ASIC deputy chair warned that questions over her expenses not sustainable, hearing told

Documents show ASIC deputy chair Karen Chester warned chief of operations Warren Day his attempts to quiz her over expenses claims were ‘not sustainable’.

ASIC chief of operations Warren Day, general counsel Chris Savundra, deputy chair Sarah Court, deputy chair Karen Chester and commissioner Kate O'Rourke. Picture: Martin Ollman

A senior executive at the corporate regulator told colleagues he felt threatened after an exchange with the deputy chair, who said his attempt to quiz her over expenses was “not sustainable”.

Emails, originally released in redacted form under Freedom of Information laws, shows Australian Securities and Investments Commission deputy chair Karen Chester warned the regulator’s chief of operations Warren Day over his attempts to understand why she had claimed travel expenses for a number of days she was in Canberra in 2021.

“All of this could have been addressed far more efficiently by a call to the finance team,” Ms Chester told Mr Day.

“I’ve spent way too much time justifying something that did not warrant justification as have you, and in your current role that is not sustainable.”

ASIC redacted these statements in documents released to The Australian, claiming the warning to Mr Day was an “irrelevant matter” and the exchange represented personal information.

ASIC, as the corporate regulator, expects Australia’s companies to uphold the highest ethical standards and has taken action against those that have fallen short.

The bullying claims are the latest allegations levelled against Ms Chester, who leaves ASIC in the coming months.

Notes from ASIC’s human resources team show Mr Day raised the exchange with a number of figures in the agency, telling others he was concerned Ms Chester had sought to intimidate him in a number of emails and phone calls.

In an earlier email to Mr Day, after he contacted Ms Chester over her expenses, the deputy chair told the ASIC executive “you are too funny”.

Mr Day also raised a verbal exchange with the regulator’s human resources team after Ms Chester allegedly “carpeted with F-bombs” the COO when he called the deputy chair over her expenses claims.

Colleagues were told by the COO he found Ms Chester had been disrespectful and did not sufficiently co-operate with his attempts to inquire over her expenses claims.

Mr Day had contacted Ms Chester over claims she had made for travel expenses on February 10 and 15, as well as March 8 and 11 when it was “not clear to me what the business purpose was”.

ASIC deputy chair Karen Chester. Picture: Martin Ollman

ASIC documents reveal Ms Chester claimed 33 calendar days’ travel expenses in the 2020-21 year, more than all other ASIC commissioners and chairs in that same period combined.

Mr Day noted to Ms Chester he was concerned as “there are also some days with no meetings that are in person”, but followed by telling the deputy chair “they are few and coincided with the run-up to the short lockdown in Victoria”.

Mr Day called Ms Chester on March 19, in the wake of the emails, to discuss the expenses claims before he was allegedly “carpeted with F-bombs”.

ASIC documents seen by The Australian, reveal Mr Day raised the email and verbal exchanges with the regulator’s internal teams, allegedly telling fellow staff he had told Ms Chester he felt threatened by the way she spoke to him and noting he had taken it as a “personal attack” and that it was disrespectful.

However, Ms Chester denies the allegations about her colourful language.

Appearing last week before a Senate estimates committee Ms Chester told parliament “no”, when asked whether the conversation took place.

When questioned over her alleged foul language Ms Chester said the communications reported in the media took place three years ago and “Mr Day and I have a good working relationship”.

Ms Chester told the Senate the expenses being queried represented her travel to Canberra “for a combination of work purposes” alongside a meeting with the public service and “other stakeholders”.

At the recent Senate estimates appearance Mr Day said of his probe into Ms Chester’s that he expenses “wouldn’t actually classify this as an investigation”.

“It was an acquittal conversation of expenditure and travel arrangements,” he said.

Liberal Senator Andrew Bragg also sought to question ASIC over the use of encrypted messaging platforms, including WhatsApp.

As revealed under responses to FOI requests, Ms Chester received a number of WhatsApp messages from Bronte Capital boss and noted short seller John Hempton.

Mr Hempton and Ms Chester were colleagues together at Treasury in the 1990s.

ASIC has previously indicated Ms Chester declared a number of messages sent by Mr Hempton to ASIC’s general counsel, Chris Savundra.

Documents released under FOI laws show Ms Chester declared the messages in two tranches in October 2022.

“I will give you a call to discuss,” Ms Chester told Mr Savundra in one heavily redacted exchange.

In response to a question on notice, ASIC said its investigations into “all relevant and available devices and platforms” showed no messages sent by Ms Chester to Mr Hempton “concerning ASIC-related matters”.

One message from Mr Hempton to Ms Chester, published by ASIC, notes “you don’t answer anymore”.

The Australian is not suggesting inappropriate behaviour between Ms Chester or Mr Hempton

At the recent estimates hearing Mr Day told the committee he had no knowledge of protected documents being destroyed, directing the Senate to answers given by ASIC in June on the topic.

Mr Day also told the Senate he had no knowledge of any ASIC official using encrypted messaging services to “engage with a short seller”.

Ms Chester’s ASIC device was wiped in 2021 before moving WhatsApp to a personal phone on July 17, 2021.

Law firm Seyfarth Shaw investigated Ms Chester, after being appointed by Treasury in April 2021, after a bullying complaint was made about the ASIC deputy chair.

Treasury found there had been instances of alleged conduct that could be “wholly or partially substantiated” but concluded there was “insufficient basis” for any further action.

Ms Chester has previously said there “were no adverse findings” from the review.

This came soon after the return of ASIC chair James Shipton, who had been stood down from the role pending an expenses inquiry – which cleared him.

An ASIC spokesman said the regulator “stands by the evidence it provided to Senate Estimates last week and does not have anything further to add”.

Originally published as ASIC deputy chair warned that questions over her expenses not sustainable, hearing told