The Australian on Saturday reported "whispered allegations" at Commonwealth Bank about "manipulation of the bank's internal transfer pricing system suggest[ing] that bonuses, linked to revenue and profit targets in treasury, were inflated."
The background to the allegations is the departure in August of Marten Touw, the bank's head of treasury, and Vincent Hua, head of markets.
CBA announced the departure of this pair on August 13. The Financial Review newspaper had a week earlier reported on a lowering of limits by CBA across its treasury trading book. The Australian's article rehashes a lot of this earlier material, but also sets the scene for the legal action instigated by Touw and Hua against CBA in the New South Wales Supreme Court seeking damages for breach of contract.
According the The Australian's report at the weekend the "whispers have focused on supposed irregularities in CBA's internal transfer pricing system - the rate at which treasury borrows from the wholesale markets and on-lends to the business units."
The newspaper noted that "while higher treasury earnings from a transfer pricing ruse could result in fatter bonuses, the overall profit outcome for the group would be broadly neutral due to offsetting slimmer margins in the businesses."