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Dancing on the ashes of Westpoint

By Scott Hickie - posted Tuesday, 14 November 2006


ASIC’s 2004-2005 Annual Report sheds further light onto the magnitude of non-intervention. In 1999-2000, ASIC received 5,534 complaints of crime and misconduct and concluded 173 cases through litigation. Five years on, the ASIC 2004-2005 Annual Report states that 10,752 consumer reports of crime and misconduct were received and 193 cases concluded through litigation.

In five years, complaints have almost doubled yet the number of companies under ASIC’s jurisdiction in 1999-2000, approximately 1.2 million, has only increased to 1.4 million by 2004-2005. From these figures alone it would seem that we are witnessing an escalation in complaints of corporate misconduct and poor corporate governance that is greatly out of step with the growing number of companies.

Of the 10,752 consumer reports of crime and misconduct, ASIC proudly points out that 57 per cent of these matters were resolved by forcing company officers to comply with the law and giving consumers access to company information. A failure of police to resolve or address 43 per cent of reported crime would be considered a political travesty, yet such results by ASIC are considered adequate.

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And when one attempts to reconcile what ASIC puts in its annual reports with candid comments allegedly made by Mr Lucy to finance journalist, Trevor Sykes, that below 8 per cent of all reports were followed up, the image of an corporate regulator flexing its muscle and nashing its teeth befalls a whimpering agency entrapped by a dizzying inertia.

The Australia’s Liberal Party answer to these issues has been to push on with the next enchanting instalment in our strident march, our holy pilgrimage to free market utopia. Westpoint will not derail that trajectory. Our pious corporate deity will atone by way of Liberal Party donations and retail investors will be handed corporate literacy programs wrapped in playschool paternalism to clean up their self-inflicted bloodletting.

As the coming months unravel the depth of mezzanine finance collapses in Australia, we may need to reaffirm primacy of shareholder rights and communication to ensure we stop this escalating deluge of corporate failure.

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About the Author

Scott Hickie is a legal editor and advocates on behalf of various investor action groups.

Creative Commons LicenseThis work is licensed under a Creative Commons License.

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