ASIC took confidential briefing on Mosaic Brands collapse as Senator urges wider review

Labor Senator Deb O’Neill has demanded ASIC look into the collapse of Mosaic Brands, saying she’s been contacted by whistleblowers who allege they have been duped by the retailer.

Australian Securities & Investments Commission chairman Joe Longo. Picture: Jane Dempster/The Australian.

The corporate regulator may look into the $318m collapse of Mosaic Brands, amid concerns aired in a parliamentary hearing over the fate of the formerly ASX-listed ­retailer.

Appearing at a Sydney hearing of the parliamentary joint committee on corporations and financial services, the corporate regulator said it had sought assurances about the sprawling clothing retailer after its collapse.

Mosaic Brands, which operated 763 stores across nine brands, including Millers and Noni B, slumped into administration in October last year, after first placing its operations in Safe Harbour amid a downturn in consumer spending.

FTI Consulting is handling the wind-up of the national retailer.

Labor Senator Deb O’Neill demanded the Australian Securities & Investments Commission probe its collapse, telling the hearing she’d been contacted by a number of whistleblowers who alleged they’d been duped by the retailer before its collapse and later by administrators.

Ms O’Neill said ASIC had the power to provide “the whole Safe Harbour story”, alleging Mosaic Brands had traded while insolvent before its collapse.

Safe Harbour allows companies in financial distress to enter a period of protection from administrative penalties, should it collapse, in a bid to work out if the company should be shut down.

The Australian Securities & Investments Commission (ASIC) (L-R) member Joe Longo in Sydney for a Parliamentary hearing. Jane Dempster/The Australian.

Ms O’Neill said she was concerned over the treatment of suppliers, alleging there had been repeated delays to Mosaic Brand’s suppliers before its collapse.

“The people who are associated with this have no other champion to get this out,” she said.

ASIC enforcement and compliance director Chris Savundra said the regulator was not concerned about allegations of wrongdoing from Mosaic Brands or its receivers. Mr Savundra said ASIC had received several reports of misconduct, mostly by suppliers who were not paid by Mosaic Brands or its controllers.

He said ASIC was given a confidential briefing about the state of the business and the lead-up to collapse. “There’s caution here about that,” Mr Savundra said. “Our job is to stay across it.”

ASIC chair Joe Longo said ASIC had spoken to Mosaic’s administrators and ASIC may still look to take action over its collapse.

“I’m not discounting the possibility altogether of us taking a more active interest in what led to the failure of Mosaic,” Mr Longo said. “But as things stand, there’s insufficient indication that would warrant us deploying our limited resources to Mosaic.”

Mr Longo said ASIC was also keenly interested in the fate of gaming giant Star Entertainment, telling the committee hearing the regulator was following reports of its financial health closely.

Mr Longo said Star Entertainment was in the sights of other regulators.

Mr Longo said ASIC would not determine the fate of Star,  saying its fate was in the hands of governments, gaming regulators and banks and lenders.

The ASIC chair said if evidence was brought to the regulator’s attention that demanded action, “then we will”.

“But we’re not the primary regulator of Star and we’re not applying any extraordinary affairs as it stands,” Mr Longo said.

Originally published as ASIC took confidential briefing on Mosaic Brands collapse as Senator urges wider review