The corporate regulator, the Australian Securities and Investments Commission, has lost some skin over the past week with a series of revelations of episodes of largesse that would make even the strongest supporter of the corporate plod squint and look more closely at the operation.
Let’s begin with the first issue that has already been canvassed by Banking Day over the past few days. The chairman and his $118,000 tax bill from KPMG has been looked at and scrutinised and scoffed at by any number of media commentators, politicians and other folks.
During a fiery session of the Senate estimates that featured parliamentarians tearing strips off the Commission, the acting chair of the somewhat embarrassed regulator, Karen Chester, said ASIC staff did report the tax advice bill to the ANAO.
While ASIC played an active part in reporting the matter relating to the $118,000 tax bill to the Australian National Audit Office there is a shadow that remains cast over that transaction. The investigation ASIC has put into place will provide further insight into what happened.
The same is true for the $70,000 relocation fillip paid to former deputy chair, Daniel Crennan. The $70,000 and $180,000 payments alone are interesting from the perspective that they were reported to the audit office.
These payments are embarrassing in an environment where a regulator needs to maintain a level of public confidence its capacity to do the critical work of regulation.
Anything the reeks of scandal or controversy undermines confidence and may create a situation where the regulator appears to be ineffective or compromised. That is not an easy perception to shake off when the media is engaged in ripping apart the latest curiosity.
Another issue mentioned in the commission’s Annual Report relates to fraud involving almost $30,000 committed by a Commission staff member and detected by ASIC. That amount was reported to the outgoing Finance minister, Matthias Cormann, in accordance with legislative requirements and the Commonwealth Department of Public Prosecutions is dealing with the matter.
It is understood to be related to allegations of corporate credit card misuse.
The Crennan and Shipton matters as well as the reference to the CDPP in aggregate paint a curious picture. In the case of the first two it is important to understand who was responsible for making the judgement calls in relation to the payments that had been made to those two individuals and why those payments were taken care of by ASIC in the first place.
Impressions, perceptions and public opinion are important for regulators. The public won’t focus on the nitty gritty of issues but how things appear in general terms.
The perception of the regulator is clearly that it has trouble keeping its own house in order. That perception will need to be managed carefully by ASIC over the medium to long term because regulators need to be able to bank on community trust.
A regulator cannot afford to be seen as the epicentre of the kind of largesse that has gotten large corporates – especially the banks - in strife. It is unhelpful to its cause.