Embattled Australian Securities and Investment Commission (ASIC) chair James Shipton oversaw an internal probe into whether his deputy exceeded remuneration limits, despite his own arrangements also falling foul of the rules, Senate Estimates has heard.
In several hours of gruelling questioning on Tuesday, it was revealed ASIC was the first to note issues regarding payments to now-former deputy chair Daniel Crennan for rent expenses during a routine review of its year-end financial statements in 2018-19.
However, Crennan, who has now resigned, continued to receive taxpayer-subsidised rent until he requested it cease earlier this year, following ASIC’s receipt of final legal advice.
The total value of the payments was almost $70,000, Shipton stood aside last Friday while an independent review is conducted after it also emerged he received about $118,000 himself for tax advice related to his relocation from the United States to Australia in 2018.
Describing ASIC’s leadership as a “total mess” on Tuesday, Liberal Senator James Patterson asked acting chair Karen Chester about why the flow of rent payments weren’t cut off sooner.
“If the auditor-general tells ASIC during its audit process that a payment being made to your deputy chair is potentially not within the guidelines, why was it not immediately ceased?” Patterson asked.
“You are asking me a question that should be put to Mr. Shipton,” Chester answered, later clarifying the commission was not across all the details.
“Unfortunately I can’t do that,” Patterson responded.
Chester said ASIC notified the Australian National Audit Office (ANAO) about Crennan’s expenses last year, prompting auditor-general Grant Hehir to suggest the regulator seek advice from the Commonwealth Remuneration Tribunal in August 2019.
However, in a letter to Treasurer Josh Frydenberg earlier this month, Hehir said his recommendation was not implemented, and that he did not have confidence appropriate action would be taken by the regulator.
Asked why it took so long to action auditor-general advice about Crennan, Chester conceded ASIC’s “glacial pace” was a clear failing, but said the matter was complex, requiring the regulator to liaise with Treasury and obtain legal advice.
Indirectly referencing Shipton —ASIC’s accountability authority— Chester revealed senior leaders within the commission did not have oversight over talks with the remuneration tribunal.
“It is fair to say the commission did not have ongoing oversight of the follow through,” Chester said.
“It is clear they [the ANAO] told us to go away and sort it out with the rem. tribunal that did not happen.
“The commission did not have oversight of that, the accountable authority did have oversight of that.”
Chester agreed Hehir’s letter to Frydenberg was without precedent in her 18-years in the public service as Patterson probed whether auditors were concerned ASIC would not take appropriate action.
“[Hehir] seems to be suggesting he encountered some internal resistance, or reluctance or reticence on behalf of ASIC to address these issues or take them seriously,” Patterson said.
Chester said ASIC does take the revelations seriously and has engaged earnestly with the ANAO, acknowledging public servants within ASIC would be “angered and disappointed” by the remuneration scandal, which had also impacted its reputation with businesses.
“We accept and acknowledged that what has happened here impacts our reputation and standing with the business community we regulate, and that is why we think it’s very important an objective and independent review be conducted,” Chester said.
The Morrison government’s go-to internal investigator Vivienne Thom has been brought onto review ASIC’s processes and is expected to report back by the end of the year.