ASIC’s public interest immunity defence under challenge

ANALYSIS

For decades, the Australian Securities and Investments Commission (ASIC) has carefully side-stepped revealing its approach to prosecutions, even failed efforts, citing public interest immunity.

This week, the Senate Economic References Committee has formally challenged ASIC on the issue arguing, in essence, that the regulator is simply being secretive, not to say uncooperative.

An interim report issued by the committee has been heavily critical of ASIC for its failure to answer a number of questions placed on notice where the regulator’s long-time, phlegmatic General Counsel, Chris Savundra, has almost uniformly cited public interest immunity or legal professional privilege.

The ability of ASIC to use those legal devices is now under challenge with the committee calling for the Senate to formally require production of documents and the fulfilment of the answers to the questions on notice.

Coming off the back of the recent controversy around allegations concerning the conduct of ASIC deputy chair, Karen Chester, the committee’s approach will test both the ASIC leadership and particularly its chair, Joe Longo and the office of the Treasurer, Jim Chalmers.

The bottom line is that the committee has taken exception to the fact that Longo, via ASIC’s counsel, Chris Savundra, has cited public interest immunity with respect to 13 questions and the committee has decided to reject 11 of those 13 public interest immunity claims.

Savundra’s letters to the committee typically argued that ASIC’s disclosure of material risked prejudicing cases on foot and also future investigations stating: “disclosure of material about a concluded ASIC matter, may still prejudice any future ASIC investigations and prosecution of possible breaches”.

“This is because even if ASIC concludes an inquiry without taking regulatory action, that is not a guarantee that ASIC may not wish to take action in the future.”

For its part, ASIC would do well not to ignore the attitude of the committee which used its interim report to state it “is concerned by ASIC’s behaviour in relation to the commencement of this inquiry”.

“Rather than engaging with the committee in a transparent and accountable manner, from the outset ASIC has chosen to attempt to undermine and influence the process of the inquiry before evidence had been gathered or hearings held,” it said.

The committee then went on to say that it was not interested in pursuing the records of open investigation stating: “It only seeks to understand matters relating to closed cases. Accordingly, the committee has accepted ASIC’s claims of public interest immunity where questions on notice have related to open ASIC investigations and has only pursued questions where ASIC has confirmed that a matter is closed”.

“The committee finds it troubling that instead of reflecting on and responding to this broad community concern, ASIC has instead chosen to hinder the committee’s work by refusing to answer questions on notice. As shown in this report, the committee has made many attempts over several months to obtain the information sought, some chains of correspondence starting in December of last year.”

“The committee has formed a view that ASIC’s refusal to provide this information is obstructing the committee’s ability to conduct this inquiry. As such, the committee has taken the significant action of making recommendations that the Senate order the provision of the information sought.”

“The committee expects that ASIC take this as an opportunity to reflect on its conduct to date and to reassess how it will better engage with the committee’s inquiry in an open and transparent manner moving forward.”