ASIC chair Joe Longo warned over Karen Chester’s ‘positive reference’ demands in 2021

The corporate regulator’s former chairman sought to discuss with current ASIC chair Joe Longo in June 2021 concerns over a heated Zoom call with his deputy.

Former ASIC chair James Shipton and deputy chair Karen Chester. Picture Gary Ramage

The corporate regulator’s former chairman sought to discuss with current Australian Securities & Investments Commission chair Joe Longo in June 2021 concerns over a heated Zoom call with his deputy, just days after taking on the top job.

A letter sighted by The Australian reveals former ASIC chair James Shipton told Mr Longo his deputy, Karen Chester, had sought to secure positive references from him, despite Mr Longo telling parliament on Thursday that “I don’t have any actual knowledge” of the incident.

The letter, also sent to Treasury Secretary Stephen Kennedy, said Ms Chester had asked Mr Shipton to “brief various journalists and senior business leaders, seemingly to assist her pursuit of the role of ASIC chair”.

The Senate heard reference on Thursday to reports Ms Chester told Mr Shipton he should “phone up those people and say something nice about me”.

“Ms Chester made a series of baseless accusations against me (some of which had already been raised with Dr Vivian Thom as part of her review),” Mr Shipton wrote to Mr Longo and Mr ­Kennedy.

“I declined to do so.”

Mr Shipton warned Ms Chester “continued to engage in inappropriate behaviour” following the call.

The Australian is not suggesting Ms Chester engaged in inappropriate behaviour, only that concerns were raised with others.

ASIC chair Joe Longo. Picture: Aaron Francis

Mr Shipton wrote that Ms Chester’s alleged behaviour included “making disparaging remarks about me to another commissioner” as well as “falsely accusing me of being the ‘cause of previous negative articles that have been rehashed’ … about her”.

But Gilbert and Tobin partner Janet Whiting, who is acting for Ms Chester, told The Australian “all of those concerns were professionally and contemporaneously dealt with by Ms Chester through the appropriate channels”. “There were no governance concerns requiring further action by Ms Chester at the time of the unexpected call from Mr Shipton,” she said.

“At no time did Ms Chester threaten to ‘leak’ information about Mr Shipton … Ms Chester was simply asking Mr Shipton to correct the record.”

The call between the two came in the wake of Mr Shipton returning to the role of ASIC chair in January 2021, after standing aside from the position in October 2020 amid an inquiry over expenses and relocation allowances.

Mr Longo was confirmed as ASIC chair on April 29, 2021, several weeks after the Zoom call between Mr Shipton and Ms Chester. Emails and messages seen by The Australian show Mr Longo acknowledged the letter on June 6, 2021, after he started as chair of ASIC five days prior.

Mr Longo told senate estimates he did not “have knowledge of anything else” after media reports revealed Ms Chester demanded Mr Shipton provide positive recommendations for her in a Zoom call on April 9 2021.

The ASIC chair said he was “clearly aware of a broader context” but did not have “any actual knowledge” of the April 9 ­incident.

“The premise of your question presumes that I discovered something on the first of June 2021 of a nature that’s obviously very unattractive, that’s simply not the case,” Mr Longo said.

But an ASIC spokesman said Mr Longo “gave evidence today that he was clearly aware of a broader context when he started the job”.

“He did not claim that he was unaware of allegations,” he said.

Senator Andrew Bragg quizzed Mr Longo over comments Ms Chester allegedly made to Mr Shipton, including suggestions she could have “leaked to a journalist”.

Mr Longo said “the idea of leaking and behaviour of that kind is, of course, unacceptable and to my knowledge does not happen at ASIC and certainly not since I became chair,” he said.

Originally published as ASIC chair Joe Longo warned over Karen Chester’s ‘positive reference’ demands in 2021