20/06/2023, 20:14 ASIC accused of undermining Senate committee

Politics Federal Regulation

ASIC accused of undermining Senate

committee
Rachel Clun
June 20, 2023 — 6.25pm

The corporate regulator has been accused by all major political parties of obstructing
parliamentary investigations into how it polices the nation’s businesses and could be forced to
hand over previously secret documents to the Senate.

In an unusual move, Coalition, Labor and Greens senators claimed the Australian Securities
and Investments Commission had undermined their committee inquiry before it had effectively
started.

Senator Andrew Bragg said ASIC had failed to do its job. ALEX ELLINGHAUSEN

Liberal senator Andrew Bragg said ASIC had frustrated the Senate’s job of investigating law
enforcement issues in Australia. As a result, a multi-party committee has urged the Senate to

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20/06/2023, 20:14 ASIC accused of undermining Senate committee

use its powers to force the ASIC to produce documents relating to the regulator’s closed
inquiries.

“ASIC has one main job, which is to enforce the law and achieve prosecutions. ASIC has failed
to do its job,” Bragg said.
“This particular report is designed to end the secrecy and obfuscation to which ASIC is
addicted.”

The Senate’s economics references committee has been running an inquiry into ASIC
enforcement since last year, asking the regulator more than 100 questions about its
investigations, including into forensic data software company Nuix and laboratory giant ALS.

ASIC made 13 public interest immunity claims in response to some of those questions, saying
disclosure of such material could harm its investigative methods, prejudice any potential future
investigations or prosecutions and damage the reputation of people of interest.

But the committee rejected most of those claims, saying the regulator chose to undermine its
inquiry.

The report, tabled in the Senate on Tuesday evening, found there were broad community
concerns about the regulator’s role as investigator and enforcer for the financial sector.

The committee said it was troubled that ASIC had decided to hinder its work by refusing to
answer questions on notice without making a good case for the non-disclosure.

“The committee has formed a view that ASIC’s refusal to provide this information is
obstructing the committee’s ability to conduct this inquiry,” the report said.

“As such, the committee has taken the significant action of making recommendations that the
Senate order the provision of the information sought.”

Two years ago, a joint investigation by The Sydney Morning Herald, The Age and The
Australian Financial Review uncovered concerns around the public float of Nuix, including
questions about the company’s governance and the quality of its financial accounts.

Soon after, the company was rocked by insider trading allegations. ASIC concluded its
investigation into those allegations in 2021, deciding to take no further action, but said in a
letter to the committee that it was making inquiries into the trading of Nuix shares in 2022.

The committee asked for internal reports on key management personnel and directors who had
been investigated for insider trading at Nuix, affidavits, and transcripts recorded with the
consent of Nuix whistleblowers.

In response to written questions, ASIC pointed out it had started proceedings in the Federal
Court against Nuix for “alleged continuous disclosure breaches and misleading or deceptive
conduct”. It has also brought proceedings against members of the Nuix board for breaches of
their directors’ duties.

It said it would not be in the public interest to disclose the requested information about the
concluded inquiries – including its decision not to take any action after conducting an inquiry
into ALS over a fake coal-data scandal.

“For example, some of ASIC’s internal reports on its finalised inquiry into Nuix reveal ASIC’s
internal deliberations and methodology in respect of its ongoing proceedings against Nuix for

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20/06/2023, 20:14 ASIC accused of undermining Senate committee

alleged continuous disclosure breaches and misleading conduct,” ASIC said in response to the
Senate committee.

“The public interest in disclosing these reports is outweighed by the prejudice to these ongoing
proceedings.”

Bragg said the committee had unanimously agreed to reject those public interest immunity
claims.

“In coming months, the committee will commission public hearings where there will be a
public airing of the substantive matter: failed law enforcement in Australia,” he said.
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Rachel Clun is an economics correspondent for The Sydney Morning Herald and The Age, based at
Parliament House in Canberra. Connect via Twitter.

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