John Symond, the one-time battler who narrowly avoided bankruptcy in the 1990s and went on to grow a fortune worth about $600 million, last week held his traditional end-of-year soiree at his Point Piper mansion. The event, catered by celebrity chef Matt Moran (MasterChef and Aria Restaurant), featured the usual roll call of elite business figures including recently appointed News Limited boss Kim Williams and Seven director Bruce McWilliam.
What was most peculiar though was a report buried in The Australian Financial Review’s Street Talk column that also enjoying Symond’s generous hospitality was recently appointed ASIC chairman Greg Medcraft.
The decision by Medcraft to attend the function is a peculiar one. As the head of the Australian Securities & Investments Commission, it is Medcraft’s job to police Australian companies. This isn’t always an easy task — and it wouldn’t be made any easier when dealing with possible acquaintances.
While not suggesting in any way that Australia’s top corporate cop acted in an untoward manner (or than anyone who attended Symond’s function has ever acted improperly), it is reasonable to suggest that Medcraft would be advised to refrain from enjoying the hospitality (which likely cost upwards of $500 per head) of one of Australia’s wealthiest corporate figures. That the function was also attended by a large number of leading business figures, such as Macquarie Group’s Nicholas Moore and the CBA’s Ian Narev, adds to that fact.
Medcraft’s predecessor Tony D’Aloisio also maintained very close links to business. A former head of the ASX and blue-chip law firm Mallesons, D’Aloisio was head of ASIC when the corporate watchdog banned short selling of financial stock (a move which directly benefited institutions such as Macquarie).
Medcraft, like D’Aloisio, has a corporate background. Originally an accountant at KPMG, Medcraft became an associate director of French bank Societe Generale in 1987, rising to the unfortunately named deputy global head-financial engineering in 1999, before spending seven years as the bank’s global head of securitisation.
The unit of Societe Generale which was overseen by Medcraft was recently accused of misleading US institutions, Fannie Mae and Freddie Mac. According to Fairfax reports, Societe Generale “is one of 17 institutions alleged by the US housing agency to have violated federal securities laws and common law by negligently misrepresenting their products and providing ‘false or misleading’ information to Freddie Mac and Fannie Mae in 2006”. Medcraft has not been personally named in the action.
However, Medcraft had been previously named in a s-xual harassment suit brought against his former employer, with claims alleging that the ASIC boss had “approved $4000 to pay for clients to attend a strip club, commented on a woman’s legs and discriminated against an employee”.
While Medcraft’s predicament may well be an unfortunate series of events, his appointment is the last in a string of controversial public figure moves by the Rudd/Gillard governments. The $2 million per year head of the National Broadband Network, Mike Quigley, was president of communication company Alcatel’s American division, responsible for North, South and Central America. While Quigley was in that role, the company became embroiled in a bribery scandal that eventually led to $US137 million in fines and penalties. Quigley (who was not named in the suit), told a Senate Committee earlier this year that “he shared the responsibility and regret for the illegal conduct at Alcatel”.
It appears that when making critical public appointments, the current government is not one for conducting lengthy due diligence. When it appointed Medcraft, a former member of the Labor Party, the prime minister granted him a specific exemption from its policy on “open and merit based” senior appointments.
It is likely that Greg Medcraft won’t be the only person closely following the legal proceedings in the United States.