ASIC chairman James Shipton won’t survive tax debacle

ASIC chairman James Shipton is seen as unlikely to survive last week’s expenses debacle due to a toxic political and electoral environment.

ASIC chairman James Shipton and acting chair Karen Chester. Picture Gary Ramage

ASIC chairman James Shipton is seen as unlikely to survive last week’s expenses debacle due to a toxic political and electoral environment, with the regulator’s acting chair Karen Chester regarded as best-placed to succeed him.

Canberra sources said the Morrison government could grasp the opportunity presented by a leadership change to introduce a more hierarchical structure.

The intention would be to clear up lines of accountability in the current model, where authority is diffused. While Mr Shipton inherited the structure, he is not seen to have initiated any moves to unwind it.

“The chairman’s role is to direct ASIC’s commissioners, not allow them to run their own areas independently of the central focus of the organisation,” one insider said.

Mr Shipton sensationally stepped aside on Friday after an independent review was launched into expenses he incurred when moving from the US two years ago to succeed Greg Medcraft.

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

The review is expected to be completed before the end of the year.

ASIC also paid $70,000 in housing costs for deputy chair Daniel Crennan QC, or $750 a week in rent in 2018 and 2019, after he relocated from Melbourne to Sydney, where ASIC’s head office is located.

Both Mr Shipton and Mr Crennan have agreed to repay the taxpayer funds.

In a bombshell letter to Josh Frydenberg, Auditor-General Grant Hehir said the matter was of such importance that he was directly contacting the Treasurer to “gain greater confidence that appropriate action would be taken”.

Mr Shipton told the committee he would co-operate with the inquiry and he “looked forward to my continued service to the Australian community”.

“What matters is I act with integrity and honour,” he said. “That means I need to act in the best interests of ASIC and its vital purpose to build a fair, honest and efficient financial system for all Australians.”

Mr Frydenberg said in a statement on Friday that Treasury would advise him on the findings of the review, and any further course of action that might be appropriate.

Insiders said over the weekend that the poor optics in the ASIC expenses debacle made it unlikely that Mr Shipton would survive.

They said the incident was not dissimilar to others where the watchdog had taken a tough enforcement position.

“The fact is that ASIC itself has to be above all this kind of stuff,” one source said.

Ms Chester, previously the regulator’s deputy chair, told the committee ASIC agreed it had not dealt with the issue quickly enough, and that there were “failings of ASIC here”.

“We’re not denying that, we’ve acknowledged that, we’ve accepted that, and we’re now focused on supporting the independent review,” she said.

Ms Chester is an economist by training who was recruited by ASIC in January 2019 from the Productivity Commission.

She was a commissioner at the Productivity Commission from 2013 and deputy chair from 2016, and was previously a partner at Mercer.