How ASIC became a cash cow

Is ASIC really looking about the business interests of Australians or is it simply leaching money out of them?

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http://www.crikey.com.au/2004/07/16/how-asic-became-a-cash-cow/

http://www.crikey.com.au/2004/07/16/how-asic-became-a-cash-cow/

16 July 2004

Is ASIC really looking about the business interests of Australians or is it simply leaching money out of them?  Ever heard of a regulatory body which generates hundreds of millions a year in surplus revenue? Look no further than ASIC which gouges Australia’s big and small business alike and has handed over more than $1.5 billion in surplus revenue to the Howard Government’s budgets since 1996.

Crikey seems to receive a never ending stream of penalty notices and fees from ASIC which prompted us to look into this and it appears the government surplus is $1.55 billion over the eight years from 1995-96 to 2002-03 – an average windfall of $193 million a year.  In the handover year of 1995-96, the surplus was only $130 million but you can trust the hypocritical Howard Government to slug their friends in business because this surged to a record $232 million by 2002-03 – an increase of 77 per cent which is well above nominal economic growth of about 50 per cent over the same period.

This table demonstrated ASIC’s highway robbery:

Revenue transferred to the Commonwealth is a gross figure. Page 81 of the 2002-03 annual report says, “ASIC collects and administers revenue under the Corporations Act 2001 and prescribed fees set by the Corporations (Fees) Regulations. The revenues from these fees are not available to ASIC and are
remitted to the Official Public Account”.

In response to this item Denise Brailey, president of the Real Estate Consumer Association wrote to us as follows:

Yes,indeed. We have been saying this for 5 years. ASIC is a do nothing ineffectual, money generating, cash cow. The first time I raised this point was at a seminar in Qld in 2000.  Look at all the search fees the Jenman Approved HBHS Consumer Protection Fund has to pay for ASIC to investigate cases to assist
consumers, just for the privilege of doing ASIC’s job of chasing crooks.

Just look at the other Law Firms and Funders that have to pay for endless searches to unravel complex criminal money-laundering activities. These are activities which ASIC sits upon like Mother-Hen.  This is precisely what has prompted Henry Kaye victims to protest outside ASIC offices in every state on Wednesday, to the amusement of passers-by. The constabulary were bemused – some of their members are the victims!

Henry Kaye registered 111 companies to set up his empire courtesy of ASIC. He then ran on a rampage of $60 million in losses, gathering victims in his wake, teaching “management of financial risk strategies,” without the benefit of an AFS Licence.  We know that ASIC hands these licences out like smarties, yet they could not be so bold as to give Henry Kaye a licence due to his inability to prove he was a “fit and proper person.” So against their own laws, ASIC permitted Henry to keep going four years after the first complaint.

Does anyone view this as negligence? Yes, tens of thousands of consumers, taken for a ride from the growth industry spawned by ASIC’s indifference to white collar crime.

What part of the word “fraud,” does ASIC not understand? Now the American Spruikers have landed, to spruik more victims and cash, without the benefit of an AFS licence and ASIC decides to act “after the doors were opened. Another 1500 people signed up two weeks ago in the Danko event.  All the promoters did, in order to entice innocent citizens into their 'black box' scams, was use the magical words “government approved.”

Well it is “government approved” by default. That’s what Henry boasted on stage and video. ASIC permits these spruiker scammers to open large doors held at our most prestigious venues and take in the funds. Now ASIC Queensland, are trying to close the doors after the spruiker horse has bolted in three states. It’s our fastest rising growth industry, careering out of any sensible regulatory control whilst ASIC snoozed away.

BRW ran an article last week calling Chairman of ASIC, Jeffrey Lucy, “The Enforcer.” I don’t think so. RECA sent letters to Lucy warning him of the consequences to permit the Americans down here. Neil Jenman pleaded on his website to do the same – close them down before they open. ASIC has the powers and didn’t use them. Too lazy?

Crikey published several articles I wrote on this issue, in 2001.

ASIC boasts “69 prosecutions during the three years of Davey Knott’s reign of error. That equates to 3 prosecutions per state per year. So, we only have an average of three white-collar crooks per state per year?  Crikey pointed out last year that the crooks being rounded up were at the lower end of the scale. Yes indeed.  No wonder ASIC needed a “Rene” to save face.

I spoke with one of Ross Cameron’s advisors two weeks ago on this very subject. He said: “the surplus funds go back to the states.” Really?  Can Crikey check that please? How much revenue is passed on to the Offices of Fair Trading? All of it – the surplus cash? That doesn’t negate ASIC’s deplorable track record the past five years,where the biggest losses have occurred. Over $1 billion is missing from consumers’ bank accounts under ASIC’s watchful eye. Consumers are finding it difficult to see value for money.

They have been urged to place the equity in their homes, and their superannuation into the hands of the very people being complained about to ASIC – licensed and unlicensed.  Average hard working Mums and Dads and retirees paid big bucks to learn how to educate themselves about the strategies needed for financial security and how to secure their retirement. They were spruiked from within the walls of the ASIC building in Melbourne and ASIC had not a clue what was going on.

Well RECA is now looking at setting up temporary self help desks outside the major ASIC offices to empower consumers to look after their own complaints. ASIC should be disbanded and become an electronic search engine where searches are $2 each.  That would be considered good economic management would it not? The good ship ASIC needs to take a Titanic ride to the bottom of the corporate ocean floor, according to all the victims of these crimes.

The widely heralded “Twin Peaks” model has not only been a disaster with APRA and ASIC being dubbed the “lazy sisters.” but there are now calls for a “super” regulator. Isn’t that what Europe security chiefs warned Australia would happen? Wasn’t one super agency, what we had eight years ago?

Four ASIC chiefs jumped ship in the past four months along with many of the seasoned investigative crew. Lucy said it has a 10% turnover – not in the investigation units and the top end. It’s like being on a worst nightmare cruise ship. You take a walk at night on the deck, look over the side and golly gosh, you see the captain and bosun rowing away in a dinghy.

Knott and Collier worked for APRA until HIH went down. One can be forgiven for asking who has captured who and who is/has been “speaking truth to power?”

Consumer Protection in Australia, resembles a monorail, trundling along in a regulatory circle, charging consumer victims millions of dollars in search fees to follow the complex structures of these empires of evil, with the Financial Planning industry used as the consultation process. ASIC has become a “do-it-yourself” crime solving department.

It is the FPA members whom we found to be the worst offenders, after we begged in the streets for six years for funds to pay the search fees to help the people!  A very BIG Royal Commission is urgently needed into this over sized useless monolith, renamed ASIC in wonderland.Mr and Mrs Crikey and the magnificent Crikey Team have made my day! 

I am sure you have just gained a readership of 100,000 aggrieved consumers.

Denise Brailey
President-Real Estate Consumer Association