Treasurer withholds report into ASIC misconduct

Treasurer Jim Chalmers has resisted a Senate order calling for the release of a confidential report detailing the findings of alleged misconduct by Karen Chester, deputy chair of the Australian Securities and Investments Commission (ASIC).

Treasury was ordered to produce the confidential report no later than midday on Thursday, 9 March.

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However, in a letter addressed to Minister for Finance Katy Gallagher, Treasurer Chalmers claimed public interest immunity.

He told the minister disclosure of the findings would “unreasonably infringe” the privacy of ASIC officials named in the confidential Treasury report. 

“It is in the public interest, that private information about individuals not be unreasonably disclosed,” he said. 

He added the report contains allegations made against Ms Chester, including information provided in confidence to investigators by “confidential informants”, which cooperated under the expectation their identities would remain anonymous. 

Given some of the informants continue to work for the corporate regulator, Treasurer Chalmers fears they may be subject to “additional prejudice” if their identities are revealed. 

Withholding the report, he continued, would also support the public interest in “preserving the integrity of fact-finding investigations”, ensuring whistleblowers are not punished for exposing misconduct. 

Notably, Treasurer Chalmers said releasing the report would “cause undue prejudice” to Ms Chester.

Pointing to evidence to Senate economics legislation committee hearings over the past month, he noted the investigation “did not find all of the allegations substantiated” and there was an “insufficient basis for further steps to be taken”. 

Moreover, the Treasurer claimed he blocked the Senate order under the grounds it would set a harmful precedent by breaking a “longstanding” government practice to not disclose “privileged legal advice” — also contained in the Treasury report. 

Liberal Senator Andrew Bragg, who moved the Senate order on 8 March, has rejected Treasurer Chalmer’s justifications, describing the decision as a “cover up”.

“Rather than redact personal, sensitive information, the Treasurer is trying to conceal the report’s findings from the public. Very troubling,” he said. 

The order was passed following months of scrutiny from the Senate economics legislation committee, which had probed ASIC’s leadership team over its handling of the investigation.

ASIC chair Joe Longo and deputy chairs Karen Chester and Sarah Court faced hours of questioning regarding previous evidence to the committee on 16 February, which downplayed concerns flagged in the Treasury investigation into Ms Chester’s conduct.

ASIC’s leadership team had previously told the committee the Treasury report produced “no adverse findings” against Ms Chester.

However, a Treasury communication sent to Longo in February 2022 had noted many of the instances of alleged misconduct could be “wholly or partially substantiated”.

In light of this evidence, Mr Longo distanced himself from previous committee testimony, instead conceding the Treasury investigation produced “mixed” findings.

Mr Longo said he did not act against Chester following his “legally privileged” reading of the Treasury report because the findings “did not reflect” his experience at ASIC since assuming the role as chair.

He went on to claim there was a very low likelihood of the alleged conduct reoccurring, in his view, adding there was a “lack of utility” in reinvestigating the instances in question.

Ms Chester repeatedly told members she had not read the Treasury report and rejected any concerns over her deputy leadership.