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Jul 5, 2013

Double standards as gutless ASIC targets the little guy

The corporate regulator is too scared and incompetent to take on large companies, but has come down hard on the man who sent out a fake press release to expose the stupidity of finance journalists.

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Is there a bigger joke in Australian regulation than the Australian Securities and Investment Commission?

Journalist Adele Ferguson’s excellent exposé of ASIC’s stunning lack of interest in detailed evidence provided by whistleblowers on misconduct within the Commonwealth Bank, which has led to a Senate inquiry into the regulator, is only the latest revelations about ASIC’s remarkable ineptitude. Whether it’s failing to successfully prosecute references from the Australian Stock Exchange, waving through exemptions on financial reporting, a failed seven-year investigation of Offset Alpine and Trevor Kennedy, the regulator’s spectacular failures on Westpoint and Storm, its abandonment of any action against ABC’s Eddy Groves or its miserable litigation record, ASIC is a byword for incompetence.

It is unable or unwilling to do its job of corporate regulation properly, particularly when faced with having to go after big companies that might have the gall to fight back. But it’s a different story on the internet.

Since Melbourne Free University found its website had been taken offline in early April and its provider AAPT refused point blank to even acknowledge that it had done so, ASIC has emerged as one of Australia’s primary internet censors, using the untrammelled power of section 313 of the Telecommunications Act to censor the internet in aid, it maintains, of blocking scam sites.

Melbourne Free University wasn’t a scam site; it just happened to be collateral damage in ASIC’s war on the internet, one of 1200 sites blocked by ASIC under s.313 in its quest to block one scam site. Yes, they wanted to block one site, but managed to shut down 1200.

ASIC might be utterly hopeless at presenting a case in a court of law, but it can sure as hell bring down internet sites.

Still, give ASIC some credit. When it tried to bring down another scam site in March, it brought down not 1200, not 2500, not 25,000 but 250,000 sites — the vast majority of which, fortunately, had “no substantive content”, although that was purely coincidental. Even so, that’s an improvement of over 20,000% in accuracy by ASIC in just a matter of weeks.

“If you’re online and ASIC knows you’re just an individual, without corporate resources to fight it, then it will come down very hard on you indeed.”

Sadly, it wasn’t enough to assure then-communications minister Stephen Conroy, who started an inquiry into the use of s.313.

ASIC is also one of the agencies that supported data retention in the recent joint committee on intelligence and security inquiry, insisting it was important that it be allowed to have access to Australians’ internet and phone records. Greens Senator Scott Ludlam asked them at estimates whether that might help fix their terrible record in prosecuting people.

If you’re online and ASIC knows you’re just an individual, without corporate resources to fight it, then it will come down very hard on you indeed.

That’s why the Whitehaven Coal hoaxer Jonathan Moylan has this week been charged by ASIC and now faces 10 years’ jail for raising awareness of the laziness of investors and journalists and Whitehaven’s potentially highly damaging CSG projects. Moylan, who was on the receiving end of a rare raid by ASIC officers after the hoax, had issued a fake media release about the company from his laptop. Moylan has been charged with breaching the Corporations Act.

If Moylan was backed by a large company, you can bet ASIC would at worst have demanded an enforceable undertaking not to do it again, or maybe instigated a multi-year investigation that quietly ends without charges.

The double standard is blatant and sickening and reminiscent of that found in the United States, where online activists and hackers have been charged and jailed for embarrassing the US government and large US companies, but not one single bank executive has gone to jail in the wake of the global financial crisis. Even admitting to acting as a vast money-laundering outfit for the world’s most violent drug gangs doesn’t see anyone in the banking sector behind bars.

Australian banks aren’t engaged in that sort of behaviour by any stretch. But rip off your financial planning clients and take their life savings, engage in dodgy and insider trading, preside over a spectacular corporate collapse or repeatedly breach industry codes of practice, and ASIC couldn’t care less. Send out a fake email that exposes the cupidity at the heart of equities markets, and ASIC goes from Keystone Cops to SWAT quick as a flash.

Bernard Keane — Politics Editor

Bernard Keane

Politics Editor

Bernard Keane is Crikey’s political editor. Before that he was Crikey’s Canberra press gallery correspondent, covering politics, national security and economics.

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21 comments

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21 thoughts on “Double standards as gutless ASIC targets the little guy

  1. Carolina Cadiz

    “Simply reporting what occurred might be one thing but the author here is saying ASIC are incompetent, and I’m here to tell you they had no other choice with regards to the methods used when blocking sites.”Ruski Rudd

    But is n’t that the issue right there? You assume ASIC has carte blanche. Shutting down 1,200 sites to block one other site is like putting flouride in the water, you save one tooth but kill 12,000 people.

    Your diamond cuts no ice.

  2. Bob the builder

    mmm…

  3. Person Ordinary

    “There is no connection between the prosecutions of activists, bankers on wall street and ASIC.”

    You cannot see the common thread of corruption – the violent self interest that fills the gaps between power and accountability?

    Not sure Bernard could have made it any clearer. Maybe you don’t want to see it.

  4. Serenatopia

    ASIC cracking down at a pimpled-faced 25 year old protester because mining magnates lost a few million
    http://m.smh.com.au/business/charge-laid-after-whitehaven-hoax-email-20130702-2p9x6.html
    ASIC not cracking down in CBA for corrupt financial planning practices where Retirees potentially lost millions
    http://m.smh.com.au/business/asic-caned-over-tardy-probe-on-cba-financials-20130604-2nohg.html

    @Rudski you are playing the person not the issue! While Bernard can be dramatic, the issue here is the contradictory and corrupt standards of ASIC!

    @Fractious—I am really very sweet, it must be that I am right on the money!

  5. rudski rud

    I concede my posts could be more eloquent so I will give it another go.

    If I was to criticise ASIC and describe them as, “ASIC is a byword for incompetence” and in the same article complain about inadvertently blocking websites I would have found out the process and reasons.

    Simply reporting what occurred might be one thing but the author here is saying ASIC are incompetent, and I’m here to tell you they had no other choice with regards to the methods used when blocking sites. If they want to use section 313 in many cases you will unfortunately take down more than one site.

    Now, you could complain about the law and section 313 but ASIC are simply following their role and rules given.

    What is the point of the article, was it to point out that shared web proxies aren’t a good idea? No.
    Its just a cheap shot at ASIC.

    Many points in this one article are disjointed and I can’t see any connection. Example

    “…..where online activists and hackers have been charged and jailed for embarrassing the US government and large US companies, but not one single bank executive has gone to jail in the wake of the global financial crisis”

    There is no connection between the prosecutions of activists, bankers on wall street and ASIC.

    Jonathan Moylan is completely different and to compare him to wall street bankers associated with the GFC is, well you finish the sentence….

  6. Carolina Cadiz

    Great piece, Bernard. You have now made up for last week’s debacle.

    Yes, these Big Brother institutions certainly look after their ” Big Brotherhood.”

    They are Bullies, making an example of the little bloke with good intentions and near harmless consequences while letting the real criminals go free..Sigh!

    Did n’t know ASIC had their snout in the Data Retention trough. That is really interesting. Thanks again for this excellent and well researched article.

  7. fractious

    “if you didn’t research the simple question of how does a site get blocked wouldn’t it be reasonable to assume you didn’t do any research into the cases ASIC lost?”

    Only someone who has a very poorly-developed grasp of the principles of sound argument, or someone with a barrow to push, would assume any such thing.

    Serenatopia #9, either you’re absolutely on the money or I’ve bumped into someone whose level of cynicism about how the modern “developed” world runs matches mine.

  8. Damian Hollooway

    ASIC are ruthless in enforcing fines on small business if you are even a day late lodging your yearly fees but turn a blind eye when Rhinehart etc don’t bother to lodgeyearly accounts.

    Its one rule for the rich and another for the poor.

    Selective enforcement in skewed interpretations of the law.

    The sooner ASIC is dismantled and an efficient but fair regulator brought in to replace it the better.

  9. Bob the builder

    The above was in answer to this question: “Is there a bigger joke in Australian regulation than the Australian Securities and Investment Commission?”

  10. Bob the builder

    Yes, there is – and it’s ORIC (Office of the Registrar of Indigenous Corporations), who’ve repeatedly proven that they prosecute tiny, technical breaches and steer well clear of obvious, large-scale corruption and fraud.

    The failure to act with any rigour on the credible and well-publicised allegations about the operation of the Jawoyn Corporation is but one of a number of examples.

  11. rudski rud

    Bernard, even though I normally find your articles a good read in most cases, I have to point out the technical issue you overlooked or simply decided to exclude because the majority of the population wouldn’t know how blocking websites really works.

    Even though it sounds really nasty that a whole bunch of sites got blocked it’s not technically possible in many cases to single out and block one site.

    You block via IP not DNS and most smaller sites use web proxies or shared IPs but either way it’s impossible to “block” a single site that might be hosted from a data center that has 10,000’s of sites hanging off it.

    Go have a chat with your IT team and they can explain what a web proxy is.

    Which gets me thinking, if an expert can pick apart this article and point out the complete lack of knowledge or research I wonder about the rest of it. You went pretty hard on ASIC and I’m not law expert and I assume you’re not either. So if you didn’t research the simple question of how does a site get blocked wouldn’t it be reasonable to assume you didn’t do any research into the cases ASIC lost?

  12. Serenatopia

    Just in case you missed the obvious conclusion—Australia is a dictatorship!

  13. Serenatopia

    Sorry BK—ASIC, ATO, AFP—aren’t gutless to go after the big fish—they are run by the big fish—this isn’t a case of incompetence—this is corruption playing right before our eyes and our journalists keep diluting the obvious conclusions!

  14. Patriot

    Throw the worthless hippie in gaol.

  15. Tom Stayner

    Excellent article, thanks Bernard. Is it naïve to even ask how many times an actual white-collar criminal has been jailed (at all, let alone for 10 years) for making “false and misleading statements” under this same act? The impression I’m getting is never – anyone know?

    A very minor correction – Whitehaven’s projects are in open-cut coal mining, not CSG. But you’re right that they’re “potentially highly damaging”. In fact Maules Creek mine, in Leard State Forest from where Moylan sent the press release, got final approvals yesterday to start next week…

  16. Andrew Dolt

    Hey, the ASIC chairman Greg Medcraft knows who the real enemy is. Not the bankers who securitised highly dodgy assets and brought about the Global Financial Crisis, obviously. After all Greg was the banker who was Societe Generale’s global head of securitisation, the guy who co-founded the American Securitisation Forum, and the chief executive of the Australian Securitisation Forum. Then he took over the mangy old watchdog ASIC, and ensured it lost any focus it might previously have retained. Why would he want to disturb his old mates when he can instead go after a guy living in a tree whose only motivation was to make clear ANZ’s hypocrisy over the Equator Principles?

  17. Hamis Hill

    The stupidity of finance journalists?
    We are unused to such honesty in the land that forgot the GFC.

  18. Rambling Rose

    It’s time for programs like Four Corners to investigate ASIC.

  19. SusieQ

    Excellent article BK!
    We await a response from ASIC…..oh look, a pig just flew past……

  20. Le Masurier

    This is so ridiculous I fear I’m missing something…

  21. Bo Gainsbourg

    Extremely well said. This is a blight on the entire profession of financial journalists and the performance or non performance of ASIC over recent years. Not to mention that the fact of what the guy was trying to draw attention to is the single most serious financial, economic and environmental issue for our future. Whitehaven is firmly in the unburnable carbon bracket, and we won’t be able to get away from that now or in the future.

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