Before berating Australia’s corporate cop once again, it’s worth remembering that we don’t take corporate wrong-doing very seriously in this country. ASIC bosses may disagree but the findings of the 2014 Senate hearing into ASIC’s performance were clear enough.
It took eight years for ASIC to do anything about Commonwealth Bank’s (ASX:CBA) financial planning arm ripping off clients. The subsequent Senate hearing into the matter left Senator Mark Bishop declaring the evidence ‘shocking’ and that the credibility of both ‘ASIC and the CBA is so compromised that a Royal Commission really is warranted.’ It didn’t happen. Instead, we got another scandal from CommInsure.
In 2014 ASIC also declined to investigate two David Jones directors for insider trading in a case Juliette Overland, a corporate law lecturer at University of Sydney, said looks like ‘a very clear example of very improper trading’.
In another insider trading case, ASIC failed to appeal former Gunn’s CEO John Gay’s incredibly light sentence, nor did it pursue directors of the Reserve Bank for breaches of directors’ duties, despite the Australian Federal Police bringing bribery charges against them. In fact, it didn’t interview a single witness.
What ASIC is very good at is making money for the Federal Government and throwing the book at easy targets, like environmental activist Jonathan Moylan and people who are tardy at returning ASIC forms. As I wrote in February 2014, ASIC seems to let the big fish go but relishes a fight with weak, poorly funded opposition.
Déjà vu all over again
Step forward a few years and it's déjà vu all over again.
On 21 March, ASX (ASX:ASX) CEO Elmer Funke Kupper resigned over an investigation by the Australian Federal Police into an alleged 2010 payment by Tabcorp (ASX:TAH) to the family of Cambodian Prime Minister Hun Sen. Funke Kupper was CEO of Tabcorp at the time.
response to the news that Funke Kupper had done ‘a great job’ and that ‘we’re sorry to see him go’. All true. It should also be noted that the AFP have not formally involved him (not Carlisle, Funke Kupper) in the investigation, let alone charged him with anything. There may be nothing to these allegations.
But that’s not the point. ASIC has been under attack for years for going soft on the top end of town. With one of Australia’s most high profile CEOs being drawn into a bribery investigation, the sensible thing for ASIC boss Greg Medcraft to say would have been something like, ‘we await the results of the investigation and will examine any findings, taking appropriate action if and when required. Until then, we have no further comment.’
What Medcraft actually said was, ‘It's very unfortunate. Elmer is a really creative, talented CEO. I think he's brought great vision to the ASX. It's actually a sad loss,’ before going to say ‘we’ll just have to see how this evolves’.
Greg, it’s not meant to work like that. You’re the boss of the corporate regulator. When another agency finds enough evidence to warrant an investigation, you should keep quiet and show circumspection, not carry on like a potential character witness.
Investors hoping that ASIC might evolve from its puppy-like status will find no comfort in these ill-judged but revealing remarks. The shambles continues.
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