Dollars for drongoes

Banking is like any industry, and has two things. Insider knowledge and jokes about processes and customers. And cock-ups. (Technically that may be three things, but the jokes thing is more a corollary of the first, not an independent "thing").

To the banking industry's credit, I am surprised mistakes this big don't happen more often than they do. People are coming out of the woodwork with their own stories of mistakes made by banks, which only goes to show that it DOES happen more than we're aware of. If Gao hadn't run with the money we wouldn't have heard anything about it until the next public gaff. Then Gao would be coming out of the woodwork saying he he was given ten million dollars by the bank, and having a good laugh about it.

Two other things are interesting. How badly the media have reported it, and, as is only just starting to happen, how Westpac is coming under more scrutiny about it's working conditions than I'm sure it wants to.

First, I heard, a Rotorua businessman had been given a "7 figure" deposit in error. Now 7 figures, if my math is correct, is 9,999,999 or less. The media was reporting at the same time that is was also $10m. Which is, of course, an "8 figure" sum.

Then we heard Gao had taken off with the ten million dollars. Then we heard that it was only six million he'd escaped with, Westpac had recovered four million. Then we heard Gao had applied for a ten thousand dollar overdraft, and we had to assume it had mistakenly been made a ten million dollar overdraft. Which is significantly different to a ten million dollar deposit to his account. Some bozo was saying on the news that there were checks and balances and if a 10m deposit had been made one of the balances would have been out (which is not necessarily true).

In today's SST, it seems confirmed that a 100,000 dollar overdraft limit was mistakenly turned into a 10m dollar one, which is much easier to understand because all that's required there is to drop the decimal point. Now it makes sense. I was trying to figure out in my head how ten thousand had become ten million via only a simple mistake. Harder to turn ten thousand into ten million, than a hundred thousand.

But also reported today is that Westpac is "vigorously pursuing" the outstanding 3.8 million. Huh? Where did that figure come from?

Point is, in the rush to get the story out, the media just grabbed any old numbers that vaguley fit the story, no matter how incorrect they were.

So it seems Westpac is only out 4m, with liens of at least a couple of million over properties in Rotorua and Auckland (if the media can be believed). So the bottom line is Westpac is only out by an amount similar to the CEO's bonus.

Which brings us nicely to Westpac's strong desire, I'm sure, to not get too much egg on it's face. It was only a matter of time before FINSEC made the connection between such a mistake and Wetspac's staff being under too much pressure. This mistake has nothing to do with staff being under too much pressure. It's a simple mistake, the kind made by the banking industry DOZENS if not HUNDREDS of times A DAY. Most of them are picked up by the checks and balance system. But some ALWAYS get missed.

To be fair, even in this financial environment, ten million dollars is not a lot of money, and if it ends up being a million or two, then in banking that is chicken feed. Bad debts of that amount are written off regularly.

Obviously Westpac doesn't want to set a precedent, otherwise the stuff ups they make every day will start costing them. If they make a mistake of only a thousand dollars, and you spend the money, are they going to pursue it? I doubt it. Ten thousand? Maybe. They just want people to think that if they overpay you you HAVE to pay it back. Which technically you do. However, the question is how hard will they pursue you for it.

Mostly, they don't want you to think they are incompetent, which they are not (well, relatively speaking).

But obviously Gao is incompetent. Why not transfer the whole amount to his mother's bank account in China and DISAPPEAR. The sister-in-law (so to speak) is gloating on Facebook? Geez. What a moron. They'll be caught and in a gesture of global good will China will extradite them. Westpac will cut their losses, but send them to jail anyway. It'll be old news by next week, and we'll only hear more about it later when they're caught, then jailed.

If Gao had any brains he would be holed up somewhere in deepest darkest China counting his Yuan.