Six of the best for ASIC

by | Feb 15, 2012 | Business

ASIC’s Summer School needs some new lessons.

The ASIC Summer School kicks off next week at the Hilton in Sydney. This annual shindig, where senior ASIC stuff mingle with academics and business A-listers – is at the vanguard of the corporate regulator’s brand management strategy.

The event itself has been branded “Building Resilience in Turbulent Times”, which is an apposite title as despite the decline in global corporate activity in recent years the Australian regulator’s dividend cheque to the government has remained astronomically high.

This thing makes a huge profit – thanks to charging the likes of $58 for a couple of pages of public information the taxpayer has already paid for – and its budgetary significance will not have been lost on the Parliamentary Secretary to the Treasurer, David Bradbury, when the welcoming drinks and canapes are served at the Zeta Bar on Sunday evening.

This is the highest charging regulator in the world. In most other jurisdictions, creditors and shareholders can expect to obtain their public information for free.

School fees

And taxpayers will help to pick up the tab for the Summer School. Based on the 2011 event, the cost of the venue alone is around the half-million-dollar mark.

Some might prefer that the watchdog’s time and money was spent investigating corporate malfeasance and putting ponzi-schemers out of action instead of networking over a campari but they are charging for this too.

Attendees need to stump up $2,000 to hear people articulating their vision and leadership on important regulatory issues.

That makes the ASIC Summer School a private school, rather than a public one. And the two-day curriculum is all about an institution, a bureaucratic empire in fact, justifying its existence, keeping in tight with the people that count. And they surely aren’t victims of corporate crime.

While you might not be able to afford to send yourself to the ASIC Summer School unless you are part of the establishment, don’t despair.

Free lesson

Fear not for your regulatory education because this dilapidated MWest classroom is open for all comers. It is even free online.

Today’s lesson is: how ASIC has failed on transparency and disclosure. Now sit up straight and pay attention please. You need to understand some basic record keeping rules that apply to this particular arm of government.

On November 14, 1994, the Senate agreed to a motion by Senator Harradine that all government departments and agencies compile and make public an indexed list of their files every six months. Senator Harradine was an authentic politician and a man of integrity. He understood that good government required good record-keeping to help public servant perform their duties efficiently.

The Harradine motion for six-month file lists provides a mechanism for accountability and transparency for an agency such as ASIC.

Not all of ASIC’s files have to be included in the lists.

For example case files and files that go to the internal management of the agency are excluded. But files relating to the policy advising functions of ASIC are required to be included in the six-month file lists. Additions to existing files in the prior six months are also included.

Extraordinary development

Something extraordinary has been happening to the ASIC six-month file lists in recent times. The lists seem to be shrivelling to next to nothing.

The number of files disclosed by ASIC as required by the Senate has fallen off a cliff:

The most recent list for the six months to 30 June 2011 disclosed only 12 files equivalent to one file for every 165 ASIC employees. In contrast, the list for the six months to December 31, 2007 disclosed 217 files.

A BusinessDay investigation has found that ASIC is failing to disclose relevant files on its policy making activities in its 2010 and 2011 six-month file lists.

The file lists for December 31, 2010 and June 30, 2011 include no references to the files that should exist for the development of numerous ASIC policies including (1) ASIC market integrity rules; (2) Over-the-counter contracts for difference; (3) Substantial holding disclosures; (4) Exemptions for non-government organisations; (5) Non-standard margin lending facilities; and much much more.

Rights at risk

Jeffrey Knapp, an accounting academic at the University of New South Wales says that the thinning of ASIC’s file lists may be an underhand attempt by the Agency to deny the public its right to request access to documents on agency policy-making pursuant to the Freedom of Information Act.

“If you don’t know an ASIC file exists, then you are hardly in a position of being able to request access to documents from that file,” Knapp told BusinessDay. Whatever the case, the regulator is effectively burying information about its policy making.

The drop off in the file numbers also corresponds to the time that the Senate inquiry into liquidators and administrators was afoot.

ASIC lodged comprehensive submissions to this Inquiry totalling nearly 200 pages. Again there is no file reference in the six-month lists for these submissions.

“I don’t think ASIC’s lengthy submissions to the Senate Inquiry in the first half of 2010 were compiled on the back of an envelope” says Knapp. “Why aren’t the relevant files for these submissions disclosed in ASIC’s six-month lists?”

Poor disclosure practices by ASIC are a case of history repeating.

It was also around this time that ASIC was silently purging accounting exemption orders from its public data base.

“If the public is unable to access accounting exemption orders issued to public companies, then how are they to know they exist?” asks Knapp.

“Ultimately the apparent omissions in ASIC’s six-month file lists are a matter for the Senate to investigate. It is their order so it is their rules that appear to have been broken. Prima facie ASIC is in contempt of the Senate.”

But Knapp says that is not the worst of it.

“ASIC’s failures to disclose and be transparent about its files and its accounting exemption orders sets a regrettable example for the rest of the market place.”

He said a regulator builds resilience in turbulent times not by being secretive and sneaky but by showing leadership in accountability and transparency.


Michael West

Michael West

Michael West established to focus on journalism of high public interest, particularly the rising power of corporations over democracy. Formerly a journalist and editor at Fairfax newspapers and a columnist at News Corp, West was appointed Adjunct Associate Professor at the University of Sydney’s School of Social and Political Sciences. You can follow Michael on Twitter @MichaelWestBiz.

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