Denise Brailey made her name fighting dodgy finance brokers in Western Australia so she is well qualified to comment on the inadequacies of our corporate watchdog ASIC.
Crikey has published a series of articles which highlighted the importance of corporate surveillance not because of the possibility of corporate disasters, but more to the point, the symptoms of corporate greed were already evident in the mid to late eighties. The regulators were privy to explosive documentation, yet appeared unable or, unwilling to move.
The business community is very aware that corporate collapses cause devastation to ordinary Australians – small business people, the working middle class, the already poverty stricken. It follows, the economy is then required to sustain high levels of expenditure in “aftermath activities” such as public inquiries, royal commissions, corporate post mortems and legislative change; followed by new policy implementation programs. Further consequences of lacklustre corporate surveillance materialise in the form of unemployment, a slide in consumer confidence and the devastating effects upon spending, as more ‘mums and dads’ are left in a financially insecure zone. The ripple effect of corporate delinquency burdens us all in some way and the community will ultimately and consistently pay the highest price for regulatory incompetence.
Sadly, the Federal Government’s response has been lacklustre. The recent budget for the Corporate Cop, allowed for an embarrassing increase of only $10 million to be shared by ASIC offices in all States and Territories, yet the increase in revenue was higher than the handout.
Richard Gluyas’ article in the Australian (20/7/02, Pg 30) echoed similar thoughts: “David Knott said in his press statement a week ago that ASIC would draw on the resources of its chief accountant’s office and corporate finance and enforcement directorates for the new accounting hit-squad. But even if it were fully staffed, the entire chief accountant’s office could meet in a telephone box. There are three or four of them.”
A senior member for the ASIC team claimed a new ASIC taskforce “is not going to change anything.” David Knott is meanwhile attempting to sound like Allan Fels a hard act to follow. The difference between the two chiefs is obvious; one is talking of breath-taking policies he hopes to adopt, the other has been a mile in front for a good number of years. The ACCC approach has produced spectacular results, with the blessing of the ‘mums and dads’ who rely on quality standards and conduct in the market place, policed by strong enforcement agencies. Allan Fels delivered the goods.
Top ASIC investigators have known for the past few years, where the problems of corporate governance are to be found. Several have left the agency in disgust. One only needs to examine levels of morale in both agencies, as a clear comparison. ASIC chiefs in each state need to rebuild strong investigative teams and implement policies which reflect the mood of the electorate. The general public have a right to expect professional advice when consulting with members of the legal, accounting and finance professions. Failure of those professions to deliver honest and reliable standards and conduct to the paying public, result in financial ruin for many hardworking innocent Australians. Consumers pay the highest price when faced with the failure of professionals to deliver sound, and relied upon advice. There are those who would argue the public has a right to expect Boards and their members to act as professional watchdogs and they expect ASIC to embrace the role bestowed upon the regulator, as being one of enforcement. Regulations are a useless waste of taxpayer dollars if those charged with the task of enforcement, are asleep at the wheel or indulge in political gymnastics to hide the truth.
ASIC has had a ‘national taskforce’ for the past three years we would love to discover the minutes of those meetings and the results of their expertise. If we are to avoid the devastating consequences of American corporate collapses we need serious community minded watchdogs to watch over the corporate regulators and ask the hard questions, starting with:- when were the regulators first aware; what were they aware of; by whom; and what action was taken to punish the wrongdoer.
Whether the allegations of corporate delinquency are a matter of incompetence, or of criminal activity, makes little difference to the victims. The reality is that during the past decade, over one hundred thousand ordinary, innocent Australians and their families have already been hit financially by corporate greed and the key players responsible for those losses are, in most cases, are permitted by ASIC to continue to roam the streets. Facts emerging demonstrate: the decline in professional standards is clearly attributable to an obvious lack of punishment in the corporate sector and the denial of awareness by the Federal regulatory body. The tragedy unfolds, that innocent Australians from middle Australia could have been spared these catastrophic challenges to their financial security, had the Federal Government insisted on raising the bar on corporate standards in 1996, and not relied upon four men and women in a “phone box” to shoulder the responsibility.