ASIC's section 313 spiderweb

ASIC’s latest mea culpa about shutting down 250,000 sites is another example of how good intentions and actual enforcement don’t always go hand in hand.

Through the 1970s and 1980s Peter Clyne was the scourge of the Australian Taxation Office and a hero to the nation’s tax dodgers. He was also a poster child of the sort of behaviour the Australian Securities and Investments Commission is trying to weed out – albeit in a heavy-handed manner which has done the corporate watchdog no favours.

ASIC has now admitted to inadvertently blocking access to about 250,000 innocuous websites. These are in addition to the 1200 it had already accidentally censored. A modern day Peter Clyne’s website would be almost certainly be caught up in the secret internet blocking campaign being carried out by Australian government agencies with almost no oversight or accountability.

Using a range of offshore residencies and companies – not too dissimilar from today’s corporate tax minimisation schemes – Clyne claimed to be able to almost completely avoid paying taxes.

His books, such as How Not To Pay Your Debts: A Handbook For Scoundrels and New Adventures In Tax Avoidance garnered both a healthy readership and the ire of the tax office.

Today Clyne would almost certainly be running a collection of websites flogging his books, seminars and the mandatory 16-volume DVD set that most people selling financial schemes offer these days.

He’d be also incurring the wrath of agencies like ASIC, AusTrak and the Australian Federal Police – basically any agency with the power to block information unthought of 30 years ago.

The extent to which government agencies have been using section 313 of the Telecommunications Act to block access to websites has slowly unfolded over the last month. ASIC’s latest mea culpa is another example of how good intentions and actual enforcement don’t go hand in hand.

ASIC’s desire to shut down fraudulent investment schemes isn’t the issue – its misguided use of section 313 of the Telecommunications Act is.

A get-all clause

Section 313 is one of these wonderful get-all clauses inserted into laws that give unparalleled power to an ambitious bureaucrat. It allows state and federal bureaucrats to ‘ask’ telcos to block the services – not just websites but phone and internet connections – on the basis of “enforcing the criminal law and laws imposing pecuniary penalties”.

Predictably, government agencies have started using this power. What’s particularly pernicious about it is that owners or users of affected have no idea what has happened, apart from the pages being inaccessible.

Owners of affected websites receive no notice and attempts to access the banned pages simply fail.

The practice came to light as evidence emerged of  websites – many of which were legitimate and law abiding small businesses – were accidentally blocked by a clumsy ASIC order blocking an entire server that was shared with one suspicious financial scheme.

While it appears the financial scheme ASIC had targeted was something you wouldn’t recommend to your grandmother, the regulator ordered the block with no notice or any court order, simply because it doesn’t need to. 

Even more pernicious was that the blocking order only went out to some internet service providers, so those connected to some services were unable to access the offending websites while others were.

What happened to accountability?

One of the greatest worries is that nobody quite knows how many agencies are issuing 313 notices. At last week’s parliamentary hearings, it became apparent an unnameable ‘national security agency’ had also used these powers, along with ASIC and the Australian Federal Police.

The AFP have a history of misusing powers like Section 313. In 2006, the agency’s High Tech Crime Centre pressured hosting company Melbourne IT into shutting down a parody website operated by writer Richard Neville on the grounds it “looked too much like” the prime minister’s page.

While the AFP’s actions with Richard Neville are relatively trivial, the fact that any agency can shut down a business’ telecommunications links on the say so of an anonymous and unaccountable public servant should give every business reason to pause.

Do you or your business have an outstanding parking fine? Your state’s Office of State Revenue can use their Section 313 powers to ask your ISP or mobile phone provider to ‘assist’ them with recovering their debts.

Should you have the same name as somebody under investigation by Project Wickenby – the ATO’s hunt for the modern day Peter Clynes – you could find your phone goes quiet, on the basis that you may be using it to commit nefarious acts against the Commonwealth’s revenue.

Peter Clyne eventually came to grief when he miscounted the number of days he’d spent in Australia and the tax office successfully challenged his claim of non-residency that was the cornerstone of his tax avoidance strategy.

Today the ATO, along with dozens of other government agencies, wouldn’t need to be so lucky. At the stroke of a bureaucrat’s pen, he and his websites could ‘disappear’ from the internet.

Having the power to ban websites is powerful and it can hurt legitimate businesses as we’ve seen in recent weeks. It also gives state and federal bureaucrats the ability to control what we see and hear.

Australians need to consider carefully whether we want to give agencies such powers without any accountability.

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