October 27, 2020
The acting chair of corporate watchdog ASIC, Karen Chester, says she and her fellow commissioners were kept in the dark about $118,000 paid to help stooddown boss James Shipton manage his tax affairs.
Ms Chester, appearing before Senate estimates on Tuesday, said there were “clear failings” in how those payments were approved as Labor warned that Mr Shipton’s position had become “untenable”.
She told the hearing it was only a little over a month ago that “the full commission became aware of the full seriousness of this matter” after being briefed by Auditor-General Grant Hehir.
Mr Hehir sent a letter to Josh Frydenberg last Thursday in which he outlined the Australian National Audit Office’s concerns about expenses paid on behalf of Mr Shipton, as well as $70,000 in rental assistance paid to deputy chairman Daniel Crennan.
Mr Shipton stepped down from the top job at the corporate regulator on Friday, and is taking paid annual leave pending the conclusion of an independent review by Vivienne Thom, a former inspector-general of intelligence and security. Mr Crennan resigned on Monday.
Opposition assistant Treasury spokesman Stephen Jones said Mr Shipton’s position was “untenable” and urged the independent review to be wrapped up within two weeks. “We can’t have this wounded organisation limping on when we need it to be at the top of its game,” he said.
Mr Jones said payments made on behalf of Mr Shipton to KPMG for tax services relating to his relocation from the US “were unauthorised and probably unlawful … He (Mr Shipton) has known about it for a long time, and it appears he went to great lengths to hide details of this from other commissioners. If (Karen) Chester’s evidence is accurate, we’ve got a divided leadership.”
Ms Chester was also grilled on why the Australian Securities and Investments Commission had not acted sooner to stop rental assistance payments to Mr Crennan, despite the ANAO raising the issue of the $750 weekly payments more than a year ago.
“We agree the failure to address that matter was a failing, we accept that,” Ms Chester said.
Once again, the acting chair claimed ignorance around the full scope of the payments, saying she had “no idea” the rental assistance to Mr Crennan was in the form of an ongoing allowance rather than a one-off expense for his relocation to Sydney from Melbourne.
The rental assistance was first identified as an issue during the preparation of ASIC’s 2018-19 financial accounts in August 2019.
Senator James Paterson asked why, if the ANAO had said the payments were not within the guidelines, the payments were not immediately ceased.
Ms Chester replied that it was a question for Mr Shipton.
“I didn’t have full visibility,” she said. “I was not fully aware of these matters at the time — I can see it is incredibly glacial in pace in how it was dealt with.”
Ms Chester said “we accept and acknowledge that what happens here affects our standing with the business community we regulate,” but added “we are anything but drifting”.
She said if she were in the shoes of the ASIC staff, “I would be angry, disappointed”, but she was “very confident that the reputation of ASIC will recover and will recover quickly”.
