Australia's biggest bank fights $ 50 bn damages claim

Australia's biggest bank fights $ 50 bn damages claim
ASSOCIATED FRANCE PRESSE

SYDNEY, JULY 24: Australia's biggest bank, National Australia Bank Ltd (NAB), is being sued for as much as $50 billion (29 billion US) in one of the country's biggest damages claims, a court was told Monday. The case, which could run for up to two years in the Supreme Court of New South Wales, is the first in which a court has been asked to value lost E-commerce opportunities.

Two companies, Idoport Pty Ltd. and Market Holdings Pty Ltd., allege NAB breached agreements over the purchase and development of a financial planning system, AUSMAQ, which it acquired in 1996. The companies, owned by systems developer John Maconochie, blame the bank and eight other parties for having "squandered and lost a golden E-commerce opportunity by not developing and exploiting AUSMAQ."

Opening the case for the companies, barrister John Garnfey told judge Clifford Einstein the claim against NAB and its subsidiaries was valued at between $14.3 billion and $50.6 billion. Garnfey said the claim was "really rather modest" given the potential revenue AUSMAQ could have generated if fully developed and marketed internationally.

"If the bank exploited the service properly, performance bonus payments under the agreement by 2003 would have been between $190 million and 418 million US. "It's really a minute figure and a very modest claim," when total global fees for financial services were estimated to be US $4.49 trillion, he said. The companies' claims were 0.004 of one per cent and 0.1 per cent of that amount, Garnfey said.

He also said performance bonuses would have continued to increase, unless NAB had offered to buy out the AUSMAQ system. The companies' lawyers are expected to take up to two weeks to complete their opening remarks, which the judge was told could run for up to two years. They are also alleging the NAB developed six other services with "similar and equivalent functionality" to the AUSMAQ system. Maconochie is not a party to the action but has been named as a party to a cross-claim by NAB. The case continues.