ASIC chair 'steps aside' over relocation expenses

The chairman of the Australian Securities and Investments Commission (ASIC), James Shipton, has "stepped aside" from his post, effective immediately*.

While addressing the House of Representatives standing committee on economics’ review of financial regulators on Friday (23 October), Mr Shipton outlined that he would need to recuse himself from the hearing as he had "offered to the Treasurer to step aside as chair and accountable authority of ASIC" pending the conclusion of a review into concerns raised regarding relocation expenses.

The move comes following concerns over his relocation expenses from the Unites States to Sydney totalling around $100,000.

An audit of ASIC’s financial statements by the Australian National Audit Office (ANAO) found that total remuneration paid to both ASIC chair James Shipton and deputy chair Daniel Crennan QC may have exceeded limits set by Remuneration Tribunal Determinations due to relocation expenses incurred by the two men. 

Mr Shipton will step aside pending an investigation and has said he will “voluntarily reimburse ASIC for taxation-related expenses ASIC paid following my 2018 relocation from the United States”.

It is not believed that Mr Crennan will step aside, despite the audit also finding that he had rental reimbursements after he relocated from Melbourne to Sydney totalling around $70,000.

The accommodation payments for deputy chair Crennan were ceased following his request, and he offered and agreed to repay the accommodation payments made to him as a debt due to the Commonwealth.

Mr Shipton said that ASIC would need to work through acting arrangements, but it was his understanding that the most senior commissioner in terms of tenure, deputy chair Crennan, would would “take a position as acting chair and as acting accountable authority”.**

‘What matters is that I act with integrity and honour’

Mr Shipton told the committee: “Apologies to you and the committee members at the short notice, but this news is literally minutes old. I have offered to the Treasurer to step aside as chair and accountable authority of ASIC pending the conclusion of the review, and that means that I will not propose to execute my functions until that review has concluded.”

He commented: “I have advised the Treasurer this afternoon that, in the circumstances, it is appropriate to stand aside pending the outcome of the review.

“While I believe that I have acted properly and appropriately in this matter, I hold myself to the highest possible standard. 

“What matters is that I act with integrity and honour. That means I need to act in the best interests of ASIC and its vital purpose to build a fair, honest and efficient financial system for all Australians.”

ASIC has acknowledged the ANAO’s findings and accepted all relevant recommendations, which include conducting an independent review of the issues raised in the ANAO report.

Mr Shipton said ASIC “acknowledges the processes supporting the approval of these relocation expenses were inadequate and, given the high standard ASIC holds itself to, it is disappointed that such situation has occurred”.  

ASIC said it anticipates the independent review will assist it to make appropriate changes to key policies and processes. 

In the interim, ASIC has implemented changes to procedures associated with approval of expenses relating to geographic relocation for statutory appointees to ensure that there is commission oversight of those expenses and that the arrangements for new statutory appointees are clearly documented prior to them being made.

“ASIC acknowledges that action in relation to this matter, first raised in the ANAO’s 2018-19 Closing Report, should have taken place more promptly,” Mr Shipton said.

“At all times during consideration of this matter, I have been mindful of the need to avoid any conflict of interest. I have recused myself from all relevant commission deliberations. Where I have had to take any formal action in my role as ASIC’s accountable authority, I have only done so on the recommendations of the other, non-recused commissioners. Deputy chair Crennan has taken the same approach.”

He continued: “I only took this position to serve the Australian community and to work to improve the corporate and financial system that should also serve it. If I in anyway impede that purpose, the right thing for me to do is to step aside until such time that I can. 

“ASIC’s work protecting the Australian community must come first. It is far too important to jeopardise.

“I look forward to cooperating with the inquiry, and I look forward to my continued service to the Australian community.”

Independent review to be undertaken by Dr Vivienne Thom

According to Treasurer Josh Frydenberg, he received correspondence from the Auditor-General for Australia bringing to his attention “matters that he identified while conducting an audit of ASIC’s annual financial statements” on 22 October 2020.

Mr Frydenberg commented: “Specifically, the Auditor-General has indicated that during the 2019-20 financial statements audit of ASIC, the Australian National Audit Office (ANAO) identified payments made on behalf of the ASIC chair, Mr James Shipton, relating to taxation advice and deputy chair, Mr Dan Crennan QC, relating to housing expenses that he considered may exceed the limits set in the Remuneration Determination made by the Remuneration Tribunal and that there were also identified instances where the Commonwealth Procurement Rules were not followed.

“As made clear in ASIC’s 2019-20 Annual Report, tabled today, both the ASIC chair and deputy chair have agreed to repay these amounts.

“In response to the Auditor-General’s findings, the ANAO has recommended to ASIC that:

• ASIC undertake a review of the processes supporting the approval of remuneration and benefits paid to executive office holders, including the trigger points for seeking advice should amounts outside of the Remuneration Determination be considered for approval; and
• A review be undertaken of the procurement processes around payments made for the taxation advice paid on behalf of the chair to determine those internal controls that need to be either reinforced with relevant staff or redesigned to ensure effective implementation.

“As the matters identified by the Auditor-General relate to the accountable authority of ASIC, I have asked the Treasury to undertake an independent review into the findings of the ANAO financial statements audit. Following the review, Treasury will advise me on the findings of the review and any further course of action that may be appropriate.

“I have written to ASIC and the Auditor-General confirming this course of action.

“The independent review will be undertaken by Dr Vivienne Thom and is expected to be completed with the full cooperation of ASIC by the end of the year.”

Dr Thom is a former public servant and current independent consultant and intelligence specialist.

* This story was updated on 26/10/2020 to reflect that Mr Shipton has "stepped aside" while a review is undertaken rather than officially resigned his post

** Since this story was published, deputy chair Daniel Crennan resigned his post (on 26/10/2020)