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Two former NAB employees banned for loan fraud

Two former NAB employees banned for loan fraud

The financial services regulator has permanently banned two former employees of National Australia Bank for “recklessly” giving the bank “false payslips, letters of employment, bank statements and statutory declarations” in home loan applications.

Former NAB employees Danny Merheb and Samar Merjan (also known as Samar Awad) have been permanently banned from engaging in credit activities and providing financial services following an ASIC investigation. The ban commenced on 29 June 2018.

NAB reportedly alerted ASIC to the misconduct of its former employees, alleging that bank staff in the Greater Western Sydney area were accepting false documents in support of loan applications.

Mr Merheb, who later went on to become a mortgage broker, was found to have recklessly given NAB false payslips, letters of employment, bank statements and statutory declarations in respect of home loan applications.

Ms Merjan, who later went on to become a bank manager and personal banker at Westpac, was found to have “knowingly and recklessly” given NAB false payslips and letters of employment in respect of personal loan and credit card applications.

The false information and documentation submitted by Mr Merheb and Ms Merjan were primarily provided to them by a third person who had no association with NAB.

ASIC also found that:

  • Mr Merheb falsely attributed a loan as being referred to NAB by an introducer who was a friend in order for the friend to receive commissions dishonestly.
  • Ms Merjan assisted the third person in the creation of two false documents, which she subsequently provided to NAB in support of lending applications.
  • Ms Merjan was twice offered cash by the third person to process lending applications.

Both parties involved have the right to lodge an application for review of ASIC’s decisions with the Administrative Appeals Tribunal.

ASIC’s investigation is continuing.

On 16 November 2017, NAB announced a remediation program for home loan customers after an internal review, prompted by whistleblower reports it had received which found that some home loans may not have been established in accordance with NAB’s policies.

NAB identified that around 2,300 home loans since 2013 may have been submitted with inaccurate customer information and/or documentation, or incorrect information in relation to NAB’s introducer program.

The major bank has said it "welcomes ASIC’s decision to ban two former NAB bankers, who were investigated by ASIC for loan fraud", adding that the two former employees were both terminated from their employments with NAB in November 2015 and that NAB had "reported them both to ASIC".*

Royal commission uncovers fraud

The bannings come after several instances of fraud were found to have occurred at the bank in the past few years.

Appearing before the Royal Commission into Misconduct into Banking, Superannuation and Financial Services Industry during its first round of public hearings in March, NAB’s executive general manager of growth and partnerships, Anthony Waldron, was questioned over the bank’s failure to adequately disclose instances of fraud in its introducer program prior to 2015.

Documents released to the commission, along with testimony from Mr Waldron, revealed that several NAB employees were allegedly “bribed” by third-party introducers.

In its submission to the commission, NAB also addressed misconduct in its introducer program, conceding that there was a lack of accountability, “governance gaps”, over-reliance on banker behaviour, practices that “reduced the probability of misconduct coming to light” and a “lack of due diligence oversight”.

However, the lender claimed that by October 2017, it had “commenced ‘triangulated reporting’ to monitor unusual changes in banker and introducer performance and behaviour”.

NAB noted that triangulated reporting serves as a “mechanism to monitor the relationship” between customers, bankers and introducers by linking “sudden changes in volumes between banker and introducer” and detecting “unusual loan performance”.

*This story was updated on 6/7/2018 to include NAB's statement.

[Related: Major bank denies link between job losses and fraud]

Two former NAB employees banned for loan fraud
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