The Witch Hunt on Westpac Does No One Any Favours

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Always eyes watching you and the voice enveloping you. Asleep or awake, indoors or out of doors, in the bath or bed- no escape. Nothing was your own except the few cubic centimeters in your skull.

George Orwell, 1984

I was born in a small village called Burntisland in Scotland.

It sits on the banks of the Firth of Forth, an estuary that separates the Kingdom of Fife from the capital, Edinburgh.

I remember as a youngster looking across the channel, seeing the glowing lights of the ‘big city’ far away in the distance.

But back in the 1600s the glowing embers would have firmly been on my side of the shore.

You see, Burntisland was famously known for as a witch burning town. A bad time and place for any woman who crossed the religious zealots of the day.

Take the case of poor Janet Brown as described by the Burntisland Heritage Trust:

In 1648, the unfortunate Janet Brown of Burntisland was put on trial by the Commissioners – a panel of men drawn from the local establishment for the express purpose of conducting witchcraft trials.

It was normal practice for a suspect to be interrogated prior to the actual trial – this typically involved forms of torture, perhaps the use of thumbscrews or sleep deprivation.

Another grotesque practice was witch-pricking, the insertion of a long pin of wire into the body to test for pain sensitivity and the presence of blood. So common was this operation that a new profession – witch-prickers – came into being, comprising men skilled in the operation and interpretation.

Burning at the stake usually followed.

Gruesome times…

A mere accusation was as good as a death sentence. The ‘trial’ was just for show.

It’s amazing to think this is a real part of our shared human history.

And yet the psychology of witch hunts is still with us today.

The mob mentality, the presumption of guilt, and the hysterical baying for blood are alive and well. It’s why we still use the phrase.

Which brings us to an unlikely defence from me today…

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Outrage ends badly

Now, as you know I’m no fan of the big banks.

A bunch of rent seekers, devoid of innovation and imagination. They’re the opposite of all that free markets stand for, while simultaneously pretending to be bedrocks of such a system.

Thankfully, I think their time is nearing an end.

The writing is clearly on the wall for anyone who cares to look. But I won’t regurgitate that today. Suffice to say there’s big opportunities in small disruptors if you know where to look.

So, like I said, I’ll have a go at the big banks with the best of them. Their faults are aplenty.

But I also think the furore over Westpac right now is a bit overdone. It almost seems like a witch hunt.

And like any good witch hunt, the emotions of the mob are stirred up in full.

As ABC news reported:

Community outrage and Federal Government anger now threatens to boil over following revelations the bank aided and abetted child pornographers and child exploitation on multiple occasions and did absolutely nothing to stop it.

Home Affairs Minister Peter Dutton was eager to lead the charge proclaiming in parliament.

It is clear…that the Westpac banking bosses, through their negligence, have given a free pass to paedophiles.

Is this true?

Did employees at Westpac knowingly allow money to go to into the hands of such people?

I think that’s a bit of a stretch…

The more likely answer is that Westpac set up a sophisticated system — probably on the advice of some highly paid consultants — to attract the kinds of companies who might’ve wanted to minimise their taxes. The other stuff was collateral damage.

Thomson Reuters Chief, Nathan Lynch is certain of it:

That’s what this case is all about — it’s the facilitation of massive, high-level, cross-border tax evasion.

But we’re not hearing much about that though, are we?

It’s all terrorism and paedophiles. The usual bogeymen that get rolled out anytime governments want to bring in new laws.

I worry there’s a dangerous level of opportunism at play here.

And the unintended consequences of knee-jerk reactions might punish everyone…

Big Brother and hidden agendas

Money is a form of privacy as much as any other personal details. It should have some protections as such.

I don’t want my kids growing up in a world where they don’t have the freedoms I had. But it seems to be the way we are drifting…

I worry that some will try to use Westpac’s woes as cover to further entrench draconian laws that allow Big Brother to watch over even more than they do already.

‘It’s for our own good,’ they’ll tell us.

But tax-dodging companies will be alright. They’ll find new ways to avoid taxes, and no doubt criminals will find new ways to shift money too.

Meanwhile, we end up in a world even George Orwell would’ve thought over the top.

Do we really want to give governments the power to snoop on all aspects of our lives?

Giving up control of the ability to spend money as you see fit is giving up an enormous privacy.

As you might know, the government are already pushing a bill to ban cash payments of over $10,000.

As the ABC reported:

The proposed law would force Australians to use electronic transactions or cheques over cash for payments above $10,000 and impose two-year jail sentences and fines of up to $25,200 if they don’t.

A two-year jail sentence for paying by cash?

That’s a third of the sentence Cardinal George Pell copped for actual paedophilia.

It seems clear to me that government — and its regulatory bodies — are looking to control money. Your money.

The Westpac situation could turn into a convenient tool to push for even more power, and I fear any laws will work out bad for us in the end.

I’m certainly not defending the big banks here.

Crucify Westpac and the big banks for the many wrongs they’ve made, yes.

But don’t burn us all down in the process…

Good investing,

Ryan Dinse,
Editor, Money Morning

PS: Bank Busters! Three Aussie tech plays outsmarting the ‘big four’ banks. Click here to find out more.

About Ryan Dinse

Ryan Dinse is an Editor at Money Morning.

He has worked in finance and investing for the past two decades as a financial planner, senior credit analyst, equity trader and fintech entrepreneur.

With an academic background in economics, he believes that the key to making good investments is investing appropriately…

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