Remuneration Tribunal: “no record” of ASIC’s claims

As the Morrison Government – widely seen as one of the most corrupt in living memory – starts a fresh new year its actions appear to be finally catching up with it. Three key government agencies are now seriously at odds. The corruption scandal at the heart of the corruption regulator is coming to a head. Something almost certainly has to give. Anthony Klan reports.

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EXCLUSIVE

ANTHONY KLAN

The government Remuneration Tribunal says it has “no record” of the corporate watchdog ever seeking its advice over the legality of tens of thousands of dollars in “rent” the watchdog paid its deputy chairman.

That is despite the Australian Securities and Investments Commission not only claiming – in writing – that it had sought advice from the Remuneration Tribunal, but ASIC having provided highly-detailed information about what the tribunal’s supposed “response” to it was.

In October ASIC deputy chairman Daniel Crennan QC resigned and chairman James Shipton “stood aside” after it was revealed the men had received hundreds of thousands of dollars in allegedly improper taxpayer-funded “relocation” benefits.

According to the Remuneration Tribunal, not only does it have no record of ASIC ever contacting it about the Crennan payments, it has no record of ASIC seeking its advice over the legality of the $118,557 in personal “tax advice” that was provided to Shipton and is at the heart of the scandal.

“Following the ANAO’s advice, ASIC contacted the Secretariat of the Remuneration Tribunal by telephone on  9 August 2019”

— Australian Securities and Investments Commission

“The secretariat has no record of any of the parties you mention seeking the Tribunal’s advice on the matters to which you refer”

— Remuneration Tribunal

On January 1 The Klaxon revealed Treasurer Josh Frydenberg had failed to “ask” the Remuneration Tribunal, which sets the pay rates for politicians and senior public servants, whether the Shipton and Crennan payments were legal.

Now the Remuneration Tribunal has exclusively told The Klaxon it has no record of ASIC, Treasury – or any other “related party” – having ever asked it for any advice whatsoever regarding the ASIC payments scandal.

“The secretariat has no record of any of the parties you mention seeking the Tribunal’s advice on the matters to which you refer,” the Remuneration Tribunal Secretariat wrote to The Klaxon on Monday.

That was in response to questions we put to the tribunal on December 24.

ASIC has claimed that it sought and received advice from the Remuneration Tribunal, regarding the legality of rent payments it was making to its deputy chair Crennan, on August 9 2019.

That was three days after ASIC’s auditor, the Australian National Audit Office, told ASIC on August 6 2019 to obtain advice from the Remuneration Tribunal regarding the Crennan payments, because the ANAO had serious concerns the payments were illegal.

The Klaxon reveals Frydenberg never “asked” the Remuneration Tribunal about the legality of ASIC payments. Now Tribunal says no one has – not even ASIC. Source: The Klaxon

(The ANAO is the government body that audits the annual financial statements of key government agencies and is overseen by Auditor-General Grant Hehir.)

“Following the ANAO’s advice, ASIC contacted the Secretariat of the Remuneration Tribunal by telephone on 9 August,” ASIC has claimed in writing.

The Remuneration Tribunal says it has no record of this ever occurring.

“I should also advise that the secretariat has no record of the telephone conversation you say occurred on 9 August 2019, so I am unable to comment on its existence or content,” the Remuneration Tribunal’s response to The Klaxon said.

“Neither the Remuneration Tribunal nor its secretariat has received any submissions about the alleged relocation expenses paid by ASIC to Mr James Shipton and/or Mr Daniel Crennan.”

(The statement is signed simply “Remuneration Tribunal Secretariat”).

The tribunal’s explosive denials are highly damaging for Frydenberg, for ASIC, and for Shipton – whose future is dangling in the balance as he tries to hang on to the top job he started just two years ago.

ASIC has been detailed and unequivocal about the “advice” it claims to have received from the Remuneration Tribunal.

In a seven-page letter, dated May 26 2020, ASIC’s General Counsel Chris Savundra wrote to ASIC’s Chief of Operations (Shipton) setting out in high detail ASIC’s plans to seek a formal “determination” from the Remuneration Tribunal regarding the Crennan payments.

The letter is contained in a 107-page bundle of internal ASIC documents that was released by the Parliamentary Joint Committee on Corporations and Financial Services (which oversees ASIC) the week before Christmas. (Item 111 here).

In the letter, ASIC’s Savundra claims ASIC contacted the Remuneration Tribunal “on 9 August 2019”.

The letter states:

“Following the ANAO’s advice, ASIC contacted the Secretariat of the Remuneration Tribunal by telephone on 9 August 2019. The Secretariat indicated, in summary, that:

1. The Tribunal will not expressly provide ASIC with a view as to whether the Relocation Package or the Rental Assistance specifically are consistent with the Determination.
2. However, the Rental Assistance appears to be a form of ongoing support rather than the reimbursement of an expense incurred on relocation.
3. ASIC can seek a determination of the Remuneration Tribunal which would regularise the arrangement for Deputy Chair Crennan. However, it is not the Tribunal’s practice to make determinations which have retrospective effect.
4. Any request for a determination should be made by ASIC’s portfolio Minister and follow the requirements for submissions set out on the Tribunal’s website.”

The situation is extraordinary and puts the corporate regulator in a remarkable position.

Either ASIC or the Remuneration Tribunal is not telling the truth over a matter of extreme seriousness and importance regarding the corporate watchdog’s future.

A matter that has already cost the job of ASIC’s deputy chairman.

Letter from ASIC General Counsel Chris Savundra to ASIC chair and “chief of operations” James Shipton. Source: ASIC

ASIC claims it contacted the Remuneration Tribunal on August 9, 2019. Tribunal says it has “no record” this ever happened. Source: ASIC

The ASIC documents also show ASIC drew up a letter (below) to the Remuneration Tribunal, on Frydenberg’s behalf.

However Frydenberg never sent it. (The Remuneration Tribunal has said it never received the letter and has no record of any correspondence whatsoever regarding ASIC and its Shipton and Crennan “relocation” payments).

The letter ASIC wrote on Frydenberg’s behalf. Frydenberg never sent it. Source: ASIC

ASIC has an internal “Audit Committee”, whose members include NSW Productivity Commissioner and former long-time Australian Taxation Office chief Peter Achterstraat.

xHow The Klaxon broke the story on Monday. Source: The Klaxon. Graphic: HS.

As revealed by The Klaxon on Monday, KPMG – which was paid $118,557 for giving the personal “tax advice” to Shipton – has been running ASIC’s internal audit operations.

On Monday afternoon ALP treasury spokesman Stephen Jones released a statement and said it was time for the Federal Government to “back or sack the head of the corporate watchdog”.

“The Treasurer has run out of excuses to avoid dealing with this situation,” Jones said.

“He must immediately decide whether Mr Shipton or someone else will lead ASIC through these challenging economic times.”

ASIC’s alleged failure to ask the Remuneration Tribunal for advice on the Shipton and payments is particularly grating because it has emerged that ASIC has instead use taxpayer funds to pay a private lawyer for its “advice” on the matter.

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

16 reasons why the $118,557 KPMG “tax advice” payments to Shipton are highly irregular. Source: The Klaxon

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

The partner said it was not unusual for employers to pay for tax advice provided to employees who were moving countries.

However, and integrally, the lawyer said 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”.

ASIC has failed to provide information substantive enough for it to be determined whether the $118,557 payments were reasonable or valid.

Attorney-General Hehir has raised serious concerns about them, including that they didn’t follow the Commonwealth Procurement Rules.

ASIC has repeatedly refused to comment about the scandal in recent weeks, directing The Klaxon to Josh Frydenberg’s office and Treasury, which conducted the “independent review” Frydenberg ordered into the saga.

Frydenberg has repeatedly refused to say what the “terms of reference” – or parameters – or his inquiry are, or to explain how the inquiry is “independent” when it is being run by a department he oversees (Treasury) and is regarding an agency he has direct responsibility for (ASIC).

Frydenberg has had the findings of the review since at least January 5 but has so far refused to release them.

More to come…