ASIC has hit back at media following what chairman, Greg Medcraft, calls ‘ill-informed’ reports that the finance industry watchdog failed to adequately respond to Leighton Holdings foreign bribery allegations.
In a speech addressed to a Melbourne business lunch on Friday, Medcraft said he would like to ‘set the record straight’.
“There has been plenty of media in the past fortnight about [ASIC’s role in investigating foreign bribery allegations]. A lot has been written, much of it has been ill-informed in describing ASIC’s role.”
Medcraft started by explaining why ASIC generally focuses enforcement actions for corporate governance on public companies, rather than proprietary ones.
“It is because ASIC is all about ensuring confident and informed investors and fair and efficient markets…We have limited resources, so we take on cases where the wrongdoing might affect a wider range of shareholders, especially mum and dad investors. That is, companies where the extent of harm or loss has a broader market impact.”
Furthermore, he said, bribery of foreign officials is primarily enforced by the AFP, with ASIC only holding jurisdiction in a small number of cases where directors may have breached their duties.
“In any foreign bribery investigation, criminal proceedings are the main game. ASIC cannot and will not, do anything to jeopardise the success of criminal actions taken by the AFP. This is something the media has mostly chosen to ignore.”
He also pointed out that the maximum penalty for a directors’ duties breach is a $200,000 fine and banning as a director, while the maximum for the criminal offence of bribing a foreign public official is ten years jail or a $1.7 million fine – or both.
“What do you think has the biggest deterrent effect – a fine, or jail? Losing some of your money, or losing all of your liberty?
Medcraft’s comments follow on-going media speculation that corruption was rampant in Leighton's foreign arm, more so than Leighton disclosed to the market in February, 2012. ASIC has been accused of failing to conduct rigorous investigations in the two years following Leighton’s admission to the AFP that it may have breached bribery laws in Iraq.