The Australian Securities and Investments Commission seems to be pioneering a new model for law enforcement – sit on the fence when something difficult comes along but applaud brave citizens prepared to take their own action.

As a very rough simile, it could be like the local copper declining to lift his baton against a bikie gang vandalising the neighbourhood, but willing to cheer on a resident determined to protect his property and advise how far he can go in that pursuit.

After its ignominious handling of the Vizard case, you might think ASIC would want to be seen to be a little braver, but the story within the story of an Allstate Explorations shareholder wanting to examine Allstate’s administrators points to a continuing faint-heartedness on the part of the watchpuppy.

Allstate of course is the joint owner of the infamous Beaconsfield mine. Its administrators, Michael Ryan and Tony Woodings of Perth’s Taylor Woodings, achieved their own measure of fame by doing an amazing deal with Macquarie Bank to sell Macquarie some $77 million worth of inter-company Allstate debt for just $300,000.

Macquarie went on to make millions out of that debt while Allstate shareholders were, figuratively speaking, shafted. The saga also won the Oz’s Michael West a Walkley award and a defo action from Macquarie.

Now Allstate shareholder Simon Evans wants to examine the administrators before the court – something that appears to be less than appealing to the administrators and Macquarie, given the legal challenges they are mounting to it.

Yesterday ASIC barrister Dr Andrew Bell was before Justice Roger Gyles in the Federal Court, saying further investigations into the $77 million deal could well lead to compensation claims by Allstate shareholders. Michael West’s report in the Oz followed what the case revealed about Macquarie, but Liz Sexton in the Smage raises a more important question: why hasn’t ASIC taken action itself? Reports Sexton:

(The administrators’) lawyers argued that ASIC should have known public examination would be futile because ASIC itself had closed an investigation into the issues in February 2004.

Dr Bell countered yesterday that, “the conclusion of [ASIC’s] inquiry was not that this case had absolutely nothing in it.

“We looked at it, sure, and we came to the conclusion we came to, but with difficult issues, complex issues of fact and law, one cannot say that this would be hopeless,” he said.

Dr Bell said ASIC had its own budgetary resources and policy priorities. “Someone else may (a) take a different view of the strength of the evidence or (b) be prepared to take a different risk.”

After reading internal ASIC documents about its investigation, Justice Gyles said that “plainly enough the author was not really blessing this with holy water”.

Yes, taking on Macquarie Bank is a very hard and expensive job. Much wiser to let that one go through to the keeper. Really inspires confidence in ASIC’s performance, that does. 

Peter Fray

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Peter Fray
Editor-in-chief of Crikey