Helen Coonan (NSW, Liberal Party, Minister for Communications, Information Technology and the Arts) Share this | Hansard source

The answer to that is no. Clearly ASIC has been appropriately resourced. Together with all government agencies, from time to time there are bids for additional funds. The government listens to what is required, makes an assessment about what is needed to resource an agency and responds appropriately. Clearly, in the circumstances, ASIC has been appropriately resourced. I certainly take issue with the suggestion implicit in the senator’s question that ASIC’s resources were in any way attributable to any perceived lack of action in the Westpoint matter.

As I mentioned a couple of days ago in relation to this matter, ASIC started investigating the Westpoint mezzanine financings back in 2002. It is worth reminding the Senate of its main actions that it has taken in relation to this matter. It certainly took steps to attempt to force Westpoint to provide regulated disclosure of information to investors in relation to the mezzanine financings. When direct discussions with the company in 2003 and 2004 failed, it took court action in May 2004. The initial decision by the court was not as conclusive as ASIC wanted, and that is not ASIC’s fault. It therefore appealed against the ruling, and a final ruling is still outstanding. It kept investors informed about court proceedings against Westpoint. An announcement on the case was put up on its website in May 2004. In June 2004, ASIC wrote to each investor in the two mezzanine financing schemes which formed the substance of the court action, informing them about ASIC’s concerns. It started a general campaign in 2003 to warn investors against the risks of investing in high-yield debentures. Warnings of this nature were posted on its website in May 2003 and again in May 2004. A surveillance report on high-yield debenture prospectuses was released in February 2005. The accompanying media release stated that these debentures were risky instruments and that there was no guarantee that investors would get their money back.

It is important to understand that ASIC does not prudentially regulate companies such as Westpoint. I mention that because Senator Webber did mention Westpoint in her question. Westpoint directors were providing statements that Westpoint was solvent as late as 2005. Westpoint auditors were at the same time providing unqualified financial statements for the Westpoint entities. Once ASIC had appropriate evidence in late 2005, it successfully took action to stop Westpoint from operating further. Just recently, it has taken further action to support Westpoint investors, including taking action to trace and secure as many assets as possible for distribution to the Westpoint investors. ASIC has therefore obtained a Federal Court order appointing receivers to the personal assets of the main directors, including those of group founder, Mr Norman Carey, forbidding them from leaving the country and freezing some assets. I do not think it could be said, as has been implied by Senator Webber, that ASIC has not been taking appropriate action in relation to Westpoint. In fact, if you look at what ASIC has done, you will see it has been absolutely exemplary as an agency in what it has undertaken.