“The people best able to carry out enforcement jobs, not the only people, but best equipped are frankly – love them or hate them – lawyers. I’m not talking about academic training of lawyers. I’m talking about lawyers who have actually worked and practised. They know how things work on the ground and they’re charged with a huge enforcement task; that is 100 per cent of what they do. They’re not there to create policy. They’re not there to make speeches. They’re there to enforce the law.”
The government announced an overhaul of ASIC after Mr Shipton was forced to step aside when it was disclosed taxpayers paid $118,557 to KPMG to prepare his tax returns after he returned from overseas to take the ASIC job in 2017, and deputy chairman Daniel Crennan quit following revelations he claimed nearly $70,000 from taxpayers to cover rent.
In January, a government review led by former inspector-general of intelligence and security Vivienne Thom cleared both men of any wrongdoing.
Mr Hartnell, who is a lawyer and has advised businessmen including Rupert Murdoch and Kerry Packer, said he had watched the leadership crisis at ASIC in the past year “with a great deal of concern”.
“A large organisation depends on leadership. And I think the leadership has been less than compelling.”
Mr Hartnell said practising commercial lawyers have an understanding of how businesses interact with the law, and the technicalities involved in that, which makes them well qualified to decide which cases have a chance of successful litigation and which ones do not. In the wake of the Hayne royal commission report, which was handed down in early 2019, ASIC had adopted a “why not litigate” approach.
Jeffrey Lucy, also a former chair of the corporate watchdog who was appointed under Treasurer Peter Costello, said ASIC was structured differently during his leadership. While Lucy was heading up ASIC from 2004 and 2007 there were only three commissioners, compared to the six that it had grown to under Mr Shipton. “And significantly none of the commissioners had line responsibilities,” Mr Lucy said.
“For commission meetings we had the executive directors attending and when necessary key investigative personnel, including for the James Hardie case a senior counsel. So we, as a commission, weren’t isolated from the staff, we were engaged with the staff.”
He said this meant the commissioners were aware of the facts of individual cases and following investigations daily.
During Lucy’s tenure ASIC oversaw a review of audit regulation following the collapse of Enron, and the prosecution of executives after the failure of insurer HIH.
He said it was important that ASIC’s chair and senior leadership have a constant dialogue with Treasury and the Treasurer’s office. “Part of the purposes of the liaison with Treasury is one that works with the government to bring forward policy changes. We were in the field, and so we could discuss with Treasury and explain to Treasury areas where we felt that there were legitimate needs for policy shift.”
He said during his leadership of ASIC, the Treasury under Peter Costello was focused on “regulation being appropriately applied not heavily applied, and reforms designed to make Australia respected overseas”.
“One of the main roles [as ASIC chair] is to ensure that the cost of capital in Australia is the lowest it can possibly be and that there’s no sovereign risk factor applied to the market in Australia because of poor regulation.”
An accountant by training, Mr Lucy said in his opinion the questions facing the ASIC chair were commercial issues rather than legal issues. “It was often an issue of trying to understand the commercial imperatives of businesses that we were looking at, what did they do, and why did they do it, and how did they do it?”
He declined to comment on Mr Shipton’s tenure or the recent problems at the regulator. Former ASIC chairmen Tony D’Aloisio and Alan Cameron declined to be interviewed.
Executive search firms believe the tight timeframe in which the government has to find a replacement for Mr Shipton favours a domestic appointment. They say the government would want to avoid a repeat of the taxation issues that came with the current ASIC chair’s appointment.
The exception would be “if it’s somebody who’s already relocating to Australia,” said a headhunter, who asked not to be named. Even so, the names bandied about for the role have included the former interim chief executive of Britain’s Financial Conduct Authority, Chris Woolard, and Margaret Cole, a former managing director of enforcement and financial crime at the Financial Services Authority, a precursor to the FCA. She’s now at PwC in London.
The choice may be a partner from a top tier law firm, as Mr Hartnell has suggested, and speculation has included names such as Greg Golding at Ashurst and Shannon Finch at Jones Day.
Anne is an award-winning writer and a senior correspondent for The Sydney Morning Herald and The Age. She was previously deputy editor of Good Weekend and has worked for The AFR and as a foreign correspondent. Email Anne at email@example.com