Minister admits ASIC reputationally damaged by Chester report

Mike Taylor

Managing Editor/Publisher, Financial Newswire

2 March 2023

The report of the Treasury-initiated investigation into Australian Securities and Investments Commission (ASIC) deputy chair, Karen Chester, was only ever “viewed: by the ASIC chairman, Joe Longo, and remains confidential.

That meant that Longo was strongly questioned by members of the Senate Economics Committee without being able to provide them with the investigation report’s content saying that neither he nor ASIC were in possession of the document.

The investigation and report were compiled by law firm, Gilbert and Tobin.

The Minister for Finance, Senator Katy Gallagher acknowledged to the committee that as a result of the issues around Chester ASIC had suffered some reputational damage.

Appearing before the committee, Longo said that he did not have the confidential, legally privileged report on a confidential basis.

“It’s confidential and legally privileged and I cannot comment further,” Longo said.

However, he made clear that it was not Chester, not he, who had characterised a letter from the Secretary of the Treasury, Steven Kennedy, as indicating the report had delivered “no adverse findings”.

Longo later said that, at best, he regarded the letter as having delivered a “mixed” message with respect to the report’s findings.

Asked by NSW Liberal Senator, Andrew Bragg, whether she believed the investigation and fall-out might impair her performance in her job, Chester said that no and that she was busy with ASIC getting on with the job.

In his opening statement to the committee, Longo said: “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.

“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.

“Now to come to my response to the Secretary’s letter.

• I gave careful consideration to the following:
• To the extent that any conduct was substantiated, it occurred at a certain historical point in time before my term as Chair commenced.
• Given the change in circumstances since my appointment, in my view, the likelihood of the conduct that was the subject of the report recurring, was very low.
• In the 7 months since I had become Chair, I had not seen any conduct by Deputy Chair Chester that concerned me.
• The lack of utility in re-investigating the matter.

“Based on those factors, I decided that I would not proceed with a formal investigation under the ASIC Code of Conduct at that time. I wrote to Deputy Chair Chester and the Secretary of the Treasury to inform them that I considered the matter closed.”

“I spoke to Deputy Chair Chester and reinforced my expectations around Commissioner behaviours. I also asked her to reflect constructively on the issues and conduct which led to the process being initiated. I advised Ms Chester that the matter was at an end and my focus would continue to be on taking ASIC in a positive direction.”