28 Oct ASIC deputy throws Shipton under bus
John Kehoe – Australian Financial Review – Wednesday October 28 2020
The chairman of the corporate watchdog, James Shipton, did not tell senior colleagues for more than a year that the Auditor-General had raised concerns about a housing allowance of almost $70,000 paid to one of his deputies, acting chairwoman Karen Chester has said.
In extraordinary testimony to a Senate committee that exposed senior divisions at the Australian Securities and Investments Commission, Ms Chester distanced herself and other senior commissioners from Mr Shipton, who has stepped aside for an investigation, and deputy chairman Daniel Crennan, who resigned on Monday.
Ms Chester and fellow commissioners Danielle Press, Sean Hughes and Cathie Armour were “not fully aware” of the matters at the time, she said, adding that they found out in mid-September 2020 about the auditor’s concerns about the allowances for housing and tax services.
Ms Chester suggested that most of the commission was kept in the dark about the auditor taking issue in August 2019 about $750-a-week housing payments for Mr Crennan after he relocated from Melbourne to Sydney for work.
The matter was raised by the auditor at a “very high level” with the sole “Accountable Authority” – who is Mr Shipton as the head of ASIC – and “it does raise issues of disclosure to the commission at that time of the detail last year”.
“I think you are asking me a question that should be put to Mr Shipton,” she said. “It’s fair to say we did not have a full information set.”
She also said that Mr Crennan had released a “very carefully drafted” resignation statement on Monday, which noted that after he was told in September 2020 of “external advice” and the ANAO’s “present” position concerning the housing allowance he requested the payments stop and agreed to repay it.
Ms Chester said Mr Crennan would have become aware of the matter no later than a January 23, 2020, ASIC update to Mr Crennan about the ANAO earlier advising remuneration tribuanl approval should be sought, after the payments were flagged in a note in the 2018-19 audit in August 2019.
Liberal senator and acting chairman of the committee, James Paterson, said that ASIC’s leadership model was a “total mess” and it needed to put its “house in order”.
Opposition financial services spokesman Stephen Jones said Mr Shipton had kept matters secret from his leadership team and tried to minimise his tax through KPMG services paid for by ASIC.
“Clearly the relationship between the chair and acting chair is cooked,” Mr Jones said.
“The government has to clean it up quickly because waiting til the end of the year is a joke.”
The former inspector-general of intelligence, Vivienne Thom, is conducting an independent review of ASIC’s remuneration and procurement processes.
Other ASIC staff had brought to the attention of the ANAO that ASIC had covered the costs of the tax services and housing allowance for them to relocate from overseas and interstate for their jobs, Ms Chester said.
She later clarified that the ASIC commissioners were verbally briefed last year that there was a matter with Mr Crennan’s “relocation payments”, butsaid they were not told it was an ongoing rental allowance or the amount of money involved.
The Liberal senator, Andrew Bragg, told Ms Chester that as deputy chairman at the time she must partly take responsibility for ASIC’s failures.
Ms Chester said the full commission did not have “ongoing oversight” of the Auditor-General’s written advice in August 2019 to seek remuneration tribunal approval of the housing allowance.
Ms Chester, who was not aware of the matter at the time, contended it was a “observation”, rather than an official “recommendation”, a nuanced distinction slammed by Senator Paterson.
“The Accountable Authority did have oversight of that,” Ms Chester said.
“As did the audit committee and I understand the audit committee did raise issues with the slow pace in dealing with the matter.”