Expenses farce shows duck-shoving is alive and well

The report by Vivienne Thom into relocation expenses paid to James Shipton and Daniel Crennan reinforces that the fine art of bureaucratic duck-shoving is alive and well.

The report by Vivienne Thom into relocation expenses paid to James Shipton and Daniel Crennan reinforces that the fine art of bureaucratic duck-shoving is alive and well.

The 14 individuals interviewed by Dr Thom, who were not named apart from Mr Shipton and Mr Crennan, managed to come up with at least six different answers to the burning question of who should have been responsible in ASIC for managing and monitoring the expenses issue.

The answers included the general counsel, internal audit, the commission itself, the audit committee, the chief legal officer with the people and development division and the executive committee.

Is it any wonder that Mr Shipton, the ASIC chairman, and Mr Crennan, his deputy, tripped over when trying to navigate the byzantine governance of the nation’s conduct regulator?

Further, the 41-page abridged version of the Thom report confirms a report in The Weekend Australian that Mr Shipton never actually had a contract of employment.

Before agreeing to take the ASIC job, he attended meetings in Canberra between October 14-16, 2017.

According to the report, Mr Shipton later told his lawyer he had been informed there was no formal contract, but officials had assured him that his family’s relocation to Australia would be covered by ASIC.

On November 2020, the lawyer told Dr Thom: “Although Mr Shipton does not remember the specifics of any discussion of the particular services or amounts which would be paid to support the relocation, he does recall that he left those discussions with the clear understanding that the relocation support to be provided to him extended to the provision of taxation advice and services associated with his relocation to ­Australia.”

As events unfolded, there was nothing to suggest Mr Shipton had gained the wrong impression.

However, due to complexity associated with his work in Hong Kong, Australia and the US, the cost of the tax advice provided by KPMG kept escalating.

On August 28 and 29, 2019, the accounting firm issued three invoices: $29,878 for general tax advice, $50,173 for US tax compliance, and $36,587 for Australian tax compliance.

Dr Thom says the records she has seen show there was internal discussion in ASIC about how the increased fee should be invoiced and paid, but it appeared there was no concern raised with KPMG or Mr Shipton about the higher fee.

“The (ASIC) staff member did suggest in an email that ‘an alternative would be for James to incur the costs. I could investigate whether we could pay for him as a loan and recover from his fortnightly pay’,” she says. “But there is nothing to indicate that this suggestion was further pursued.”

Fatefully for Mr Shipton, ASIC paid the invoices on September 19, 2019.

The fuse was lit not long after on January 3, 2020, when ASIC’s people and development section responded to a query from the agency’s finance area about fringe benefits tax payable on the chairman’s tax advice.

Less than three weeks later, there was a meeting between people and development and the Australian National Audit Office.

An ASIC staffer who attended said in a later email: “They asked whether we have made any other payments to commission appointments that they should be aware of. I advised that this year’s financial statements will include an amount paid for taxation services for James Shipton but these services were offered to Mr Shipton as part of the recruitment activity undertaken by Treasury prior to his appointment.

“I advised that Treasury met with the P&D Senior Executive Leader at the time, and myself wanting ASIC’s commitment for relocation expenses for an international candidate, should they be successful. ASIC had to commit to the level of relocation support that they could include in the job offer.

“Remuneration Tribunal approval was not sought as the relocation expenses were associated with the appointment — as per the Remuneration Tribunal’s Guidelines of Geographic Relocation.”

That’s the nub of the problem.

As Dr Thom finds in her report, there’s a lack of certainty about relocation allowances and the application of tribunal requirements.

While Treasury is responsible for the recruitment of statutory officers, she says it would be preferable — based on Mr Shipton’s case — if Treasury ensures there is a “clearly documented agreement of all terms and conditions of employment, including approved relocation expenses with limits”. “As ASIC is the employing authority and has responsibility for paying the consequent expenses, they would also have to be a party to any agreement,” she concludes.