but the leader of the Liberal-National-led coalition is languishing in opinion polls and has lost his majority in the lower house. Several lawmakers were forced to quit because they had dual citizenship, making them ineligible for office under the constitution.
The bill suggests the probe should have the same powers as a Royal Commission, including being able to compel executives to testify under oath, to demand documents and to recommend both prosecution and legislation.
It proposes a wide-ranging investigation, including whether banks, insurers and superannuation funds were engaged in unethical or unlawful behavior, and whether a new independent regulatory body should be established.
The inquiry would report to a group of three commissioners appointed by the senate, the draft bill says.
To fend off an inquiry and calls for a Royal Commission, Citigroup banking analysts said on Friday in a note to clients that Turnbull’s government would propose the banks enter into private mediation.
However, they said the banks might reject the idea.
“They may form the view that they will get a Royal Commission under a Labor Government in any case,” Citigroup analysts wrote in a note to clients on Friday, a reference to the opposition party that is gaining ground as Turnbull’s coalition languishes.
“It is still our view the Prime Minister and the Treasurer will oppose a Royal Commission or Parliamentary Commission of Inquiry in the event the banks reject this proposal.”
A Treasurer spokesman said the Citigroup “claims are completely false and the report is misinformed. We are having individual and direct discussions with the banks.”
Commonwealth Bank of Australia (CBA.AX), the biggest of the “Big Four”, faces claims of systemic breaches of money laundering and counter-terrorism-financing laws that could result in billions of dollars in fines and damages.
Australia and New Zealand Banking Group Ltd (ANZ.AX) and National Australia Bank Ltd (NAB.AX) earlier this month agreed to pay A$50 million ($38 million) each to settle interest rate-rigging cases. Westpac is contesting the same allegations.
Anna Bligh, the head of the sector’s lobby group, had said Australia already had one of the most highly regulated finance sectors in the world, and another inquiry would not help to improve confidence in the banking sector.