Not sure if ASIC will be too keen to look intothis either, depending on who has been wining and dining who.
Gifts to finance regulators point to
cosy culture
When police in the movies accept free meals from the restaurantowner, you know the quid pro quo is the cops will turn a blind eye to what isgoing on in the backroom upstairs. It is worrying that Australia's corporatecops might be following a similar script. TheHerald hasrevealed this week that officials atthe Australian Securities and Investments Commission and the AustralianCompetition and Consumers Affairs Commission have accepted gifts, ranging frommeals at top restaurants to sports tickets, from corporations like MacquarieBank and the power company Energy Australia that they are supposed to keep an eyeon. The hospitality which includes training seminars and airline flightupgrades smacks of a rather too cordial relationship between corporate huntersand their prey. When you share a drink it
can be hard to get up from the bar and slap on the cuffs. At thevery least the gifts create a perception of conflict of interest especiallygiven all the other close links and shared backgrounds between regulators andthe industries they regulate.
For instance, careers at ASIC or the ACCC can be a revolvingdoor where, after a stint as a regulator, they walk straight to a job at a bankor power company.
Blurring of these lines may well have contributed to the casesof craven regulatory failure exposed by the Hayne royal commission intomistreatment of consumers in the financial sector. The inquiry heard ASIC oftenimposed much lighter penalties than it could have under the applicablelegislation and then let the banks dictate banal face-saving press releases on ASICletterhead that barely mentioned what they had done wrong. The regulators havefailed to give the Herald a clear explanation for why they allowed their officers toaccept the gifts. Auditor General Grant Hehir last year issued a report warningabout the conflict of interest the gifts pose and urged all governmentdepartments to discourage officials from accepting them without a good reason,such as cases where refusing would cause cultural offence. It is ridiculous toclaim that financial regulators who take gifts from Macquarie Bank think they aredealing with an irascible barbarian chief and turning down an offer will breaksome ancestral financial taboo. Even Australian banks must understand perfectlywell why regulators would want to avoid a conflict of interest.
In defence of the regulators, it should be said that the valueof the gifts is generally modest and there is no evidence that the behaviourwas in any way corrupt. Which raises the question of why they were accepted atall.
The auditor general found that all government departments havepolicies on acceptance of gifts and many compile registers listing who gavewhat to whom and how much it cost. Yet the rules are often vague, poorlyenforced and vary between departments for no reason. Also, most departmentsincluding the corporate regulators refuse to make the details of the listspublic. They were only released under compulsion from a freedom of informationrequest. The lists should be made public as a matter of course. The auditorgeneral on its own website lists not only gifts received but also offers ofgifts and also gives a reason for why the gift was
accepted. For example, one employee last yearwas allowed to accept a wind-up sushi toy model from the Board of Audit ofJapan as "a gift of gratitude". It is a small but useful step in theright direction
