It takes a different sort of person to want to work for ASIC — Australia’s corporate watchdog. The pay is far less than you would receive in the private sector and the hours can be arduous. But aside from a secure role, those working in ASIC’s enforcement division can at least lay claim to be doing good — catching bad guys and ensuring that investors don’t fall victim of financial fraud. In theory, anyway. However, it appears that the reality is quite different, with ASIC almost frozen in the aftermath of the global financial crisis. No criminal or civil legal actions have yet being taken against directors and executives of collapsed companies such as ABC Learning Centres, Babcock & Brown and Allco Finance Group.

It has been almost two years since those collapses and with the exception of the odd civil claim (such as that against various MFS executives), the perpetrators of some of the greatest Australian financial collapses (Babcock’s $5.6 billion 2008 loss remains the second biggest in Australian corporate history) remain free to roam the corporate landscape.

The situation is a far cry from what has happened in the United States.

Within a year of WorldCom’s collapse, former CEO Bernie Ebbers was indicted for securities fraud. Six months after that, Ebbers was also charged with conspiracy by federal authorities and sentenced to 25 years in prison. It took just over two years for federal authorities to lay charges against former Enron chiefs Ken Lay and Jeff Skilling. Skilling would eventually be sentenced to 24 years in prison and fined $US45 million (Lay died before sentencing). The wheels of justice moved even quicker in the cases of Ponzi scheme operators Bernie Madoff and Marc Drier — both were in jail within 12 months of their crimes being detected.

But don’t expect Australia’s watchdog to act with such haste. Or even act at all. For it seems prosecuting corporate crooks is all just a bit too hard for ASIC. Much easier to go after directors of small companies whose alleged crimes affect very few, rather than former CEOs whose actions led to multibillion losses.

The Fairfax papers today reported that ASIC is belatedly “examining” a deal between Allco Finance Group and commercial property manager Rubicon. The transaction occurred in late 2008, shortly before Allco’s collapse and involved the Sydney-based finance house paying $64 million in cash and hundreds of millions in shares for Rubicon. This in itself may not have been so controversial had Rubicon not been owned by several Allco directors.

The sale netted Rubicon founder and managing director Gordon Fell (who was also a director of Allco) almost $28 million. A couple of days after collecting that money, Fell’s wife promptly paid $27 million for a Sydney harbourside mansion. (Allco boss David Coe collected about$12 million in the deal).

The transaction was one of the key reasons for Allco’s 2009 collapse under the weight of a multibillion dollar debt.

Not every transaction that loses money for shareholders can or should give rise to civil or criminal action. That is because of the “business judgment” rule. The rule holds that so long held that directors who made the decision were acting in good faith, for a proper purpose, were fully informed of the subject matter and importantly, do not have a material personal interest in the matter, then the law will not hold them personally responsible for losses suffered by investors.

That rule most does not seem to be relevant in the Rubicon fiasco.

Rubicon was a property management company that earned virtually all of its income from fees paid by three subsidiary satellite funds (which were all listed on the ASX). Only three weeks after Rubicon was purchased by Allco, the funds’ auditor, PwC, found that there was “significant doubt” as to the funds’ ability to continue as a gong concern. In short, the auditor of the vehicles that generated virtually all of Rubicon’s earnings were about to collapse — this meant that Rubicon was worth a lot less than the hundreds of millions of dollars that Allco was paying.

Fell, of course, was the managing director of Rubicon. Had he not been aware of the predicament of the trusts, then it appears that he was derelict in his duties as a director of Rubicon and the trusts (Fell was also the executive chairman of the various trusts). However, if he was aware of the trusts’ ailing financial state, then he was obligated as a director of Allco to bring those maters to the attention of the Allco board, which was about to pay $64 million in cash (and hundreds of millions in Allco scrip) to buy Rubicon (of which Fell would personally retain $28 million).

Either way, it is astonishing that given the easily obtainable public information, that ASIC has not looked into this matter.

Crikey contacted ASIC, which failed to respond before publication.