The senator leading the inquiry into Australia’s corporate regulator has savaged the watchdog in a blistering speech to parliament.
In October last year, the senate voted in favour of holding an inquiry into the Australian Securities and Investments Commission (ASIC) over concerns it was “failing to meet its obligations as a regulator”.
The two-year-long inquiry is now in full swing, spearheaded by Senator Andrew Bragg, who chairs the Economics References Committee.
On Wednesday afternoon, in a speech to the Senate, Senator Bragg said white collar crime was rife in Australia but accused ASIC of doing a “very poor job” at enforcing the law.
In particular, he lashed the financial watchdog for gathering and receiving enough evidence to prosecute and even carrying out deep investigations into corporate misconduct, but failing to take action.
“I believe this country has a significant problem when it comes to corporate crime, and I believe that the regulators are doing a very poor job of prosecuting people who are breaking our laws and the government is becoming increasingly complicit in this protection racket that is damaging our economy and damaging the capacity of people to seek redress when wrongs are committed against them,” Senator Bragg said.
ASIC’s most recent quarterly report said the govermment body achieved $109 million in civil penalties, prosecuted 125 criminal charges and had 19 company directors banned. They said 144 active investigations are under way.
It comes as news.com.au has raised concerns about a number of individuals and companies where reports to ASIC were made but no action was ultimately taken.
ASIC contacted him twice due to its concerns but ultimately did not shut the venture down, and it wasn’t until the company director died of a heart attack that the full extent of the scheme was exposed.
“The ASIC inquiry, which we’ve been running since October, has uncovered a slew of misconduct issues inside ASIC but also in relation to cases where an enormous amount of work has been done by the regulator but no action has been taken in terms of securing civil and criminal penalties,” Mr Bragg continued.
“I can name a bunch of cases … where the evidence is very clear that the law has been broken but people are not being put into jail and significant penalties are not being applied.”
Queensland couple Vikki and Kenneth Barnard blame ASIC for the loss of their life savings, which saw the bank repossess their property and drove them to the brink of suicide.
In 2015, they handed over $650,000, the sum total of their fortune after selling a profitable bed and breakfast business to an investment company called Suncoast Financial Solutions, run by local Sunshine Coast man Stephans Halgryn.
But a year later, police were called as a man’s body had been found on a small Queensland beach in a seemingly unconnected event. It was later identified as Mr Halgryn.
The company director’s death from a suspected heart attack brought the investment scheme crashing down as revelations emerged that he was running an unlicensed managed investment fund with 696 investors owed $91 million.
It later emerged that ASIC had investigated Mr Halgryn and his investment business in 2013 and 2015 “concerned” he was operating a company that was not compliant with Australia’s financial laws.
However, it ultimately did not shut down the scheme, and the Barnards invested their money in 2015, just a few months after ASIC’s second letter to the company.
To this day, aside from $145,000 in company and personal assets, the money has never been located or recovered.
“The money was absolutely everything. We basically started again,” Ms Barnard said.
“I would never have invested if ASIC had done their job,” she lamented.
The pair submitted their story to Andrew Bragg’s parliamentary inquiry into ASIC in February, right before submissions closed.
Earlier in the inquiry, Mr Bragg accused ASIC of secrecy and obfuscation, where he claimed they were using public interest immunity claims as a reason for why they could not provide more detail on certain cases.
“The government’s priority here has been to cover up our capacity to investigate ASIC, through the use of public interest immunity claims,” he claimed.
He also criticised ASIC for its decision to cut the funding available to the Financial Regulator Assessment Authority (FRAA), which has reduced its capacity to conduct reviews into regulators every five years rather than every two years.
“The point of the Financial Regulator Assessment Authority is it is supposed to ensure
the regulators are doing their job, which is to enforce the law,” he added.
The PwC scandal also came into the discssuon, with Mr Bragg stating that laws increasing the amount of fines that could be issued against companies did not necessarily solve the problem.
“On the weekend we saw the Treasurer and some other ministers announce ‘the biggest crackdown on tax advisor misconduct in Australian history’ and that the government would increase maximum penalties for advisers and firms from $7.8 million to over $80 million,” he said.
“That’s all well and good, but a very fine law is no law at all unless it is enforced. I think the question on PwC and all these corporate crimes is not one of having laws but one of enforcement.”
News.com.au contacted ASIC for comment.
The senate inquiry was announced last year just weeks after independent analysis found that a report to the regulator about financial misconduct had a less than one per cent chance of being investigated.
ASIC has around 2000 staff and nearly $800 million in funding, according to its latest publicly available report.
“It’s not a question of money and resourcing, it’s a question of focus,” Senator Bragg said at the time of the inquiry commencing.
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“The community expectation of ASIC is not particularly good. People need to be made examples of.”
The inquiry continues.
alex.turner-cohen@news.com.au
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