ASIC boss James Shipton exits, the day after Australia Post boss Christine Holgate

Illustration: John Spooner

The tragedy of the past two days at ASIC and Australia Post is they will set back progress towards the much-needed interchange between business and government, because having seen the consequences, many outside government would say why bother.

Canberra and indeed Victoria and other state public services are in desperate need of talented people to help manage the country, and the more interchange there is between the two the better it would be for both business and government.

But the sight of both Shipton and Holgate on the front pages would be enough for most in business to say no thanks.

There are some with either a public-spirited mind or ego willing to take the step, but the more the bureaucracy rules the less chance of a free-flowing exchange.

ASIC boss James Shipton is a bit unlucky to have timed his exit, be it temporary or permanent, the day after Australia Post boss Christine Holgate was effectively shown the door by Prime Minister Scott Morrison.

Shipton is proper to a fault, and having grown up in a parliamentary household knows the game. From the evidence presented on Friday he has done nothing wrong and the only revelation of note was just how KPMG makes out like a bandit in its advisory fees.

KPMG said on Friday: “We never comment on client matters. All inquiries in relation to these matters should be directed to ASIC.”

Somehow the big four accountant managed to turn a $4050 fee in an engagement letter to a final invoice of $118,557 in a matter of months, which may say something about the complexity of US tax law but certainly tells you KPMG knows how to charge like a wounded bull.

Granted, there were some complexities and Shipton had sought advice on Australian tax law, on how to optimise foreign exchange taxation and also the matter of late payment of Massachusetts tax and accompanying penalties.

Shipton was dotting the i’s and crossing the t’s like a good banker, but maybe should have taken care of the expenses rather than trying to bill them through ASIC.

On what is known, none of the above is what a reasonable person would call a hanging offence.

But that is how it may end, because he is the corporate cop and has to be able to lecture business about doing the good and honourable thing.

While there is no reason to think he has done anything but the honourable thing, that is a different question to whether he can still play corporate cop and the answer to that is problematic.

That being the case, Shipton’s own moral compass will tell him to stand aside permanently.

The Shipton expenses along with the living expenses for Daniel Crennan in Sydney were targeted for good reason by the audit office, but for the QC and former investment banker such charges were a matter of course.

When the person paying the bill is the national taxpayer good governance requires due process and clearly this has not happened, which is why we have today’s headlines.

The better question is whether the processes are the right ones.

If there is doubt over Shipton’s tenure, as noted yesterday there is none about Christine Holgate at Australia Post: she is gone.

This, it should be noted, is not a reflection of the job she did or indeed the decision to give staff gifts for a job well done.

As noted yesterday, the problem was the nature of the gifts, being jewellery, and the fact one watch was given to a direct report who is already on the gravy train of corporate largesse. A cash payment of $3000 would not have raised the same alarm.

Holgate has not always shown awareness of her position running a government business, as evidenced by her own jewellery when giving parliamentary evidence.

Her mistakes included an obvious one in hiring former Victorian government minister Phillip Dalidakis to a senior role and then working out just months later he was not what she wanted.

That was a high-profile error of judgment which has had clear consequences.

Her minister Paul Fletcher arguably overreacted, but Morrison is preparing for a cabinet reshuffle and all involved want to present the right profile.

Her tin ear as regards public perception aside, Holgate clearly failed where her predecessor Ahmed Fahour excelled: in managing up, down and sideways to ensure he would be looked after.

But she has successfully progressed Post to the position where growth in parcel volume this year matched the total volumes of two years ago, which was an extraordinary performance given aviation is not running at a peak.

The obvious choice

Treasurer Josh Frydenberg faces a big test if as expected James Shipton does step aside from ASIC, with his nominated replacement Karen Chester superbly positioned for the full-time role.

Chester was one of the famed microeconomic mafia which formed in the Prime Minister’s department in the late 1980s under ACCC chief Rod Sims. They included former Productivity Commission chief Peter Harris and present PM&C chief Phil Gaetjen.

She also headed the committee of inquiry into ASIC in 2015 which was shunned by then boss Greg Medcraft but adopted in full by Shipton.

A former PC deputy, Chester is across the key regulatory principles, most notably design and distribution obligations which puts the responsibility on business to do the right thing for customers.

She is also a skilled veteran public servant who has shown — as in Friday’s Economic Committee hearings — an ability to defend ASIC and satisfy parliament.

The question for Frydenberg is whether, at a time when business is preaching gender diversity, he is prepared to put that into practice and appoint the first female corporate plod.

Capital idea

This column often marvels at the ability of the market to be driven to help achieve corporate ends.

On Friday Coca-Cola Amatil surprised by calling a trading halt at $10.75 a share ahead of a well-reported purchase of some beer brands from Asahi. The stock has increased by 13 per cent this month, double the market gain, and 5.5 per cent in the last week.

The beer buy is assumed to be around $400m, which could be easily funded by debt, but the company was reportedly doing the rounds of fund managers.

Bankers do this to ensure they can sell a share issue and claim an underwriting fee at the same time, supposedly to compensate for the non-existent risk involved.

Same story at Bega, which is on a run, converting a 47 per cent, three-year underperformance to a 26 per cent outperformance this year ahead of a perceived capital raise to buy Lion Dairy.

Not bad given a sorry performance in recent acquisitions and the fact the two most recent share issues are yet to turn positive.