Declaration of interests and conflicts of interest within the Australian Securities and Investments Commission
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The Auditor-General responded on 18 May 2018 to correspondence from Senator Whish-Wilson dated 24 April 2018, requesting that the Auditor-General conduct an audit of the implementation of declaration of interest and conflict of interest policies by the Australian Securities and Investments Commission (ASIC).
18 May 2018
Senator Peter Whish-Wilson
Senator for Tasmania
By email: Senator.firstname.lastname@example.org
Dear Senator Whish-Wilson
I am writing in response to your letter of 24 April 2018, requesting that I consider undertaking an audit of the Australian Securities and Investments Commission’s (ASIC’s) policies and practices regarding declaration of interests and conflicts of interests.
As you will be aware, the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (Royal Commission) was established on 14 December 2017, with the final report due by 1 February 2019. The Terms of Reference for the Royal Commission includes scope to investigate matters pertaining to the effectiveness and ability of regulators of financial services entities, such as ASIC, to identify and address misconduct issues of entities including any changes required within the regulator to minimise the likelihood of misconduct. For this reason I do not intend to commence an audit on this topic while the Royal Commission is underway. I will however reconsider whether an audit of ASIC’s declarations of interests policies and practices would add any further value to the public sector after the Royal Commission report is released and the findings are known.
Correspondence from Senator Whish-Wilson
Transcript of letter from Senator Whish-Wilson
Mr Grant Hehir
Australian National Audit Office
GPO Box 707
Canberra ACT 2601
24 April 2018
Dear Mr Hehir,
I am writing to you in relation to the policies and practices regarding the declaration of interests and conflicts of interests within the Australian Securities and Investments Commission.
Concerns have been raised in the media in regards to the potential conflicts of interests between former ASIC Chairman Greg Medcraft and the, currently stood aside, Senior Counsel for AMP, Brian Salter.
It has been reported in the press that Brian Salter interfered with a supposedly independent report about AMP, authored by his former firm Clayton Utz and emailed to Greg Medcraft, of ASIC, for regulatory purposes.
It has also been reported that Brian Salter was appointed to ASIC's Financial Service and Credit Panel, although since ASIC have said he was been stood aside from this panel.
It has been reported that Brian Salter was the "best man' at Greg Medcraft's wedding and it is plain that the public might view the role of Medcraft having regulatory interactions with Salter, and the appointment of ASIC to a panel as a potential conflict that needs to be declared and managed.
I am not in a position to determine whether this conflict was declared and how it was managed if declared because there appears to be no public documentation or comments on this matter. In writing this letter, I am not suggesting there was any wrongdoing involved from either person mentioned but I am suggesting that work needs to draw attention to how such potential conflicts are declared and managed.
I am writing to you to ask you to conduct an audit of the implementation of ASICs declaration of interest and conflict of interest policies across the entire organisation, particularly for Commissioners and senior staff. It is essential that the corporate regulator be seen as above reproach.
I would like you to examine how conflicts are managed in ASIC when dealing with them as regulator where ASIC staff or Commissioners provide oversight top companies where friends of former colleagues may be in senior positions, and also how conflicts are managed when such people are appointed to government panels.
I note that an Ombudsman's Report into a previous ASIC conflict of interest matter said the following on ASIC's policy:
In general, a "conflict of interest" arises when a person has an interest - real or perceived - that conflicts with a duty they hold, and could influence the performance of that duty.
ASIC's "Statement on disclosure of interests and conflicts of interests" defines a conflict of interest as when: ...you are required to consider a matter in which you have a direct or indirect interest.
The existence of that interest may mean that you are unable, or you may be perceived as being unable, to properly perform or exercise your functions, services or powers. The interest may be a pecuniary interest, an indirect interest or other interest. "Other interest" may include current or former personal relationships, such as friendships, familial ties, business or other professional or social associations or where you have had prior dealings of a negative kind.
In regards to how this concept applied to ASIC and its employees, ASIC's overarching policy at this time was that:
ASIC and members of its staff must avoid situations where external or personal interests may conflict,.or appear to conflict, with our administration or enforcement of the ASIC Act, the Corporations Act 2001 (Corporations Act) or other legislation.
Senator Peter Whish-Wilson
Senator for Tasmania
Greens Treasury spokesperson
NB: I have attached supporting media articles
Note: Senator Whish-Wilson's correspondence included an attachment containing the following media articles:
- The corporate cop. The Australian 20/4/2012.
- Ex-ASIC chief finds a better man. The Australian 24/4/2018.
- Remarkable hypocrisy of AMP. Australian Financial Review (AFR) Weekend 21/4/2018.
- Lawyer stood down over ASIC links to AMP. Canberra Times 23/4/2018.