Outcomes of review of ASIC Governance

The Government will implement significant changes to the governance of the Australian Securities and Investments Commission as a result of Dr Vivienne Thom AM’s review of ASIC Governance.

On 22 October 2020 the Auditor-General wrote to me bringing to my attention matters that he identified while conducting an audit of ASIC’s annual financial statements.

In response, I commissioned an independent review conducted by Dr Thom which considered:

  • the processes supporting the approval of remuneration and benefits paid to Executive Office holders, including the trigger points for seeking advice should amounts outside of the Remuneration Determination be considered for approval; and
  • the procurement processes around payments made for the taxation advice paid on behalf of the Chair to determine those internal controls that need to be either reinforced with relevant staff or redesigned to ensure effective implementation.

Following the tabling of ASIC’s annual financial statements and the release of the Auditor-General’s report on 23 October 2020, Mr Shipton volunteered to take leave for the period of the review and, pending the outcome of the review, chose not to receive his salary.

Mr Crennan resigned on 26 October 2020, bringing forward his planned departure date from ASIC. Mr Shipton repaid the $118,557 paid by ASIC for tax advice. Mr Crennan repaid $69,621 paid by ASIC for accommodation payments.

Dr Thom submitted her report to the Secretary to the Treasury on 17 December 2020. Both Mr Shipton and Mr Crennan were at all times fully cooperative with the review process.

Dr Thom made no adverse findings regarding Mr Shipton and Mr Crennan.

In relation to Mr Shipton, Dr Thom recommended that it was open to the Treasury to seek legal advice about whether Mr Shipton breached applicable codes of conduct and, if so, what actions might then be taken.

After considering Dr Thom’s report and supplementary legal advice provided to the Treasury concerning these matters, I am satisfied that there have been no instances of misconduct by Mr Shipton concerning his relocation arrangements, including ASIC’s payment for tax advice resulting from his relocation to Australia in early 2018, nor have there been any breaches of applicable codes of conduct.

Dr Thom made recommendations for significant improvements to ASIC’s internal practices, systems and processes to enhance its management of matters recommended for action by the ANAO, including internal audit management, quality assurance of legal advising processes and improving the management of and controls for spending relating to Commissioners. Dr Thom also noted issues of concern regarding the adequacy of ASIC’s processes concerning:

  • the proper use and management of public resources;
  • systems of risk oversight and management;
  • systems of internal control; and
  • cooperation between ASIC officials.

Given the nature of the matters raised, the Government expects ASIC to implement as a priority the recommendations made by Dr Thom concerning its internal risk, management and governance arrangements and to report to me regularly on its progress.

In the light of the outcomes of the review, Mr Shipton will return to his role, but Mr Shipton and I have agreed that it is in the best interests of ASIC that he will step down as Chairperson of ASIC in the coming months. I thank Mr Shipton for his three years of service and dedication during his time as Chairperson of ASIC.

The Treasury will immediately commence a search process for a new Chairperson. I intend to finalise the appointment within the next three months.

Mr Shipton will resume his position on Monday, 1 February 2021 and continue in his role until a new Chairperson commences.

The review also concluded that the Treasury could improve its processes for managing the appointments of statutory officers under Treasury portfolio laws. In response, the Secretary to the Treasury has moved to implement a new system immediately.

I thank Dr Thom for her conduct of the independent review.

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