The head of the nation’s corporate regulator has “stood aside” and his deputy has resigned over hundreds of thousands of dollars of allegedly improper payments. Treasurer Josh Frydenberg called an “independent review”. It was due to report by yesterday. There’s one problem. Anthony Klan reports.

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The Federal Government has failed to take the central step in one of the biggest corporate governance scandals in decades by refusing to actually “ask” the Remuneration Tribunal whether $300,000 of extra benefits paid to the chairman and deputy chairman of the corporate regulator were legal.

That is despite an “independent review” into the matter, launched by Treasurer Josh Frydenberg, due to report its findings by “the end of the year” – which was yesterday.

The Klaxon can reveal that Frydenberg has refused to seek an answer from the Remuneration Tribunal as to whether vast “relocation” expenses paid to Australian Securities and Investments Commission chairman James Shipton, and to deputy chairman Daniel Crennan QC, were lawful.

Crennan resigned and Shipton “stood aside” in October when the payments became public knowledge.

The Remuneration Tribunal is the federal government body which sets the pay rates of high-level public servants, such as politicians, federal court judges and the heads of major agencies – including Shipton and Crennan.

Despite this, the tribunal has confirmed it has never been asked by Frydenberg to determine whether the payments were lawful.

“The Remuneration Tribunal is not aware of having been asked to make the determination to which you refer,” the Remuneration Tribunal Secretariat told The Klaxon on Christmas Eve.

“The Tribunal Secretariat closes today and reopens on 4 January 2021”.

Frydenberg and his office did not respond when approached by The Klaxon for comment.

Shipton, a former Goldman Sachs banker, was appointed to run ASIC in November 2017, by then Treasurer, now Prime Minister, Scott Morrison.

Crennan was appointed as ASIC Deputy Commissioner by Frydenberg in June 2018.

ASIC paid $750 a week towards the rent of Crennan’s luxury Sydney home over almost two years, a total of almost $70,000.

That was after he relocated from Melbourne to Sydney, at Shipton’s request, in early January 2019.

Those payments were on top of the “total remuneration” Crennan was entitled to, as set in legislation by the Remuneration Tribunal.

In 2018-19 the ASIC Deputy Chair was to receive “total remuneration” of $608,550, and $620,730 in 2019-20.

The total rent payments totalled $69,621.

Including fringe benefits tax the total cost to ASIC – and so benefit to Crennan – was over $100,000.

Crennan has said he will pay the $69,621 back, and it has been registered as a “debt of the Commonwealth”.

Shipton received $118,557 in personal “tax advice” from KPMG, allegedly in relation to his relocation from the US to Australia to head up ASIC.

The total cost to ASIC – and so the total benefit to Shipton – was just over $195,000, after including fringe benefits tax.

The Shipton payments have been described as “outrageous” and far above what any employer would be expected to pay.

They were on top of Shipton’s “total remuneration”, set at $775,910 for 2019-20.


Clockwise from top: Frydenberg, Hehir, Crennan and Shipton. Source: Supplied.


Private umpire

The refusal by Frydenberg to ask the Remuneration Tribunal, the relevant body, to determine whether the payments to Shipton and Crennan were legal is particularly jarring because documents recently emerged showing ASIC had instead paid a private lawyer for its “advice” on the matter.

All advice put forward by ASIC support its actions in having made the payments to Shipton.

A partner at law firm Minter Ellison (the partner’s name is blacked out) wrote a letter responding to ASIC.

They were “not in a position to comment on the reasonableness of each of KPMG invoice” regarding the Shipton payments “because this would necessitate a detailed knowledge of the advice”.

Regardless, and without commenting on the total actual Shipton payments, “it is standard practice for an employer to cover the reasonable cost of tax advice (including tax filings) where an executive is relocating countries to take up a position”.



ASIC was actually told by the Remuneration Tribunal that the payments to Crennan were likely illegal well over a year ago.

But the scandal only emerged publicly on Friday October 23, after the Auditor-General caused it to be thrust into the public spotlight.

On October 22 Auditor-General Grant Hehir took the highly unusual step of writing a “section 26” letter to Frydenberg, raising his serious concerns about the payments to Shipton and Crennan.

(Paragraph 26(1)(a) of the Auditor-General Act 1997 states that if the Auditor-General discovers a matter “of such importance” that they consider it should be “brought to the responsible Minister’s attention” they must do so.)

The Auditor-General oversees the Australian National Audit Office (ANAO), which is responsible for auditing the financial reports of key government agencies each year, including those of ASIC.

The position of Auditor-General is a ten-year appointment, with that long tenure aimed at preventing the appointee from being improperly influenced or pressured by the federal government.

Frydenberg almost certainly knew about the payments to Crennan and Shipton long before October 22, but Hehir writing the letter under section 26 meant the matter could no longer be hidden from the public.

On October 23, ASIC’s annual report was tabled in parliament and that afternoon Shipton fronted the House of Representatives Standing Committee on Economics at Parliament House in Canberra.

Shipton read from a pre-scripted letter, announcing he had stood aside as ASIC chair and could not comment further.

Also on October 23, Frydenberg released a statement, announcing he had received the letter from Hehir the day before.

Frydenberg said he had launched an “independent review” into the matter. However that review would be handled by the Department of Treasury, which he oversees.

“As the matters identified by the Auditor-General relate to the Accountable Authority of ASIC (Shipton), I have asked the Treasury to undertake an independent review into the findings of the ANAO financial statements audit,” Frydenberg’s statement said.

(In their written statements, both Frydenberg and Hehir referred to Shipton as the “Accountable Authority”, which is the legalistic title for the ASIC chairman under the legislation.)

“The independent review will be undertaken by Dr Vivienne Thom and is expected to be completed with the full cooperation of ASIC by the end of the year.

“Following the review, Treasury will advise me on the findings of the review and any further course of action that my be appropriate,” Frydenberg’s statement said.

Frydenberg did not say what the specific terms of reference of his “independent” inquiry were, or whether he would even release the review when it was completed.

Although no new information had emerged in the interim, three days later, on Monday October 26, Crennan announced his resignation as ASIC deputy chair.

That was half-way into his five-year term.

In his letter to Frydenberg, the Auditor-General wrote that he had been compelled to write to ensure action was actually taken over the matter, which was extremely serious.

“I consider these as important matters to bring to your attention as they relate to the stewardship by the Accountable Authority (Shipton) of taxpayer resources, particularly with respect to payments made to the benefit of the Accountable Authority (Shipton),” he wrote.

“Further, I formed a view during the course of the audit that in order to gain greater confidence that appropriate action would be taken, I should indicate that I would bring the matter to your attention”.

The $300,000-odd in payments benefiting Shipton and Crennan “may exceed the limits set in the Remuneration Determination made by the Remuneration Tribunal”.

Further, in relation to the Shipton payments, the ANAO had “also identified instances where the Commonwealth Procurement Rules were not followed” and that “payments were made on behalf of the Chair where appropriate governance mechanises were lacking”.

On Tuesday October 27, Liberal senator James Paterson told a Senate Estimates Hearing the Auditor-General’s action appeared “unprecedented”.

“It is not normal for the Auditor-General to write to a minister and say that in order to gain greater confidence that appropriate action was taken, I’m bringing the matter to your attention,” Paterson said.

“I’m not aware of any precedent for that…this is an exception thing for the Auditor-General to do.”



A 107-page bundle of internal ASIC documents was released by the Parliamentary Joint Committee on Corporations and Financial Services (which oversees ASIC) the week before Christmas.

Although many are heavily redacted, the documents (see item 111) shed much light on Hehir’s action – and why he was concerned that nothing would happen unless he sent Frydenberg the section 26 letter.

The Remuneration Tribunal has actually already told ASIC that the rental payments to Crennan were unlikely to be legal.

That was in August 2019.

According to ASIC’s internal notes, the Remuneration Tribunal told ASIC that for it to give a concrete view on the matter, it needed to receive a written request from the Treasurer.

However Frydenberg – nor anyone else – has ever sent such a letter to the tribunal.

That is despite the internal ASIC documents revealing that ASIC actually wrote up a Remuneration Tribunal request on Frydenberg’s behalf in May – seven months ago.

Frydenberg – nor anyone else – has ever sent such a letter to the tribunal.



Shipton is told, on May 26 2020, that ASIC will seek a Remuneration Tribunal decision. A letter has been drawn up on Frydenberg’s behalf seeking the decision. Source: ASIC



A detailed, 7-page letter penned by ASIC on Frydenberg’s behalf, seeking Remuneration Tribunal decision. Frydenberg is refusing to send it. Source: ASIC



According to the ASIC documents, the remuneration concerns first emerged with the rental payments to Crennan.

Then, several months later, they spread to Shipton after ASIC was charged $118,000 for his personal “tax advice” from KPMG.

The ASIC documents state the rental payments to Crennan were flagged by ASIC’s human resources department, called People & Development, in “around June” 2019.

It found fringe benefits tax should be paid on the $750 a week rental payments.

Legitimate “relocation” expenses – such as removalist costs and airfares – do not generally attract fringe benefits tax, because they are seen as costs incurred by a person in the course of doing their job.

Had the accountants at ASIC’s P&D failed to ensure ASIC paid that tax they would have been breaking the law by misleading the Australian Taxation Office, for which there are substantial penalties.

The ANAO, the federal auditing body overseen by Hehir, queried ASIC about the payments, raising concerns that given they were on top of Crennan’s “total remuneration” rate they may be unlawful.

On August 5 2019 ASIC’s senior lawyer, Commission Counsel Chris Savundra, wrote an email saying they considered the payments were lawful.

The ANAO hit back the next day, saying it was “not convinced”.

“The ANAO replied to Finance on 6 August 2019, stating that it was “not convinced” the arrangement complied with subparagraph 7(3)(c) of the Determination,” the ASIC documents state.

The pay levels set by the Remuneration Tribunal each year are known as “determinations”.

In 2018-19 financial year the relevant document was the “Remuneration Tribunal (Remuneration and Allowances for Holders of Full-time Public Office) Determination 2018”.

Subparagraph 7(3)(c) of the determination says “geographical relocation” costs of an employee can be paid on top of the “total remuneration” limit – but only if they are genuine.

The ANAO didn’t consider paying $750 a week towards Crennan’s rent for two years was a genuine relocation expense.

Either way, ASIC’s own rules state that in order for an employee to qualify for any such payment, the employee must keep a “principal place of residence” away from the ASIC office where they work.

ASIC agreed Crennan had given up his principal place of residence, a lavish rental property in Melbourne’s Brighton, when he moved to Sydney.

A resolution was simple.

ASIC should ask the Remuneration Tribunal.

“The ANAO recommended that ASIC approach the Remuneration Tribunal directly “to obtain a decision on whether these arrangements…satisfy subparagraph 7(3)(c) of the determination, or represent breaches of the Remuneration Tribunal Act,” the ASIC documents state.

Three days later, on August 9, ASIC’s lawyer Savundra contacted the Remuneration Tribunal.

However unlike much of the other correspondence, this was via a phone call.

He reported a summary of the conversation.

The Remuneration Tribunal’s advice was pretty straight forward.

It said the “rental assistance” to Crennan “appears to be a form of ongoing support rather than the reimbursement of an expense incurred on relocation”.

If ASIC wanted a concrete decision, it would provide one if the Treasurer put the request in writing.

More to come…

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