26 October 2020

SUBJECTS: Dan Crennan; James Shipton; corporate governance; Banking Royal Commission; Auditor-General.
MATT DORAN, HOST:  Stephen Jones, thank you for joining us.
DORAN: We've had the news today that Dan Crennan, Deputy Chair of ASIC, has quit his position. Do you have any choice in the matter, do you think?
JONES: Look, I think it's inevitable that we're going to sew some resignations at the top of a ASIC given the bombshell revelations of last week. I think the Treasurer has got some questions to answer. On Friday last week, he said this was all news to him. Over the last few days and including at senate estimates this morning, it's been revealed that has been sitting on this for well over a month at the same time as making critical decisions about changes to ASIC’s jurisdiction. So we want to the Treasurer to explain why he sat on this for so long.
DORAN: We'll get to that in just a moment. But obviously with Dan Crennan having now resigned from his position, James Shipton announced on Friday that he would be stepping aside pending the outcome of this independent review, do you think it's tenable for him to remain as Chair even if he has stepped aside for the time being?
JONES: Look, I think Mr Shiptonn position is going to be very, very difficult. He's the cop for corporate regulation. He’s the person who's supposed to be in looking at the governance standards of corporations, of banks, implementing the recommendations of the Royal Commission. And the organisation that he heads, and including himself, has fallen well short. I think when people look through the evidence that he gave to the Royal Commission and some of the statements that he made there, where he talked about the hypocrisy of a regulator not living up to the standards that it was imposing on other people, I think his positions is going to be very, very difficult indeed. He's going to have to explain the anomalies between what he said before the Royal Commission and what's been exposed to have been going on over the last 12 months.
DORAN: Would you be expecting that the Government sack him?
JONES: Well I think that's a question for Mr Shipton in the first instance. I think the Government should be slow to terminating the commission of a statutory officer. But there's a clear anomaly between what he said 12 months ago, what's been exposed today, and a very, very difficult situation when you're imposing the highest level of governance standards on banks and corporations that aren't being applied in your own organisation.
DORAN: Want to pick up on what you were saying there about what Josh Frydenberg knew about this matter. Some of the documents have been tabled in Senate estimates today, we have an email from the Australian National Audit office to Josh Frydenberg on the 15th of September effectively saying, here’s our audits of ASIC’s books. There is an issue there that we will write to you separately about. But it doesn't appear that they have written to him separately on that for a couple of days after that. Are you suggesting that there's something more untoward happening there?
JONES: Look it's extraordinary if the Audit Office writes formally, sends an email to the Treasurer, and says incoming a big bomb about to go off. We're going to send you a formal letter under our act advising you of the details of that, that something doesn't twig. If that was it, you'd say maybe benefit of the doubt. But what we know is that on the 28th of September a conversation occurred between the ASIC Deputy Chair and his Departmental Secretary. And the day after his Departmental Secretary rang his Chief of Staff, Mr Frydenberg’s Chief of Staff,  had a long conversation with him, went through the details about what was going to be in that ANAO  formal notification.  No doubt whatsoever, he knew exactly what was going on. But he sat on it for over a month while making significant changes to ASIC’s jurisdiction. Big questions to ask.
DORAN:  You made the point that when it comes to James Shipton's tenure as the ASIC chair that the government should be somewhat slow in terms of allowing sort of investigations to play their course and things like that. Does that not apply in this instance as well when that correspondence is going back and forth between the Audit Office, between ASIC and Treasury and the Treasurer's office?
JONES: What we know as of Friday last week is there's no dispute over the facts. There's no dispute that payments were made to Mr Crennan and Mr Shipton which way exceeded the authorisation to make those payments. We know that for over 12 months that those statutory officers have known all about it. It’s been well known within ASIC that those payments have continued to be made. So there's no dispute over the fact in these situations. I can understand why Scott Morrison and Josh Frydenberg of being slow to act on this. I mean, it's very embarrassing for them. Mr Shipton was their hand-picked guy. He was the bloke that Scott Morrison picked when he was the Treasurer to come in in the hope of reforming ASIC, toughing it up and trying to deflect the calls for a Royal Commission. Well it appears that that's gone all horribly wrong, and there's a hot mess inside of ASIC that needs to be cleaned up so that we can get back to the task of implementing the Royal Commission recommendations. The worst possible outcome here would be if the Government got away with using this mess inside of ASIC as further excuse to delay the implementation of the Royal Commission recommendations. That would be a disaster for Australian consumers.
DORAN: Just finally and briefly, this is another issue that's been picked up by the Australian National Audit Office. It seems like they're having an absolute belter of a year at the moment in terms of big-ticket investigations, where they’re pulling up questions about how government agencies, government departments officers are working. Do you think that this plays further into that discussion about the need for a National Integrity Commissioner?
JONES: It's extraordinary isn't it? In Australia Post you get an expensive watch for doing your job. In the ANAO you get your funds cut for doing an excellent job. Clearly it speaks to the Government not liking scrutiny, not wanting accountability. We need the funds to be restored to the ANAO immediately. We need to ensure that they can get on and do the excellent job that they do of keeping Government and Government agencies to account. We need to get on and implement the federal ICAC. This Government is allergic to scrutiny. We need to ensure that we can restore faith in Government processes, Government business enterprises, Government departments. From the Leppington Square incident, to Australia Post to a ASIC itself we need a tough, independent regulator in place, It’s been dragging on for way too long.