The Australian Securities and Investments Commission has been at it again, underlining one of its major failings – its inability to crack down on fraudsters and scammers even when they're operating in plain sight.
You are more likely to be jailed for drinking to excess than for robbing people while wearing a white collar, even when the con runs to as much as $100 million.
The latest media release announcing ASIC's toothless nature wasn't in that league, but it illustrates the point.
As reported here, ASIC wants to warn people about three Gold Coast conmen who so far have ripped off $1 million or so with a cold-calling scam.
ASIC took them to court a while back and they were ordered not to use the names of several real companies while conning people, so the trio now are using the names of several different real companies.
While ASIC eventually might name and shame these shonks, they are still walking the streets instead of an exercise yard. Or, more likely, they are cruising the coast in limos.
Elsewhere on these pages, Michael West is deservedly serving up ASIC curry over the toothless kitten's caveat emptor attitude to dodgy investment schemes.
I argue the regulator's fundamental failure is even more basic: its inability to kick heads even when they're exposed at their feet.
Oh, it manages to lumber the occasional particularly stupid miscreant, but by and large it simply waves fraud and conmen through.
There remains no greater testimony to ASIC failure than the Firepower scandal – perhaps the most obvious, blatant, ridiculous and lucrative fraud ever perpetrated on punters; punters who included former Macquarie heavy Bill Moss and Air Chief Marshal Angus Houston (the bloke who was convinced the Joint Strike Fighter is a really good plane), as well as about 1300 less notables.
Tim Johnston and his fellow scumbags ripped $100 million or so off the public in plain sight with their “fuel pill” con and ASIC did nothing about it until the game was pretty much over, after it was exposed by The Sydney Morning Herald and Crikey, while the rest of the media did about as much as ASIC, i.e. stuff all.
And what did the long arm of the law do to this nasty little spiv Johnston? They took him to court and in 2011 he was banned from managing a company for 20 years. That's it. Big whoop. Slip most people a 10th of the Firepower takings and they will happily volunteer to never manage a company again.
Back in 2008 there reportedly was brief given to the DPP, supposedly containing potential criminal charges, but five years later, Johnston still walks the streets.
Of course, Johnston is bankrupt and allegedly penniless, but in the miraculous way of these things, it seems his wife is rich and the Firepower liquidator couldn't find where the money went. Wonder if they have a family trust?
Johnston should be in jail and so should a lot of other conmen, but ASIC isn't likely to put them there.
The watchpuppy has been useless at dealing with this sort of fraud and has done nothing about its uselessness. The politicians happily use ASIC primarily as a revenue source – all those ridiculous corporate fees – but don't empower it or encourage it to get out and kick heads, to be proactive in finding, stopping and locking up fraudsters.
ASIC has a partial excuse for its powerlessness in the inadequacies of the law, but the excuse still doesn't wash.
First, it is up to an active regulator to lobby its political masters to get the power it needs. ASIC does that in the fancier fields that interests it, but it hasn't scored in the grubby day-to-day battle with con artists. It remains a serious and ironic governance fault that ASIC lacks a board to drive its chief executive.
Second, a regulator with gonads and an innate sense of justice can work inadequate laws harder, instead of sitting back with an overly legalistic view of the world and telling people “too bad” they were fleeced.
Alan Fels provided an example of how it can be done when he was running the ACCC. He used the media, high-visibility raids and whatever tools he could muster to sink the slipper. His targets ran for their lawyers and political contacts to complain bitterly, but it worked better than doing nothing.
It is disappointing that the present ASIC boss, Greg Medcraft, appears to have gone down the same path as his predecessors – it's all too hard for them.
The recent Four Corners program featuring a number of investment scandals had Medcraft looking as reactionary as ASIC always looks – a body that appears long after the dastardly deeds have been done to issue the odd parking ticket and be of no help to anyone.
This is a body that is taken with the idea of outsourcing its job to litigation funders, but that doesn't work when it comes to lumbering “bankrupt” fraudsters.
Medcraft's immediate predecessor, Tony D'Aloisio, made a goose of himself early in his ASIC career by telling a Senates estimates committee that one of ASIC's gross failures had occurred “because I wasn't there”. The record has gone on to show that the gross failures continued to occur throughout and after his term.
Medcraft isn't far behind. When Tim Johnston was theoretically banned from managing a company, Medcraft bravely declared the regulator “will not hesitate to act” when investors are not given all the information they need to reasonably make an informed decision.
They'll act all right – by issuing a media release.
Michael Pascoe is a BusinessDay contributing editor.
