ASIC says regulator acted with ‘glacial’ speed in response to almost $200k in overpayments
Karen Chester, the acting chair of the Australian Securities and Investments Commission (ASIC), says it took far too long for the corporate watchdog to respond to the knowledge it had overpaid its boss and deputy nearly $200,000.
Ms Chester also acknowledged the auditor-general became so concerned about ASIC’s tardy response to the overpayments he had to write to Federal Treasurer Josh Frydenberg about his concerns.
ASIC remains embroiled in controversy after it was revealed last week it paid its boss, James Shipton, more than $118,000 for personal tax advice and its deputy chair, Daniel Crennan, nearly $70,000 in housing cost payments.
Officials from the Australian National Audit Office (ANAO) are concerned the payments may have exceeded the limits set by the Remuneration Tribunal for both men’s salaries.
When the news was announced, Mr Shipton said he was stepping aside, pending an independent investigation.
Then on Monday, Mr Crennan quit the organisation, saying he was planning to retire in July 2021 but it would be in “the best interest of ASIC” for him to resign immediately.
ASIC brings matter to attention of auditor-general
On Tuesday, Ms Chester told a Senate Estimates hearing ASIC officials had discovered the $187,000 in overpayments themselves during an internal audit and brought the matter to the attention of the ANAO last year.
ANAO’s 2018-19 closing report, which was issued in August 2019, recommended ASIC seek advice from the Remuneration Tribunal on the classification of the questionable payments.
At the end of September 2020 this had still not occurred.
The ANAO then released its draft finding on the matter to ASIC on October 6, 2020, which was when ASIC told the ANAO Mr Crennan’s $70,000 payment would be repaid as a debt to the Commonwealth.
Ms Chester said she understood why the ANAO had become frustrated with the time it was taking ASIC to address the problem, and agreed it was exceptional for the ANAO to warn the Federal Treasurer directly.
“I can see that it is incredibly glacial in pace, in terms of how it’s been dealt with,” she said.
Liberal senator James Paterson said he was concerned about why the ANAO felt the need to write to the Treasurer about the problem.
“It is not normal for the auditor-general to write to a minister and say that in order to gain greater confidence that appropriate action was taken I’m bringing the matter to your attention,” he said.
“I’m not aware of any precedent for that … this is an exceptional thing for the auditor-general to do.”
Ms Chester agreed.
“I’m not aware of a precedent [of an auditor-general sending] a section 26 letter to a minister, from my own personal experience of about 18 years of public sector life, but also that of discussions that I had with the acting Treasury secretary,” she said.
“So we do take this incredibly seriously.”
ASIC says the problem is complicated
Ms Chester said the problem was complicated, because the payments had already been made to Mr Shipton and Mr Crennan by the time the problem was discovered, so the ANAO was not in a position to make a “risk retrospective determination”.
“Thus, it meant it needed the involvement of the Treasurer,” she said.
“So there were ongoing discussions with Treasury, a briefing with Treasury, then Treasury wanted ASIC to go to the Remuneration Tribunal, so we thought we best get legal advice. We secured and obtained legal advice and by that time it was the end of the financial year.”