The government of Nauru has dismissed reports Westpac has cut ties with it as “a politically motivated fabrication”.
On Thursday it was reported Westpac had informed the Nauruan government it would cease doing business with it and its entities. ABC’s Pacific Beat said accounts would be closed at the end of the month, citing a letter sent to some customers.
Westpac did not deny the report, but told Guardian Australia it could not comment because of confidentiality. The government of Nauru did not respond to requests for comment.
However, on Thursday afternoon it accused the ABC and Guardian Australia of publishing a “politically motivated fabrication”. The response was posted on the government’s Twitter account, often used to respond to media reports after they have been published.
Supposedly "exclusive" story by ABC about banking in Nauru is politically-motivated fabrication. Govt will release statement with facts soon
— Republic of Nauru (@Republic_Nauru) April 14, 2016
In a subsequent statement, the Nauruan government confirmed Westpac had withdrawn services, but suggested the end of the business relationship had been the government’s own decision.
“The Government of Nauru has made a decision to strengthen its business and financial relationship with its chief financial partner, Bendigo Bank,” it said.
On Friday afternoon a spokeswoman for Bendigo Bank told Guardian Australia the bank’s relationship with Nauru had remained the same since it opened a customer service agency in June 2015 after responding to an expression-of-interest proposal.
“Our Bank employs the same public agency model it already uses in 110 Australian communities. Agency staff are employed by the agent, with the Bank involved in operations, including selection and ongoing training,” a spokeswoman said.
Bendigo Bank declined to comment on Westpac’s decision.
In its statement on Thursday the Nauruan government said its business relationship with Westpac “was severed when the bank withdrew financial services to not only Nauru, but nearly all of the Pacific small island states.”
“Unfortunately this has become the norm with a number of smaller higher risk and low turnover nations worldwide as large banks chase profits and abandon services to long established customers.”
Westpac has not had a physical presence in Nauru, and in July 2015 the bank finalised the sale of its banking operations in Samoa, the Cook Islands and Tonga to the Bank of South Pacific. Proposed sales of operations in the Solomon Islands and Vanuatu did not go ahead at the time, and it retained its presence in Fiji and Papua New Guinea.
A spokeswoman again declined to comment, based on confidentiality.
Nauru’s statement also pointed towards a report by the Asia Pacific group on money laundering, which said the country “faces low risks of money laundering and terrorism financing”.
The report, published in 2012, noted Nauru had criminalised both acts, but “some domestic predicate offences are missing”.
“There is no criminalisation of funding terrorist organisations or individual terrorists, other than those prescribed by the Nauru government. At the time of the onsite visit and the period immediately thereafter, no organisation or individual had been prescribed.”
On Thursday Sprent Dabwido, president of Nauru from 2011 to 2013, told Guardian Australia Westpac’s decision was not unexpected.
“It’s ... not a total surprise when you have a government that is reckless in handling the finances of a nation,” he said.
“I can’t blame them because most of the dealings of this government are never straightforward, never black and white,” he said.
