Shipton likely to follow Crennan in ASIC exit ‘by year’s end’

ASIC chairman James Shipton is hanging by a thread, with experienced public sector leaders expecting him to follow his deputy Daniel Crennan QC out the door.

ASIC chairman James Shipton is hanging by a thread, with experienced public sector leaders expecting him to follow his deputy Daniel Crennan QC out the door. Picture: Tracey Nearmy/Getty Images

ASIC chairman James Shipton is hanging on to his job by a thread, with experienced public sector leaders expecting him to follow his deputy Daniel Crennan QC out the door “by the end of the year, if not earlier”.

Allan Fels, chairman of the Australian Competition and Consumer Commission from its inception in 1995 until June 2003, said private sector operators who were recruited to manage government agencies needed to be “more sensitive to public sector sensibilities”.

“I expect Mr Shipton will be gone by the end of the year, if not earlier,” Professor Fels said.

“Matters such as personal expenses, credit cards and gifts require a high degree of sensitivity and very strong internal management.

“The government is likely to bring in external people and take the opportunity to clear things up at the top.”

Mr Crennan’s abrupt departure leaves ASIC’s key enforcement agenda in a state of limbo, with deputy chair Karen Chester parachuted into the role of acting chair after Mr Shipton stepped aside last Friday pending the outcome of an independent review of his expenses.

The chairman told the House economics committee on Friday that he would immediately vacate his post while the Treasury conducted a review of $118,000 paid to KPMG for tax advice and a further $78,000 in fringe benefits tax.

ASIC also paid $70,000 in housing costs for Mr Crennan, or $750 a week rent in 2018 and 2019, after his relocation.

Both men have repaid the funds, with the review expected to be completed before the end of the year.

An ASIC spokesman said Mr Shipton was now on leave, pending the outcome of the independent review.

Treasurer Josh Frydenberg, he said, had exercised his power under the ASIC Act to appoint Ms Chester as acting chair and accountable authority.

Mr Crennan tendered his resignation to the Treasurer, prompting Mr Frydenberg to thank him for his service “and the important work he has undertaken during his time as deputy chair”.

The resignation was despite Mr Crennan’s assertion that he had received advice from ASIC that his expenses were “consistent with ASIC policy”.

In a statement released on Monday, he also said that he had been intending to retire from his position in July next year.

“However, in the current circumstances, I have decided that it is in the best interests of ASIC for me to resign now,” the statement said.

“I have therefore tendered my resignation to the Treasurer with immediate effect.”

After accepting an offer to become a Melbourne-based ASIC commissioner in early 2018, Mr Crennan said he agreed to a request from Mr Shipton in October of that year to move to Sydney because of the higher number of commissioners in Melbourne.

ASIC agreed to pay a relocation package, which included a rental allowance.

“I was told the payment of this allowance was consistent with ASIC policy,” Mr Crennan said.

“In September 2020 and early October 2020, I was told of external advice about, and the Australian National Audit Office’s (ANAO) present position concerning, the rental allowance being paid to me.

“I requested that ASIC cease paying me the rental allowance.

“I also offered and agreed to repay the rental allowance ASIC had paid to me.

“After the audit of ASIC’s financial statements, the ANAO recommended an independent review into issues raised regarding relocation payments, including mine.”

Mr Crennan said the review would take some time, and to ensure that ASIC’s “important” work was not disrupted, he would remain available to facilitate the orderly transfer of work to his successor.

“I wish the new commissioner every future success as he or she continues the critical work that ASIC is assigned to undertake.”

While Ms Chester’s appointment as acting chair makes her the leading contender to succeed Mr Shipton as permanent chair, her level of support in the coalition party room is not considered strong.

Prof Fels said ASIC has had “long-term problems on every front: culture, litigation skills and the organisation internally”.

“It’s got a very poor record over many years,” he said.

“It’s had some poor enforcement outcomes, like the Westpac responsible lending case and Tennis Australia, and it’s had no major scalps.”

An ASIC insider said Mr Shipton would have a greater chance of survival if he had strengthened the organisation and developed a stronger narrative. The watchdog, he said, had a tail wind after the financial services royal commission, with new powers and a new penalty regime at its disposal.

But morale had now been sapped by the expenses debacle.