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ASIC never was the tough corporate cop on the beat & the current ASIC executive expenses saga could make it weaker
If you think we'll end up with new leadership that's tougher on the big end of town, think again.
After being appointed by the former Turnbull government, James Shipton began his tenure as the head of the ASIC in February 2018, with Justice Kenneth Hayne's Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry underway.
After months of revelations from public hearings, Justice Hayne delivered a report that condemned the toxic sales culture in the finance sector and excoriated regulators to deal with it.
ASIC came in for particular criticism for its penchant for striking deals with corporate miscreants rather than prosecuting them (For example: Leading corporate criminal Westpac's 23,000,000 banking offences & no one went to the nick over that - how surprising!).
Mr Shipton's predecessor, former investment banker Greg Medcraft, was notorious for preferring backroom deals and settlements to court action – despite acknowledging that Australia was something of a paradise for white-collar crime — but he is merely one in a long line, reflecting a long-standing culture.
As far back as 15 years ago, ASIC was criticised by the judiciary for going soft on high-profile, white-collar wrongdoing.
Cosy cocktail functions with business leaders reinforced a perception of a captive cop, too close to those it was meant to police.
Mr Shipton, a former Harvard law professor and Hong Kong companies' regulator, is hardly a radical or a firebrand. But he moved with the zeitgeist.
ASIC adopted a formal stance of 'why not litigate?' that made court action the first option rather than the last resort for dealing with companies that breached the law.
It created a better-resourced enforcement bureau, began talking tough, and behaving a little tougher than it used to.
But the recession has shifted the zeitgeist.
The economic malaise sparked by COVID-19 health restrictions, and the threat of widespread company collapses, has given business lobby groups a rationale to furiously campaign for a relaxation of rules.
They've found Treasurer Josh Frydenberg and his staff receptive.
Despite the royal commission's body of evidence on dodgy lending, the Federal Government has moved to soften responsible lending laws.
As the downturn began, it suspended laws against insolvent trading and prevented creditors from chasing companies that failed to meet their obligations.
Now it wants new laws, similar to those in the United States, to allow companies that are broke or in trouble to enter "bankruptcy protection" and keep creditors at bay.
The legislation would also prevent corporate liquidators from conducting a thorough and detailed examination to reveal whether the business had been trading insolvent, and restrict their scope to explore the money trail to ascertain when funds in a troubled company had been spirited away.
At the moment, the laws would only apply to small and medium businesses, but big business interests want them extended.
There's also a push to water down laws on directors' liabilities.
There is a firm policy rationale for these changes: the need to encourage business investment and entrepreneurial risk-taking to help drag the country out of the deepest downturn in 20 years.
There's also a risk that they'll encourage corporate malfeasance and poor behaviour.
Conservative governments are generally more inclined towards soft-touch regulation of business, and though the pragmatic and adaptable Prime Minister and Treasurer expressed appropriate outrage after the Hayne Royal Commission, it's not surprising to see the pendulum swing back the other way.
So, don't expect to see a hard-nosed, tough-on-white-collar crime boss take over if Mr Shipton and his team are deposed.
Australian governments, and the powerful corporate lobby that influences politics, have always preferred a corporate cop more in the mould of a friendly and unarmed British bobby than a Dirty Harry.
Based On Story By | Stephen Long, ABC.
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