No quick resolution for lawsuit linked to CBA IT corruption allegations

US not-for-profit organisation Ace Foundation open to mediation over frozen funds

Civil proceedings launched in the US targeting the Commonwealth Bank look set to stretch well into 2016. The legal action centres on US$2.5 million alleged by Australian police to have been used to bribe former IT executives at the bank.

The Ace Foundation, the organisation suing the bank, has indicated that the case is unlikely to be ready for trial within 12 months of Ace's initial court filing in May.

The US not-for-profit organisation claims the money was intended to help fund work by the two former CBA employees on its projects.

The legal action is linked to corruption allegations that have resulted in criminal charges in Australia against the former CBA IT executives.

Jon Waldron and Keith Hunter are alleged to have accepted kickbacks in return for awarding contracts to US company ServiceMesh, a subsidiary of CSC.

Australian police have claimed that the Ace Foundation was used to channel kickbacks to Waldron and Hunter.

CBA approached NSW Police following internal investigations that allegedly uncovered suspicious payments into the bank accounts of the two men.

In addition to criminal charges brought by NSW Police, the two are the subject of civil proceedings by the NSW Crime Commission.

The Ace Foundation said in a statement released in May when it launched its legal action that money advanced to Waldron and Hunter to fund work by the two on the organisation's projects had been frozen by the bank.

The organisation's court filing said that from May through December 2014 it advanced funds to Waldron and Hunter to cover project costs they would incur for Ace.

The filing states that in late December 2014 the organisation discovered that CBA did not approve of the two men participating in the organisation's work.

The Ace Foundation states it then informed the two men that they could no longer work with the organisation and requested the return of its funds.

CBA prevented the two men from returning the money, the filing alleged.

"CBA claimed that the funds were improper payments intended to be hidden from CBA even though the funds were openly deposited into CBA accounts," the initial court filing (PDF) stated.

"CBA's allegation that the payments were somehow hidden in plain sight makes no sense and is demonstrably false."

Ace's mission statement says it provides "the essential technical foundation necessary to address the most pressing challenges facing economically distressed populations and developing nations".

A case management conference for the lawsuit was held this week at the Stanley Mosk Courthouse in Los Angeles. There was no appearance from CBA at the conference.

A further case management conference is scheduled for 20 April next year.

A case management statement submitted by the Ace Foundation on 5 October stated that it was still in the process of serving the Commonwealth Bank.

The case will not be ready for trial within 12 months of filing due to international service issues, the statement said.

The organisation estimates that an eventual trial will take five to 10 days.

The case management statement indicates the Ace Foundation is willing to engage in mediation as an alternative to a trial.

If the case goes to trial, the Ace Foundation has requested a jury trial and on 9 October made an initial deposit for jury fees.

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