An article in BRW ("The watchdog no one fears"), criticising the role of the Australian Securities and Investment Commission and its outgoing chairman Alan Cameron, had some members wanting to run to the ramparts to mount a defence.
The article asserted that Cameron's legacy was "gossip, frustration and bitter disappointment". This disappointment, the article says, stems from ASIC's schizophrenic roles as both a regulator and business facilitator as well as corporate watchdog. Inadequate government funding has meant ASIC can only pursue a limited number of cases. Cameron himself put the schizophrenic nature of the job rather neatly when he told BRW: "Do I smile for my photographs (as in I am here to help) or do I look serious? (ie the corporate sheriff). We are both an enforcement agency and a facilitator, so I can justify doing either". The umbrage expressed from some AICD members was that the article was unfair to an institution and its chairman who has, on most counts, done a commendable job in regulating business.
What are the issues at stake? Is ASIC a toothless tiger? Should a separate enforcement division be established as a serious fraud office? Is ASIC under-funded in comparison to the other regulator, the Australian Competition and Consumer Commission? Are Australian business practices so corrupt that more enforcement is needed? The failure to extract Christopher Skase from Spain is not a "toothless tiger" problem. There are many national and international legal snarls on which the whole chase for Skase has been enmeshed. This witch-hunt was always a political exercise rather than a genuine attempt to retrieve shareholder funds. Skase gave politicians the opportunity to stand on soap-boxes and beat their chests about the need to hunt down corporate criminals. Few remember that if the liquidators had held on to Channel 7 (the main asset in Skase's company) shareholders would have now seen some return on their investments. Is ASIC poor compared to the ACCC wealth? There is no doubt that the Government loves the ACCC and gave it a 37 percent increase in funding to $75 million while cutting ASIC's funding by $2 million to $130 million. It still means that ASIC has almost twice the budget of the ACCC.
Comparing the funding between the two regulators is irrelevant. The issue facing business and the Government should be whether there is a need that requires either of the regulators to receive more money and resources. The recent business backlash to the trial by media of GST prices policing by Alan Fels and the ACCC should be reason enough to tread warily. No board of directors would sanction a corporate environment where wrongdoing at either company or director level is allowed to run unchecked. Investors, whether large international institutions or just mums and dads, need to be reassured that the companies they invest in are well run and that they conform to corporate regulations. Before we line the barricades in defence of ASIC, let's remember that a lot of time and effort has been spent trying to provide a workable corporate regulation environment. Markets above all need certainty and the successful lobbying by business groups, including the AICD, produced at least a temporary solution in the Wakim/Hughes situation
But do we need more regulation? If ASIC is indeed the corporate gun that can't shoot, it will only be a matter of time before politicians will try to give it new corporate regulation bullets to fire - not because they are needed but because it is an election year and it makes for good politics. Financial Services Minister Joe Hockey has told the business community to regulate itself through corporate governance because if it doesn't, the Government will act. Directors are already under the gun on a range of corporate regulation issues and there is a genuine fear that a climate of risk is being created that will make directors averse to trying new ways to build their businesses. On his visit to Australia, Microsoft's Bill Gates challenged any government or business assertion that Australia was on top of the digital future game. If we are to compete on the world stage then we need room to move. It doesn't mean we need more corporate regulation and it certainly doesn't mean that we need market manipulation of a digital future by a government intent only pleasing selected corporate players.
ASIC doesn't need defending. What is required is the building of trust and confidence in Australian investors, the Government and the international business community that Australian corporations have gone for gold in terms of self-regulation through corporate governance.
No board of directors would sanction a corporate environment where wrongdoing at either company or director level is allowed to run unchecked. Investors, whether large international institutions or just mums and dads, need to be reassured that the companies they invest in are well run and that they conform to corporate regulations.
The purpose of this database is to provide a full-text record of all articles that have appeared in the CDJ since February 1997. It is aimed to assist in the research and reference process. The database has a full-text index and will enable articles to be easily retrieved.It should be noted that information contained in this database is in pre-publication format only - IT IS NOT THE FINAL PRINTED VERSION OF THE CDJ - therefore there might be slight discrepancies between the contents of this database and the printed CDJ.
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