ASIC chair stands aside over expenses investigation

Australian Securities and Investments Commission chairman James Shipton has stood aside from the role while an investigation is undertaken into relocation payments of almost $200,000 made for himself and deputy chair Daniel Crennan.

Treasurer Josh Frydenberg was notified of issues with the expenses by the Auditor-General after auditing the financial statements of the agency, but the payments, and the review were sensationally revealed in a committee hearing on Friday.

ASIC was scheduled to appear before parliament's economic committee on Friday, and in a revelation that left committee chair Tim Wilson grappling with how to proceed, Mr Shipton used his opening statement to announce the review, that he had stood down, and would take no further part in the hearing.

The payment relating to Mr Shipton, who is paid more than $800,000 a year, stems from his relocation to Australia in 2018 to take up the role as chair from the United States, where he had been working at Harvard after a stint as an executive at investment bank Goldman Sachs.

As part of the negotiations about his remuneration in the role, ASIC agreed to pay $4050 for tax services to assist Mr Shipton in moving from the US to Australia.

Following an initial briefing in December 2017, KPMG requested approval to prepare tax returns for Mr Shipton in the US and Australia. ASIC approved this without seeing costs or limits on the services provided.

In September 2018, KPMG advised ASIC its fees would be between $60,000 and $70,000, to which ASIC advised it would pay $9500 and Mr Shipton would pay the rest.

But in October ASIC advised Mr Shipton it would pay the full amount as it was part of the overall relocation limits approved by Treasury. Ten months after the initial briefing, ASIC paid an $118,557 invoice from KPMG, over what had been approved.

The invoices included tax advice on personal investments and "optimisation of the Australian taxation of foreign exchange gain or loss in foreign bank accounts" and advice on penalties for late tax returns in the US state of Massachusetts.

As well as the payment itself, ASIC paid almost $80,000 in fringe benefits tax on the services.

Mr Shipton has agreed to pay the money back, and stand aside while the review by former inspector general of intelligence and security Vivienne Thom takes place.

Auditor-General Grant Hehir told ASIC in August last year to seek advice on whether the payments were within the rules, but that advice hadn't been sought by September this year.

The auditor-general also raised the alarm about rental payments worth $750 a week, and totalling just under $70,000, paid by ASIC in 2018-19 and 2019-20 for deputy chair Crennan's accommodation in Sydney, after he was asked to relocate from Melbourne.

These payments were "over and above" the total remuneration package that applied to the role of deputy chair under the order of the Remuneration Tribunal, Mr Hehir told Mr Frydenberg in a letter.

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In a statement Mr Shipton said he had advised the Treasurer he would stand down pending the results of the review.

"Whilst I believe that I have acted properly and appropriately in this matter, I hold myself to the highest possible standard," he said.

"What matters is that I act with integrity and honour. That means I need to act in the best interests of ASIC and its vital purpose to build a fair, honest and efficient financial system for all Australians."

Deputy chair of the economics committee Andrew Leigh said the Treasurer needs to be up front about when he knew about the expenses scandal.

"His statement implied that he'd only learned about it on 22 October, but when I asked ASIC, they made clear the Treasurer had known for more than a month," Dr Leigh said.

He also questioned why the review into the matter would take more than two months.

"To have the corporate watchdog leaderless for two months in the midst of a pandemic and a recession is irresponsible, and shows the government's failure to move swiftly on investigating wrongdoing."