The Governance Institute of Australia has firmly rejected accusations it is trying to lessen the scrutiny on corporate board directors.
Yesterday, Crikey revealed many of the nation’s leading journalists had signed a letter to be sent to Assistant Treasurer Josh Frydenberg, urging him, as the minister responsible for the Australian Securities and Investments Commission, to bin any proposal that would remove the personal information of directors from the ASIC Registry. (In yesterday’s piece, Crikey incorrectly reported that the institute wanted to remove directors’ names from the ASIC registry. That’s not the case – the information it wants removed is date and place of birth, and home residential addresses).
The Victorian media head of the journalists’ union (and News Corp business journo) Ben Butler says personal details of directors like place of birth, date or birth and residential address are crucial for journalists seeking to cross-reference ownership of assets across different databases. Board directors are largely male and of western European heritage, and thus often have similar names. Being able to cross-reference someone’s overseas holdings, or look up their other assets in Australia, with more information than a name to make sure it’s the same person is part of both investigative and routine business journalism.
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The journalists’ concerns have been prompted by a proposal put forward by the Governance Institute of Australia to replace personal details like place and date of birth with a director identity number, which would allow directors to be identified across companies while protecting their privacy. Butler described it as “a proposal to gut journalism in Australia.”
The Governance Institute’s director of policy, Judith Fox, has hit back at the criticism by the union and others, saying it misrepresents the institute’s position. She says the body’s concerns were never about making directors not accountable, but protecting them from the real risk of things like identity theft.
In Australia, identity theft against corporate directors is not a well-documented problem. However, Fox told Crikey yesterday, “I don’t see why we shouldn’t be proactive about this. We need sensible discussion about how third parties who need access to information can have access to the information they need.”
“We put forward a really sensible proposal … to try and start the conversation about how to make it work.”
Attempts to replace directors’ information with a unique code, Fox notes, have been recommended by many bodies and experts like Melbourne University’s Ian Ramsay, one of Australia’s foremost corporate law experts, and fellow Melbourne University professor Helen Anderson (though Anderson told the AFR this week her proposal was not for the code to replace information currently in the registry).
The Governance Institute’s proposal has been set out in its submission to an ongoing inquiry of the Productivity Commission. The commission favours a director identity number secured through 100 points of ID as a way of guarding against phoenix activity, and notes that directors currently have to give very little by way of identification before being placed on the registry. The Governance Institute’s submission firmly supports the Productivity Commissions recommendation, but argues that there would be additional benefits in having this number replace some of the information displayed on directors.
In January, the GIA’s submission states it wrote to the Treasury Department urging it to consider such identity numbers as a “means of mitigating the risk posed to directors and officers, as a result of personal information that can be readily used for identity theft or for assaults on personal security being publicly available on the ASIC register of officeholders”.
The institute’s letter to Treasury, included in its submission to the Productivity Commission, notes the “increasing concerns” of many of its members regarding the risks posed to them by the personal information on the ASIC registry. Directors, the GIA says, are at heightened risk of identity theft by virtue of both their profile and the fact that so much information about them is publicly available. It notes that birthdays are a common form of identification verification used by banks, telecom companies and similar businesses. The date of birth of all directors can be freely accessed through the ASIC Registry. The letter to Treasury states:
“The Governance Institute is of the view that it is entirely appropriate that ASIC request and retain the personal details of all officeholders on a database subject to strict controls and access. However, we are also of the view that the open publication of birthdates and birth places of officeholders serves no useful purpose other than for persons with criminal intent.”
It adds that a director identification number could make things easier for other stakeholders who need access to the information, like media, lawyers and creditors, by making it very easy to track someone’s directorships.
For the purpose of serving documents, directors should also be required to list a service address, instead of the current requirement for a residential address, the GIA states. The appendix to its submission notes Australia requires directors to make more personal information public than many similar jurisdictions.