Nab Bank

Reporter: Frank Pangallo

By its own excessive standards it hasn't been a good year for the NAB, its profit for the first 6 months is only a lazy 2.1 billion...down about 21%.

They've also just lost a landmark court case tonight, after a six year fight, the shocking story can now be told about the NAB's despicable conduct against three battlers who refused to yeild to their low tactics.

"What have you made of their conduct?"

"Well in my point of view I mean I think they were deliberately trying to get us down." Replies Ozzie Inak.

"You're angry aren't you?"

"Of course, not angry, I hate NAB now because they kill my life."

Business partners Ozzie Inak, Memhet Ali Kay and Memhet Canli had borrowed 1.15 million dollars from the NAB in 2003 to buy and develop a property at Auburn, in Sydney's inner west. They signed this contract with the bank. The conditions couldn't be clearer.

"The conditions of that contract was we were to pay 5.65 fixed term interest rate for the period of one year and within after that first year when the loan expired it will make you renew to second year lease." explains Inak.

The terms also included a default interest rate of 4% to be added to that fixed rate of 5.65 per cent.

"So if you missed a payment?"

"At the maximum we should have been charged at 9.65% default rate"

"You didn't have a problem in that first year?"

"We didn't have a problem in the first year no no, but in saying that our contract said our interested rate was 5.65% but funny enough when our first payment came our statement showed they were charging us at 5.85%"

"What when your first payment was made?"

"Yes"

"So they'd already increased it?"

"They'd already increased it without even telling us"

So the NAB was already in breach of the contract but Ozzie says it slipped their notice and they kept their payments up to date while getting development plans approved for their site.

"And once we have plans approved, developments approved we looked at the market and thought it's probably time to sell without building and we put the property on the market as of the approved site"

But things were about to get worse for them. While they were negotiating to sell the land for 1.75 million, the NAB didn't keep its end of the bargain. Instead of rolling over the loan on the same terms as agreed, they immediately jacked up the interest rate first to 19.65%, then to a colossal 20.35%, on the approval of Peter Hatter, the Senior Manager of Strategic Banking Services.

"And they just would not budge" tells Inak.

Not only wouldn't they budge, Mr. Hatter claimed in this letter to them in April 2005 that they were entitled to charge the higher rate because it was in the loan agreement.

"But they got it wrong?"

"100% wrong because I looked at contract, the contract say 5.65 if I'm default.I'm not but, say for example I'm default 4%, 4% plus 5.65 is 9.65 but you charge me 19.65." explains Memhet

In mid 2005 the NAB seized the property, then froze Ozzie Inak's personal bank accounts and placed a caveat on his home.

"I rang him up and I said Mr Hatter I said I can't go into the bank and pay my mortgage off because my accounts are frozen and he said well yes we want your property I said well my property's not associated with them and he said well there's a shortfall in it and we want your property to make up for the shortfall"

Things got even nastier. After Ozzie refused a written demand to hand over his house keys to the bank and move out within 7 days, Mr. Hatter then sent a locksmith one night to change the locks.

"Did they have a court order?"

"No, no they had no court orders"

"Nothing?"

"Nothing absolutely nothing"

The after ignoring their claims for more than 2 years, Mr. Hatter finally conceded he'd made a mistake.

"As they saw the contracts they said we've made an error we'll reduce the interest rate down ok we'll give you seven days to pay up."

Regardless of this admission the bank pressed ahead with its legal action, eventually selling the property for 1.2 million dollars in 2007, less than an offer the partners say they had before the trouble started.

"But they spend a fortune probably more than any other company on public relations do good community activities but behind the scenes it's this dark side of their personality but frankly there's a corporate culture there that refuses to mend its ways" tells Associate Professor Evan Jones, from Sydney University's political economy department. Hehas written several case studies on bank bastardry, many of them the NAB.

"Any point fighting them?"

"No in general because the costs, the monitory costs and the psychological costs are just enormous and rarely do you have any competent and committed assistance" says Jones.

"And the banks know this don't they?"

"Absolutely, they know the lot which is why they will pursue you till the end, yes"

The income from Memhet Ali Kay's small kebab shop in Sydney's George street paid for much of their enormous legal bills, it runs 24-7, and is just a few blocks from the NAB's glistening skyscraper headquarters.

"They've embarrassed us, humiliated us and cost us a lot of money but we're still fighting and we'll keep fighting until we've proved justice" says Inak.

Well they did get justice, recently achieving a rare victory over a bank. New South Wales supreme court Judge Rothman found the NAB in breach of its contract from the very start, and that it had engaged in false, misleading and deceptive conduct. He awarded damages of $280,000, but not anywhere near enough for what they've gone through say Ozzie and Memhet, who now suffers from severe depression.

"What do you want from them now?"

"We want a fair compensation of, we actually want what we lost back. The money that we lost we want back and plus 7 years of stress and burden on the family and family problems"

As for that extra $150,000 the NAB was chasing well what emerged during the trial should send shivers down the spine of any of their customers. Another NAB Banker, Ian Rowe, told the court it was standard business practice when chasing its money to load on much more than was due so the bank couldn't lose, with any surplus going back to the customer.

When Ozzie approached the ACCC and Asic with his damning judgement, they told him they weren't interested.

"The ACCC should they act in this case?"

"They should act in this case, they should act in this case big time."

"My personal view is that this responsibility should go back to the ACCC which has a comprehensive brief for unconscionable conduct elsewhere." believes Evan Jones.

But there fight goes on, they are going to appeal the damages amount and sue the NAB for the 6 years of pain they've all endured.

"They want to think only about profit is profit is profit but profit money is not important to the person that is my life" says Memhet.

"We wanted to prove that we were right all these years the banks have been trying to get over people and trying to do the wrong thing by people and I'm sure if everyone calculated their statements now they would find the banks are still making errors and still ripping them off one way or another" says Ozzie.