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Gifts to finance regulators point to cosy culture
When police in the movies accept free meals from the restaurant owner, you know the quid pro quo is the cops will turn a blind eye to what is going on in the backroom upstairs. It is worrying that Australia's corporate cops might be following a similar script.
The Herald has revealed this week that officials at the Australian Securities and Investments Commission and the Australian Competition and Consumers Affairs Commission have accepted gifts, ranging from meals at top restaurants to sports tickets, from corporations like Macquarie Bank and the power company Energy Australia that they are supposed to keep an eye on.
The hospitality which includes training seminars and airline flight upgrades smacks of a rather too cordial relationship between corporate hunters and their prey. When you share a drink it can be hard to get up from the bar and slap on the cuffs.
At the very least the gifts create a perception of conflict of interest especially given all the other close links and shared backgrounds between regulators and the industries they regulate. For instance, careers at ASIC or the ACCC can be a revolving door where, after a stint as a regulator, they walk straight to a job at a bank or power company.
Blurring of these lines may well have contributed to the cases of craven regulatory failure exposed by the Hayne royal commission into mistreatment of consumers in the financial sector. The inquiry heard ASIC often imposed much lighter penalties than it could have under the applicable legislation and then let the banks dictate banal face-saving press releases on ASIC letterhead that barely mentioned what they had done wrong.
The regulators have failed to give the Herald a clear explanation for why they allowed their officers to accept the gifts. Auditor General Grant Hehir last year issued a report warning about the conflict of interest the gifts pose and urged all government departments to discourage officials from accepting them without a good reason, such as cases where refusing would cause cultural offence.
It is ridiculous to claim that financial regulators who take gifts from Macquarie Bank think they are dealing with an irascible barbarian chief and turning down an offer will break some ancestral financial taboo. Even Australian banks must understand perfectly well why regulators would want to avoid a conflict of interest.
In defence of the regulators, it should be said that the value of the gifts is generally modest and there is no evidence that the behaviour was in any way corrupt. Which raises the question of why they were accepted at all.
The auditor general found that all government departments have policies on acceptance of gifts and many compile registers listing who gave what to whom and how much it cost. Yet the rules are often vague, poorly enforced and vary between departments for no reason.
Also, most departments including the corporate regulators refuse to make the details of the lists public. They were only released under compulsion from a freedom of information request.
The lists should be made public as a matter of course. The auditor general on its own website lists not only gifts received but also offers of gifts and also gives a reason for why the gift was accepted. For example, one employee last year was allowed to accept a wind-up sushi toy model from the Board of Audit of Japan as "a gift of gratitude". It is a small but useful step in the right direction.