Paul Scarr (Queensland, Liberal Party) Share this | Hansard source

I rise to speak on this matter as someone who serves on the parliamentary joint committee with respect to corporations law and financial services. To Senator Roberts's comment, I also rise as someone who is a lawyer and who served as a company secretary and general counsel of an ASX listed mid-tier copper and gold mining company from our home state of Queensland. I want to make some introductory comments just in relation to the importance of the terms of reference of this economic references committee and what it is looking at.

With my colleague Senator Pratt, who I deeply, deeply respect, I was involved in the last parliament in relation to an inquiry into and review of the Sterling Income Trust, which was an awful, disastrous managed investment scheme which largely took place in Western Australia and where dozens and dozens of financially vulnerable people sold their homes and invested all their money into a managed investment scheme and received what they thought was a risk-free long-term residential lease which would take them right the way through to the end of their natural lives and found that not only were those residential leases invalid under Western Australian law but also their money soon disappeared and they were left with nothing. There were also people in my home state of Queensland who suffered due to that scheme, and I actually had discussions with them in my office.

One of the key issues we considered in that inquiry was the effectiveness, or otherwise, of ASIC's actions in relation to that matter and, indeed, also the actions of the Western Australian government in terms of those residential tenancies. I think there should have been intervention much earlier from the Western Australian government, to be frank. I also note that I consider that I have a very good working relationship with senior members of ASIC, and I would hope that that view is reciprocated by them. Certainly, in all my dealings through committees, I seek to be fair and reasonable with respect to legitimate claims of public interest immunity. But there are some issues here.

When this matter was brought to my attention, I did take the time to read the interim report of the Economics References Committee, and there are a number of quotes I want to give from that interim report which I think need to be carefully reflected on by the leadership of ASIC. In paragraph 1.34, it's made clear that the committee 'is only interested in pursuing information related to closed investigations'. In paragraph 1.41 it's noted that the committee 'accepted ASIC's claim for public interest immunity in relation to ongoing ASIC investigations but rejected the claims made in relation to closed matters'.

In relation to that specific issue about closed and open investigations, I can understand that a situation might arise where ongoing investigations are perhaps intrinsically related to closed investigations, and that might be a matter which requires some further consideration by the Economics References Committee and ASIC, but that engagement needs to be in good faith. I don't see how the references committee can dutifully discharge its obligation to look at the terms of reference without looking at how ASIC in particular has dealt with investigations which are closed. So I think the onus is on ASIC to demonstrate how a so-called closed investigation still relates to ongoing matters. I've read the letters from ASIC. It is certainly not good enough to say that a matter is closed but it could be reopened sometime in the future. I don't think that cuts it. There needs to be some further engagement in that respect.

I also note paragraph 1.61 and 1.62 of the references committee's report:

As for the claims relating to prejudice to legal proceedings, ASIC has not provided any clarity about specific legal proceedings which would be affected by this claim.

In the committee's view the information ASIC has provided to support its claims is very general in nature and does not address either of the two ways legal proceedings could be prejudiced. It is also unclear from ASIC's letters whether these matters are even current legal proceedings or are at the investigation stage.

Again, this goes back to the earlier point I made. If public interest immunity claims are made, they need to be made on the basis of some specifics. As is said in paragraph 1.63 of the references committee's report:

The vague statements about general harms which could occur do not satisfy the committee that a significant harm could occur from the release of the information.

I also want to make some comments in relation to ASIC's letter of 23 March 2023, which is appendix 9 of the Economics References Committee report. There were certainly a few things in that letter that leapt out to me and caused me some concern. Again, I respectfully suggest—and I do so respectfully—to the senior leadership of ASIC that they reflect on this. First, in paragraph b), 'Disclosure of confidential methodologies to enforce the law', there's a reference to a number of sets of questions and then this statement:

ASIC considers that the public interest in disclosing these documents and in so doing, disclosing ASIC's methods for investigating and enforcing the law is outweighed by the prejudice that would result to the effectiveness of ASIC as a law enforcement agency. These documents reveal ASIC's internal methodology for: (i) investigating persons of interest (including ASIC's confidential sources of information); and (ii) selecting matters for enforcement action;

It seems to me that that goes to the heart of what the references committee is trying to investigate—that is, how does ASIC go about selecting matters for enforcement action? That methodology, from my perspective, shouldn't be a confidential methodology. We should understand, as a Senate, the way that every one of our Commonwealth law enforcement agencies goes about selecting matters for enforcement action, because that goes to the rule of law. If laws are being broken, and the independent agency, be it ASIC or someone else, is deciding not to take enforcement action according to a particular methodology that is apparently confidential, surely everyone in this place has an intense interest in understanding what that methodology is. That goes to the heart of the inquiry. So I am genuinely bemused as to that ground for a public interest immunity claim.

There is also a reference to prejudice to third parties' privacy and reputation. I'm sure that is something that could be reasonably considered by the committee in all the circumstances and navigated through. Then we have the perennial issues relating to the disclosure of confidential and privileged legal advice. I can genuinely say that, when this side of the chamber was in government, I raised concerns—it's on the public record—about the use of public interest immunity claims with respect to the provision of legal advice. But there is a statement here that causes me particular concern. It says that ASIC's position in future enforcement action where similar legal issues arise may be prejudiced. Again, I want to understand, as a member of the Senate, what that legal advice is. How is ASIC interpreting the law? What's this advice they're being given which seems to have a material impact on whether or not they're going to decide to bring enforcement action or not bring enforcement action? In a situation where a legal case has been closed, I think we are quite entitled, and we should be genuinely interested, to see such legal advice. In summary, I call upon ASIC to reconsider their position.