The Senate economics references committee was not short of criticism for the Australian Securities and Investments Commission (ASIC) when it handed down its final report on the regulator’s investigation and enforcement activities in July.
Committee chair, Liberal senator Andrew Bragg, said it is “clear ASIC has failed” as he pushed to split it in two following an almost two-year inquiry.
“This report and indeed the whole inquiry process have shown that ASIC is not a capable regulator,” he said in the committee’s report.
However, it was the committee’s reporting of bullying and misconduct allegations that prompted Gilbert + Tobin partner Janet Whiting to request “immediate correction” be made to the report on behalf of former ASIC deputy chair Karen Chester, who at the time was a client of the law firm.
The letter, dated 4 July – the day after the committee handed down its report – and addressed to committee secretary Dr Sean Turner, detailed that the law firm had written to Senator Bragg on 17 June requesting to review a draft of the committee’s report before it was tabled, “in order to fact check it and respond to any evidence or commentary that related to our client, Ms Chester”.
“Having regard to the litany of defamatory missives about our client’s reputation over an extended period, we considered that procedural fairness required our client be afforded that opportunity,” Whiting said.
“You responded to our request nearly two weeks later, on 28 June 2024, in which you advised that the committee had denied our client the opportunity to review those aspects of the report that referred to our client.
“You noted that if the committee had any concerns or queries about the evidence provided to the committee, it was able to seek a response from our client, however the committee did not intend to do so at that time. You also noted that the committee was not aware of any evidence that would require a response from our client, in that such evidence would reflect adversely on her.”
Having reviewed the report following its tabling, Whiting said the firm was “deeply concerned about various factual inaccuracies contained in it, along with the cherry-picking of evidence without its proper context”.
The letter pointed specifically to four examples within the report that it said were misleading.
“There have been several high-profile allegations of misconduct by senior members of ASIC which have received a great deal of interest from the committee. These have included the investigation of ASIC deputy chair Karen Chester regarding allegations about her behaviour towards other staff members of ASIC, as well as concerns about the behaviour of the chair, Mr Joseph Longo,” the report said.
This characterisation, however, is misleading, Whiting said, as the only allegations against Chester came from former ASIC chair James Shipton.
This detail was also a sticking point in another statement, which referred to “one of the initial complaints” coming from Shipton, with the letter reiterating that this should have referred to “all” the complaints.
According to Whiting, the report’s inclusion of an excerpt of a letter from Treasury secretary Dr Steven Kennedy to ASIC chair Joe Longo that found an investigation concluded that “many of the instances of alleged conduct could be wholly of [sic] partially substantiated”, was out of context and “highly prejudicial”.
“As you know, the part of that letter read in full stated that: ‘The investigation found that many instances of alleged conduct could be wholly or partially substantiated as to the fact that specific things occurred, although in many cases recollections differed about the specific conduct and significance’,” Whiting said.
“The failure to report on that letter, in its proper context, is inaccurate and misleading.”
The letter also characterised the report’s description of Chester’s comments during a 2022–23 supplementary budget estimates hearing relating to the allegations as casting “unfounded doubt, in an unfair and misleading manner, on the truthfulness of Ms Chester’s comments”.
“In those circumstances, our client requires the above misleading and inaccurate statements to be corrected by the committee forthwith,” Whiting said.
“In order to do so, we require the committee to immediately table this letter, as an addendum to the report, by way of correction. Doing so is critical to affording procedural fairness to our client and to protect her reputation from further defamatory missives.”
However, in a letter dated 16 August and addressed to HWL Ebsworth partner Nicholas Pullen, who is now acting for Chester, Dr Turner defended the committee’s report.
“The committee has considered the issues raised in Ms Whiting’s letter and stands by the content of its report,” he said.
“The committee carefully assessed all evidence put to it regarding the relevant Treasury investigation, and does not agree that the paragraphs Ms Whiting refers to are inaccurate or misleading.
“In the interests of transparency, the committee has nonetheless agreed to publish Ms Whiting’s letter on its website, along with this response.”
Chester left the corporate regulator in January this year, and Longo has previously defended her conduct.
“It was apparent to me that the confidential investigation concerned a historical point in time that occurred before my time at ASIC and during a period of upheaval at the most senior level of the organisation,” Longo told a Senate committee last year.
“What I read in the confidential and legally privileged report did not reflect what I had seen in the organisation in the seven months since my appointment.”
Longo said the likelihood of the alleged conduct reoccurring, in his view, was “very low”.
“In the seven months since I had become chair, I had not seen any conduct by deputy chair Chester, that concerned me,” he said.
