Treasurer Josh Frydenberg has announced that the findings of the independent review of the remuneration issues surrounding its chair and deputy chair has made no adverse findings regarding ASIC chair James Shipton and deputy chair Daniel Crennan QC.
The review was called after an audit of ASIC’s financial statements by the Australian National Audit Office (ANAO) found that total remuneration paid to both men may have exceeded limits set by Remuneration Tribunal Determinations – largely due to relocation expenses.
The concerns focused around Mr Shipton’s relocation expenses from the Unites States to Sydney, totalling around $110,000 (largely stemming from tax advice provided by accountancy giant KPMG), as well as nearly $70,000 of rental reimbursements paid to Mr Crennan when he relocated from Melbourne to Sydney in early 2019.
Mr Shipton “stepped aside” from his role last year while the review was undertaken into the matter, with Mr Crennan later resigning from his role, bringing forward his planned departure date from ASIC.
Mr Shipton repaid the $118,557 paid by ASIC for tax advice. Mr Crennan repaid $69,621 paid by ASIC for accommodation payments.
What the Thom review found
The review recommended that it was open to the Treasury to seek legal advice about whether Mr Shipton breached applicable codes of conduct and, if so, what actions might then be taken.
The Treasurer has now said that, following legal advice, he was “satisfied that there have been no instances of misconduct by Mr Shipton concerning his relocation arrangements, including ASIC’s payment for tax advice resulting from his relocation to Australia in early 2018, nor have there been any breaches of applicable codes of conduct”.
As such, Mr Shipton will return to his role on Monday (1 February), but both Mr Shipton and the Treasurer have “agreed that it is in the best interests of ASIC that he will step down as chairperson of ASIC in the coming months”.
He will therefore continue in his role until a new chairperson commences.
Mr Frydenberg said: “I thank Mr Shipton for his three years of service and dedication during his time as chairperson of ASIC.
“The Treasury will immediately commence a search process for a new chairperson. I intend to finalise the appointment within the next three months.”
ASIC to overhaul governance
While the review, undertaken by former inspector-general of intelligence Vivienne Thom, did not recommend specific action against Mr Shipton, it has recommended “significant changes to the governance of the Australian Securities and Investments Commission”.
Dr Thom made recommendations for significant improvements to ASIC’s internal practices, systems and processes to enhance its management of matters recommended for action by the ANAO, including:
- internal audit management;
- quality assurance of legal advising processes; and
- improving the management of and controls for spending relating to commissioners.
Dr Thom also noted issues of concern regarding the adequacy of ASIC’s processes concerning:
- the proper use and management of public resources;
- systems of risk oversight and management;
- systems of internal control; and
- cooperation between ASIC officials.
Given the nature of the matters raised, the government said it expects ASIC to implement “as a priority” the recommendations made by Dr Thom concerning its internal risk, management and governance arrangements and to report to Mr Frydenberg regularly on its progress.
The review also concluded that the Treasury could improve its processes for managing the appointments of statutory officers under Treasury portfolio laws.
“In response, the Secretary to the Treasury has moved to implement a new system immediately,” Mr Frydenberg said.
“I thank Dr Thom for her conduct of the independent review.”
As the Thom review was provided as a confidential report to Treasury on 17 December 2020, only an abridged version of the findings have been released.
The abridged version was prepared by the Treasury in consultation with Dr Thom for public release so as not to disclose personal or commercial information or legal advice.
More to come.
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