levitt robinson solicitors

29 October 2013

The Committee Secretariat Senate Standing Committee on Economics P 0 Box 6100 Parliament House CANBERRA ACT2600

Also by email: [email protected] .au &by facsimile: (02) 6277 5719

Submissions by Levitt Robinson on the Performance of the Australian Securities Investment Commission

Levitt Robinson Recommendations

(a) Senior positions in ASIC should be internationally and widely advertised - the selection process should be open, transparent and merit-based and so far as possible, senior roles should be filled from the ranks of retired Judges, Senior Prosecutors, Public Defenders, former Attorneys­ General, Senior Academics and Senior Lawyers with a Consumer Action background.

Overseas appointments, particularly from similar jurisdictions, should be favourably considered.

The US system of having Senate confirmation hearings for discretionary appointments should be adopted. Applicants with a material history of professional relationships with major players in the financial services industry, should be ineligible for appointment.

(b) Legislation should be enacted to provide that there is a rebuttable presumption that receivers and administrators and purveyors of financial services, including but not limited to mortgage brokers, are the agents for banks or other financial institutions and not for borrowers or investors.

(c) Australia should follow the US Bankruptcy legislative scheme which puts recovery ahead of burial. Under the US Bankruptcy legislation, using Chapter 11, the directors of an insolvent company may submit a Plan of Reorganisation to the unsecured creditors to be approved by the US Bankruptcy Court. The Court then supervises compliance with the Plan. So long as the security of the secured creditors is protected, the secured creditors (usually banks) are bound by the Plan of Reorganisation and have to stand back.

Where .the Plan of Reorganisation fails, a trustee may be appointed in Chapter 7, to assume a role like that of a liquidator. Even then though, the trustee is more regularly and genuinely accountable to the Courts than an Australian liquidator is in practice.

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(d) An act to regulate insolvency practitioners including to provide for mandatory, reasonable fee scales and enforceable ethical rules, should be passed by the Federal Parliament along similar lines to the Legal Profession Acts, which obtain in each State and Territory in Australia.

(e) An insolvency firm which has acted as an investigative accountant, whether engaged by a borrower or lender or who has investigated a corporation or provided advisory or other services to a corporation, should be deemed to be conflicted and not be eligible to accept appointment as an external administrator of that company, whether as a liquidator, provisional liquidator, administrator, controller or receiver.

(ij ASIC should not be entitled to make policy on matters which ought properly to be the subject of legislative consideration and enactment. For example the role and limits of litigation funding in class actions and the returns which self-funded litigants are entitled to receive for outlaying legal fees on behalf of the non-contributing class members, should be the subject of legislation and regulation - not of bureaucratic fiat or judge-made law.

(g) ASIC's prosecutorial role should be hived-off to a Corporate and Banking Division of the Office of the Commonwealth Director of Public Prosecutions and ASIC should have no right to engage in "plea bargaining" at any level. Cases, when properly investigated by ASIC, should be referred to the Commonwealth OPP for prosecution and any negotiations on charges or penalties, should be left to the Office of the Commonwealth Director of Public Prosecutions.

(h) ASIC should be excluded from the role of negotiating compensation for victims of malpractice in the financial services industry and from intervening in civil litigation between parties who have independent legal representation.

{i) ASIC should refrain from bringing civil actions, other than to extract civil penalties, and only act in a prosecutorial role, where the Office of the Director of Public Prosecutions declines to initiate or maintain a criminal prosecution.

ASIC should not be permitted to bring civil proceedings where there are parallel private civil proceedings in progress, in which the parties are separately and independently legally represented.

SUMMARY

The adoption of the foregoing recommendations would have the effect of improving standards in the financial services industry, protecting unsecured creditors, promoting freedom of action and self-help by private citizens, reducing ASlC's intervention and intrusion and accordingly, would greatly reduce the burden on tax payers of high legal expenses being incurred by ASIC. Substantial economies should result.

The incidence of corporate failures would also be reduced, by imposing proper controls on the insolvency industry and cutting the cord between banks and the insolvency industry.

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KEY OUTCOMES

0) ASIC's - unwelcome and unwarranted incursions into private litigation would be minimised and public resources better deployed in the public interest.

(k) The integrity of ASIC would be fostered and ASIC's history of abject failure as a prosecutor recognised, with the prosecutorial role largely reallocated to the Commonwealth Director of Public Prosecution in a specialist Corporate and Banking Division.

(I) The importance of protecting small business in the face of corporate failures and promoting the independence and to the greatest extent possible, the integrity of the insolvency profession, would be prioritised, thereby reducing the prevalence of corruption within the insolvency industry and preventing practitioners from acting as the effective servants of banks and other large financial institutions.

(I) Indeed, a complete overhaul of our insolvency laws to bring them in line with the recovery­ focused US Bankruptcy Laws, is past due

SUBMISSIONS

(All numbers in parentheses refer to attached documents in the appended list}.

ASIC's Role and Responsibilities

According to the objects of the ASIC Act 2001, which prescribes and proscribes the ambit of ASIC's authority, under Section 1, ASIC is:

s.1(2)(a) "required to maintain, facilitate and improve the performance of the financial system and the entities within that system", while promoting

s.1 (2)(b) Mthe confident and informed participation of investors and consumers in the financial systerrl',

s.1(2)(d) "with a minimum of procedural requirements"; and most importantly, s.1 (2)(g) "ASIC must strive to take whatever action it can take, and is necessary, in order to enforce and give effect to the laws of the Commonwealth that confer functions and powers on it.• (97)

Section 11 enumerates the functions and powers which ASIC has, both under the Corporations Act and under the ASIC Act. (98)

Section 11 (4) confers on ASIC the "power to do whatever is necessary for or in connection with, or reasonably incidental to, the performance of its functions".

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Too often, ASIC perceives its role as being to impose information lockdown in order to achieve damage control or containment, so as to minimise the exposure to public scrutiny of the inner workings of important financial institutions, as if, by approaching its remit in this way, it is somehow protecting the financial system.

ASIC has overall responsibility for the regulation of financial services and corporate insolvency, with responsibility for auditors and liquidators, provisional liquidators, external administrators appointed to companies and receivers, managers and controllers.

On 21 October 2010, then ASIC Chairman, Tony D'Aloisio, was questioned by the Hon. Senator John Williams (LNP) appearing before the Senate Economics Legislation Committee, concerning ASIC's response to the banks' complicity in causing investor losses in Storm Financial Index Funds.

Rather than commit ASIC to taking whatever action it could take and deemed necessary to enforce and give effect to the laws of the Commonwealth, apropos Section 1(2)(g) of the ASIC Act, Chairman D'Aloisio adopted the "commercial approach", of ASIC's seeking a commercial settlement with the CBA, through the Resolution Scheme which CBA had devised in 2009, in the wake of its implication in the Storm Financial collapse. (33)

Mr D'Aloisio explained: "We are all trying to do the right thing by a group of investors. In AS/C's case, its ability to do that has to be independent; it has to be across the range of interests it is seeking to protect. We are doing that job and in the approach we are taking to commercial resolution, we are very mindful that, at the end of the day, in any resolution that is achieved, our own actions and how we conducted that will be subject to scrutiny by the investors, so we are very mindful of being careful in the way we are running these proceedings." (29)

With respect to the insolvency laws of the Commonwealth and ASIC's law enforcement role in the insolvency industry, there are many examples of its grave shortcomings. ASIC administers an inadequate legislative scheme, drastically in need of reform and overhaul.

So long as secured creditors have the protection of their security being preserved, liquidators, provisional liquidators, administrators and receivers should be required to act as trustees and fiduciaries for the unsecured creditors and shareholders and not just permitted - as they are now - to pander to the interests of their masters, the financial institutions who feather the insolvency firms' nests and underwrite their businesses revenue.

The Culture and the Conflict

The lack of separation between the insolvency profession and the banks has been allowed to get out of hand, in part due to the effects of the incestuous relationships between some banks, particularly the Commonwealth Bank, with certain large insolvency firms. There is a professional fraternity which

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extends right through the financial services (including insolvency) industry and into ASIC itself.

Investigative Financial Journalist, Adele Ferguson wrote on 2 May 2013: "ASIC Asleep as Insolvency Industry Worsens" (12), pointing to glaring failures in ASIC's record of upholding prudential standards in the insolvency industry. (See also, article by the author of these Submissions: "Australia's Bankrupt Bankruptcy Laws"). (27)

For business big and small, the role of the insolvency practitioner may prove crucial, a matter of commercial life or death.

A customer default under a bank loan may not only be a consequence of failure to meet interest payments or to pay instalments of principal: A loan may be for fixed term and when it expires, it may be difficult to refinance because of a fall in property values due to external market conditions or to a credit squeeze. Alternatively, a bank can say that it is not satisfied with property values, the margin between the debt and asset value or express concern over the customer's ability to continue to service a loan and then give short or inadequate notice that the bank intends to withdraw its support from the borrower.

If market conditions are generally unfavourable, this can bring about a situation where the customer cannot refinance by a bank-imposed deadline, leading to the bank appointing a receiver under a charge (if a charge were granted in the first place and registered, as is usually required by a bank, to support corporate borrowings) and making demands under the directors' personal guarantees, if given - or to the bank's appointment of an administrator under the charge, most often leading ultimately to the appointment of a liquidator.

The quinella of a receiver and a liquidator means that, on the one hand, the receiver protects the bank's security and on the other, the liquidator controls the unsecured creditors while usually preferring the interests of the secured creditor. At the very least, where a bank is the major creditor, the customer can be fairly certain that he is going to get screwed, the company stripped of its assets or the shareholders' equity seriously diluted and the directors left with a large residual debt to cover under their guarantees.

A diagnosis of insolvency results in urgent admission to the financial emergency room which, all too often in Australian practice, leads to the morgue rather than to the recovery ward. It is a disease which a customer often contracts from its relationship with a bank.

When the crisis erupts, the nature of the relationship between the insolvency practitioner and the bank is mostly determinative of the outcome, notwithstanding that the law deems a receiver appointed under a bank's charge to be the customer's agent rather than the bank's and all of the actions of the receiver, including in draining corporate assets with exorbitant fees and charges and through forced sales under the most disadvantageous conditions, to have been undertaken on behalf of the borrower.

This is so, even though the directors and shareholders reasonably believe that the company's assets are not merely being sold down but rather, that the company is being sold out.

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It follows that it is of great importance that the role of the insolvency practitioner should be subject to close regulatory scrutiny and discipline and that ASIC should be expected and properly resourced, independently to discharge its supervisory and law enforcement functions, given its statutory charter ASIC should conduct its oversight without fear or favour, as an independent statutory authority.

The importance of ASIC's perceived independence was emphasized in a letter to me from the Hon. Bill Shorten, then Assistant Treasurer and Minister for Financial Services and Superannuation, dated 30 August 2011. (1)

In assessing the performance of a statutory authority like ASIC, the organisation should not be viewed as a monolith but rather, as driven by the significant individuals who populate its ranks and also the ranks of the key industry players: the banks, insolvency firms, insurance companies and the financial planners.

The executive decision-makers in the dominant institutions which power the financial system, are themselves co-responsible for the concatenation of events which has led to the catastrophic failures by ASIC, to be considered at greater length below.

Not only is the actual and perceived independence of ASIC of paramount importance but also the quality and integrity of those who direct policy and their suitability for appointment, are also matters of particular consequence, especially where inferences are available that many ASIC executive decisions have not been made without fear or favour or hence, with requisite impartiality.

In New South Wales under the Independent Commission Against Corruption (11ICAC") Act, 1988 (107), in respect of public officials, "corrupt conducr is defined in Section 8 (I) as including:

(a) ... "any contact of any person (whether or not a public official) that adversely affects or that could adversely affect, either directly or indirectly, the honest or impartial exercise of official functions by any public official, any group or body of public officials or any public authority, or

(b) any conduct of a public official that constitutes or involves the dishonest and or partial exercise of any of his or her official functions .... ".

Synonyms for "partial" are: biased, prejudiced, partisan, one-sided, slanted, skewed, preferential, unfair, inequitable and unbalanced. Despite the Section 8 definition, unless the public official's conduct could:

(b) constitute a disciplinary offence or

(c) affords reasonable grounds for dismissing or dispensing with the services of, or otherwise terminating the services of a public official, [Section 9 (1)], then it does not fulfil the definition of "corrupt conducf'. (107)

Section 8 (5) of the ICAC Act, stipulates that conduct may still be corrupt conduct even if it occurred outside of the State of New South Wales or the matters arose under the law of the Commonwealth or under any other law.

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Nevertheless, as a matter of practice, ICAC does not investigate matters within ASIC's province, ASIC being a Federal body and having responsibility for fields reserved to the Commonwealth under the Australian Constitution.

Investigations by the Commonwealth Ombudsman's Office are largely discretionary and there is effectively no anti-corruption body scrutinising the conduct of federal agencies at the Commonwealth level.

The Australian Crime Commission, the Australian Federal Police, APRA. The ACCC and ASIO, like ASIC, all have jurisdictional boundaries, which tend to ensure that each statutory authority operates within its own terms of reference, without encroachment on each other's turf. This is also largely true as between State and Federal law enforcement agencies.

Outside of the Federal Parliament, which does not have any institutional framework for holding public officials accountable - unlike the concept of a Mspecial prosecutot', whom the US Congress can appoint (even on rare occasions to investigate presidents), there is no reliable mechanism for holding Australian Federal law-enforcement bodies to account.

CBA introduced its own Storm Resolution Scheme in 2009 which I argued and still maintain was inadequate. Levitt Robinson initiated Class Action proceedings on behalf of our clients against the CBA and its wholly-owned subsidiary, Colonial First State Investments Limited on 1 July 2010, arising out of the Storm Financial collapse and the CBA's role in it.

ASIC commenced proceedings against Macquarie Bank, Bank of Queensland and CBA only on 22 December 2010 but while launching a much broader attack on Macquarie Bank and the Bank of Queensland ("BoQ"), ASIC only alleged that CBA had been knowingly concerned in an Unregistered Management Investment Scheme (U.M.l.S.) operated by Storm Financial Limited. In fact against all

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three (3) banks, namely, Bank of Queensland (and the BoQ's North Ward Franchisee, Senrac Pty limited controlled by Matthew Buchanan and Declan Carnes), Macquarie Bank and CBA, ASIC alleged that each was knowingly concerned in an Unregistered Managed Investment Scheme, being operated by Storm Financial. However against Bank of Queensland, Senrac Pty Limited and Macquarie Bank alone - and not against CBA - ASIC alleged that there had also been breaches of the Banking Code, breaches of conduct, unconscionable conduct and liability as a Linked Credit Provider. (32), (92) and (93)

ASIC did not claim damages in any proceedings and although it continues to maintain its action against the Bank of Queensland and Macquarie Bank, late on Friday Afternoon, 14 September 2012, ASIC announced just prior to the start of the trial of its action against CBA scheduled for Monday, 17 September 2012, that it entered into a further Compensation Scheme with CBA:

The further ASIC/CBA Compensation Scheme, announced on 14 September 2012 was still inadequate and had been mainly calculated to drain support away from the Levitt Robinson Class Action proceedings which had been brought to expose the extent of CBA's role in the Storm Collapse.

The CBA had presided over the highest level of investor losses amongst Storm customers of any bank. So, why was CBA treated more leniently by ASIC than Macquarie Bank or the Bank of Queensland, given that CBA's involvement with Storm/the Cassimatises was the deepest, longest, the most extensive and we would say, the most incriminating?

CBA, uniquely amongst the banks facing Storm-related Court proceedings, facilitated the implementation of the Storm investment model by making thirty (30) year home loans to many elde~y self-funded retirees, knowing that they were acting on impaired advice from Storm, to acquire Storm Units in index funds managed by Colonial First State (the CBA subsidiary). Then, by highly gearing them with a further Margin Loan from CGI (Colonial Geared Investments), when their Storm Investment failed, they would still be left with a substantial mortgage debt which they could not service, secured against a residential property which was often of insufficient value to support the residual mortgage.

BoQ was just a home mortgage lender and Macquarie only provided margin loans. CBA covered the field .

If the Resolution Scheme was so fair and reasonable, why did ASIC still commence action against CBA, alleging its knowing involvement in an Unregistered Managed Investment Scheme?

And, why were ASIC's proceedings against the other banks so much more extensive when their involvement was less egregious?

Why, too, did ASIC say that its primary purpose in bringing the proceedings was to set a new ethical and legal bar for the bank's conduct (through its Counsel, Roger Derrington SC on 8 and 9 June 2011 , addressing his Honour, Justice Reeves) - which was why it had not brought a damages claim against CBA -then only to abandon those proceedings on the veritable eve of the trial in place of the ASIC­ Sponsored CBA Compensation Scheme, which provided nothing more for 42% of the people who had already been compensated under the CBA Storm Resolution original scheme? In other words, why did

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CBA receive special treatment from ASIC? That is a question which needs to be analysed, not only in relation to the Stonn case but in other matters, too, as this Submission proceeds.

In ASIC's announcement under 12-227MR, •ASIC and CBA reach Storm Financial Settlemenf' (92), on Friday, 14 September 2012, it is recorded:

"Subject to the Court dismissing AS/C's claim against CBA, this agreement will bring to a close, the legal action against CBA in AS/C's Unregistered Managed Investment Scheme proceeding which were brought in the Federal Court of Australia in Brisbane in December 2010. Today's agreement was reached as the culmination of discussions between CBA and ASIC about whether it was appropriate to provide additional compensation, over and above that already provided under the CBA Resolution Scheme, and was reached without any admission of liability by CBA. ASIC will request the Courl to dismiss its proceedings against CBA and the agreement will become effective upon that occurring".

On Wednesday, 29 May 2013, ASIC made another settlement announcement (93). It had separately brought proceedings on behalf of Barry and Deanna Doyle in which it alleged against the Bank of Queensland, Senrac Pty Limited (the BoQ's North Ward Franchisor) and Macquarie Bank, that these banks had breached their contracts with the Doyles, engaged in unconscionable conduct and were liable as Linked Credit Providers of Storm (none of which allegations had been made by ASIC against CBA). ASIC had identified the Doyles as among the most extreme examples of persons exploited under the Storm-Bank Model of stepped borrowing against their assets to invest indirectly in the stockmarket, without regard to risk or serviceability. On the eve of the trial, ASIC again forfeited an opportunity to make an example of the banks and settled the Doyles' claims "without admission" and with "terms not to be disclosed', other than as to the amount of the settlement. (93)

No ASIC civil prosecution has been initiated against Matthew Buchanan or Declan Carnes, who, through Senrac pty Limited, owned the North Ward (Townsville) Franchise and have been responsible for 267 out of 319 of the Storm home loans. In many cases there has been admitted back-dating of loan applications and the manipulation of client data entry by BoQ bank officers to engineer computer-generated loan approvals, which otherwise would have been withheld (15). Carnes and Buchanan continue to operate the North Ward Franchise of BoQ, to this day, with impunity - thanks to ASIC. Since November, 2011, the BoQ's Managing Director and CEO has been Stuart Grimshaw, formerly the CBA's CFO and Group Executive in Wealth Management, with senior responsibility for calling up the CGI Margin Loans to customers of Storm Financial, in late 2008. (31)

While under Section 1 (2) (g) of the ASIC Act, ASIC is compelled to "take whatever action it can take, and is necessary in order to enforce and give effect to the laws of the Commonwealth that confer functions and powers on if', such "without admission" settlements are not being negotiated by ASIC in discharge of that statutory duty (97). ASIC's unilateral and high-handed acceptance of discounted compensation for victims in exchange for what is effectively a pardon or condonation from ASIC, involves requiring the victims to take "blood money", while the culprits - often large banks and public companies - are excused from effective action being taken against them to make them fully accountable at law, either civilly or criminally.

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ASIC does not so much seek to enforce and give effect to the laws of the Commonwealth which, according to Section 1 (2) of the ASIC Act, "ASIC must strive to (do)", but rather, ASIC cuts deals which actually stymie or stultify effective law enforcement.

The Australian Financial Review reported, on 22 October 2013, comments by Victorian Appeals Court Judge Mark Weinberg who had presided over ASIC's civil case against AWB Chief Financial Officer, Paul lngleby, admonishing the regulator that "The task of sentencing should never be reduced to one of 'rubber stamping' deals done in secret (by ASIC)". (95)

While the ASIC litigation against the CBA was in train - ultimately settled by ASIC with CBA as announced late on 14 September 2012 (92)- before the ASIC v CBA trial had commenced - (which had been long scheduled to start on 17 September 2012), ASIC had outsourced substantial legal work to CBA's lawyers in those proceedings: Clayton Utz of Sydney.

ASIC's litigation against the CBA over Storm was commenced on 22 December 2010, and Clayton Utz of Sydney was appointed by CBA to defend the action. However, all this was underway while the following contracts were outsourced to Clayton Utz, Sydney by ASIC, as referred to in AusTender Contract Notice View:

1. Contract No. 396745 for $37 .925.00 (legal services to be provided between 1 January 2011 and 31 December, 2011). That Contract commenced to run just one week after the ASIC proceedings were commenced against Clayton Utz's clients, CBA and Colonial First State;

2. Contract No. 371343 for $70.000.00 was awarded to Clayton Utz, Sydney for the same period, 1 January - 31 December 2011 ;

3. Contract No. 764381 for $1.288,502.00 was issued for the period commencing 7 June 2012 Oust over three (3) months before the announcement of a settlement between CBA and ASIC) - 30 June 2013; and

4. Contract No. CN338835 for $150.286.00, which ran for the period 1 December 2009 to 30 June 2011 (reiterating that the proceedings between ASIC and the CBA were officially on foot from 22 December 2010 to 17 September 2012).

(This was no new relationship. A single contract for legal services between ASIC and Clayton Utz, Sydney, running from 1 October, 2007 to 30 June, 2009 described as "Extension of Contract for Legal Services• was for $12,091,317.00, to be paid to Clayton Utz, Sydney by ASIC - just one more ASIC­ Clayton Utz, Sydney retainer among several in the period).

All these contracts were contemporaneous with ASIC and CBA, through Clayton Utz, Sydney, from the outset, appearing as opponents in Federal Court Proceedings in Brisbane, over CBA's role in causing losses to its Storm Financial customers.

What conflict of interest? ASIC and CBA must have considered their interests to be closely aligned.

On the one hand, an extensive solicitor/client relationship was being maintained between Clayton Utz, Sydney and ASIC throughout the entire period of the Storm litigation, and all the while they were

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Page 11 outwardly acting as if they were opponents and adversaries in the Federal Court of Australia at Brisbane and in their media releases.

Bear in mind, ASIC did not outsource the conduct of the Storm CBA litigation, so in the Federal Court, it was just ASIC "fighting' its own lawyers, Clayton Utz, Sydney - representing CBA and Colonial First State.

The impression that ASIC's action against the CBA was just a chimera rather than a genuine attempt on the part of ASIC to vindicate consumer rights against the CBA, is hard to avoid.

ASIC's behaviour is to be contrasted with the way in which the US Regulator has settled consumer claims.

It was reported on 20 October 2013: "JP Morgan set for record $13 billion settlement with US Justice Departmenf'. The description of the claims against J P Morgan "that it mis-sold bundles of toxic mortgage debt to investors in the build up to the financial crisis", resonates with Storm investors in Australia and other victims of the irresponsible marketing of investment schemes here, which incorporated home mortgages as part of the package and afflicted ordinary consumers of financial products, in the lead up to the GFC.

According to the J P Morgan article which appeared in London's Daily Telegraph and was reprinted in the Sydney Morning Herald, a broader investigation by US Authorities into the financial service industry's mortgage activities in the years before the crisis of 2008 remains ongoing. Banks, including Societe Generale, are alleged to have lied about the quality of the sub-prime mortgage securities sold to investors at the time. According to the Telegraph report, $4 billion is to be paid to help mortgage customers and $9.2 billion is to be paid by J P Morgan in fines and penalties.

Notwithstanding the magnitude of this "interim (JP Morgan) deaf with the US Justice Department, a criminal investigation into J P Morgan's selling activities is described as being ongoing with the rider that "That case may result in charges against individuals and an increase in the fine". (94)

Clearly, the US Justice Department takes a far more robust and uncompromising view of its statutory duty to enforce and give effect to the laws of the United States than ASIC does with respect to the laws of Australia. No prosecution of any individual employed by any bank arising out of maladministration or for misdemeanours committed during the lead up to the GFC has been brought by ASIC and even ASIC's prosecution of the Cassimatises, the guiding minds, of Storm Financial Limited, is a civil rather than criminal prosecution, in that no term of imprisonment could be imposed even upon conviction and the case against them has still not been heard, five (5) years after the most recent material event.

ASIC's failures cannot be blamed on budgetary constraints, given ASIC's apparent profligacy in the deployment of public money spent on, or in outsourcing legal services.

For example, according to the Australian-Attorney General's Department Legal Services Expenditure Report 2011/2012, ASIC was second only to the ATO and ahead of the Defence Department and the Immigration Department in its expenditure on legal fees, exceeding $80 million in both 2009/2010 and 2011/2012 and topping $300 million over the four (4) years from 2008 to 2012. Almost $30 million in

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2009/201 O involved external expenditure on legal fees and in excess of $30 million was spent on outsourcing in 2009/2010. (5)

Much of that money was devoted to commencing or conducting litigation which went nowhere and which effectively doubled-up on private Class Actions which had already been commenced, for example with regard to the Storm Financial deMcle.

Enormous amounts were expended on legal fees by ASIC in intermeddling in private settlements between litigants in commercial disputes and albeit that those commercial disputes came within the province of ASIC's field of responsibility, the parties neither needed nor sought ASIC's assistance, which came as an unwanted intrusion.

For example, in the matter of Richards v Macquarie Bank, ASIC succeeded in overturning a settlement freely reached between the Applicant and Respondent and approved by His Honour Justice Logan in the Federal Court of Australia, with ASIC's main discernible objective being to provide a fillip to the Litigation Funding Industry and to discourage competition from self-funded consumer victims.

It takes one to know one

It is remarkable that ASIC's focus was so diverted, given the far more pressing and momentous corporate failures and suspected felonies which ASIC, over the same period, clearly failed to address. Given his personal background, ASIC Chairman, Greg Medcraft's experience as Managing Director and Global Head of Securitisation at Societe Generale Corporate and Investment Banking, may make him particularly sensitive to the kinds of investigations and forensic rigour which seem to be avoided by ASIC, disposing him to prefer deal-making and imposed settlements to curial scrutiny of corporate and banking misdemeanours.

Jn an interview when Greg Medcraft was appointed to replace Tony D'Aloisio as Chairman of ASIC, it was reported that "Questions (were) being asked over ASIC Chiefs previous role" (77). According to Nick McKenzie, Richard Baker and Simon Mann, writing in the Sydney Morning Herald on 11 November 2011, since Greg Medcraft "was handpicked by the Gillard Government this year to chair the Australian Securities Commission, taking up his "$700,000.00 a year postin May 2011.. ... (77)

"It has since emerged that Societe Generale, a French Bank with which Mr Medcraft held a senior role, is being pursued by the US Government over massive transactions involving sub-prime home mortgages in the lead up to the Global Economic Crisis". (77)

In September 2008, the US Government stepped in to bail out the nearly bankrupt American International Group ("AIG") with $182 billion from US tax payers: Of that sum, $22.6 billion was paid to three (3) banks: Societe Generale, Galyon (both of France) and the Bank of Montreal, with the majority - $16.9 billion - going to Societe Generale. (79) and (80)

This was despite the fact that when interviewed on 20 March 2007 (76), by Matthew Smith and based in New York - and still Managing Director and Global Head of Securitisation at Societe Generale Corporate and Investment Banking, Medcraft had stated:

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"In our Consumer asset-backed securitisation business, we provide warehouse financing to mortgage lenders and in the RMBS ("Residential Mortgage Backed Security") principal businesses, we acquire and securitise sub-prime mortgage pools ...... We're fortunate because our exposure to the sub-prime residential mortgage market is relatively small, thanks to good risk-management checks in place". (76)

Of the three (3) named foreign banks, Societe Generale was, by 15 March 2009, the recipient of the greatest payout made possible by the US Emergency Economic Stabilisation Act. 2008, using US Government-sourced tax payer funds. (80)

So much for Mr Medcraft's boasts at the end of his interview by Matthew Smith on 20 March 2007:

Q: How about you, personally, you have lived in New York for a while now, any plans to head back to Australia?

A: "I've been based here for the past eight (8) years and doing things I couldnY do if I was in Australia, like leading a global business. I could be based in London, Paris or New York; the European securitisation market is growing but the US market is still the biggest. I plan to go back to Australia at some point - Australia is a sophisticated market - but I am enjoying it here at the moment, I plan to take it one (1) year and one (1) bonus at a time". (Source: Matthew Smith, Alessandra Dias). (76)

Just three (3) years earlier, as the Sydney Morning Herald reported on 11 November 2011, in 2004, Mr Medcraft was named in a sex discrimination lawsuit in which it was alleged that he had approved $4,000.00 to pay for Societe Generale clients to attend a strip club, had commented on a woman's legs and discriminated against a female employee. The suit was "confidentially settled in a New York Court and the plaintiff, a female employee, received a modest payour. (77)

Mr Medcraft was reportedly not the subject of an adverse finding and told the journalist: ... .. "all claims against him had been withdrawn, that the bank 'made a contribution to the plaintiff's legal fees"' but that a confidentiality clause stopped Mr Medcraft from commenting further. (77)

So ASIC's continuing predilection for settlements providing for "terms not to be disclosed' and made "without admissionn, may have its roots in the personal experience of ASIC's leadership. (92) and (93)

The selection process for "the top dogs" of the "watch dog" should be more rigorous and transparent. Upon the premise that "birds of a feather flock together'', to the maximum extent possible, senior appointees should not come from the ranks of professionals who have enjoyed confidential relationships with the organisations and enterprises which they are most likely to be expected to police or investigate, after appointment to a senior role in ASIC.

According to Nick McKenzie, Richard Baker and Simon Mann, writing on 11 November 2011 , following the announcement of Greg Medcraft appointment as ASIC's new Chairman, the then Opposition seized on revelations that Mr Medcraft had been a former ALP member, and that the role of Chairman of ASIC had not been advertised - allegedly in breach of Labor's election policy about how senior public servants were to be appointed. (77)

On 16 December 2011, Adam Schwab in "Crikey.com", commented on Mr Medcraft's appointment: "It appears that when making critical public appointments, the current government (the Gillard Labor

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Government) is not one for conducting lengthy due diligence. When it had appointed Medcraft, a former member of the Labor Party, the Prime Minister granted him a specific exemption from its policy on 'open and merit based' senior appointments." (2)

ASIC Chief Legal Officer, Michael Kingston, a former Victorian Barrister who practised in the areas of banking and finance, commercial law, companies and securities, prior to that, had been a partner in the Mergers & Acquisitions Group at Mallesons and, until July, 2003, had worked on numerous large transactions. (30)

In his previous roles, it can only reasonably be assumed that Mr Kingston's clients would have been large public companies, banks and have fallen squarely within the class of persons over whom ASIC is required to exercise prudential oversight, to investigate and even at times, to consider prosecuting and to prosecute.

Demonstrating consistency in giving most favoured status to CBA representatives, on 24 November 2010, Minister for Financial Services and Superannuation, Bill Shorten, announced the composition of his new QFinancial Advice Advisory Panef to include ASIC Commissioner, Greg Medcraft, at the head of the list, followed by Brian Bissaker, Chief Executive Officer of Colonial First State Investments Limited, CBA's subsidiary (who had held that office when it is contended that the Colonial-Badged Storm Index Funds were unlawfully terminated by Colonial First State in December 2008), nominated just behind Mr Medcraft. Colonial First State, is a wholly-owned subsidiary of the Commonwealth Bank of Australia. (Bissaker has since accepted a redundancy package from CBA).

Adding to the impression of the absence of neutrality between ASIC and CBA, is the fact that, in Brisbane, the entire 20th floor of the Commonwealth Bank Building, at 240 Queens Street, Brisbane, is occupied by ASIC, as CBA's major tenant.

How would Storm Investor witnesses have felt, attending ASIC's Brisbane offices to make statements between 2009 and 2012, in many cases to testify against the Commonwealth Bank, when they had to travel to the 20th level of the Commonwealth Bank Building. to do so?

How would they have felt, too, had they known and understood that ASIC had directly instructed the CBA's own lawyers in the Storm proceedings, Clayton Utz of Sydney, to act for ASIC in a range of matters and had committed to paying them around $1.7 million in legal fees to work for ASIC, while the Storm proceedings were underway?

The unfortunate impression that , was exacerbated by the article which appeared by Adam Schwab on www.crikey.com.au on 16 December 2011: "ASIC boss rubs shoulders with the business elites" (2), referring to ASIC Chairman, Greg Medcraft's attendance at a function at the private residence of John Symond (the one time battler who narrowly avoided bankruptcy in the 1990's and went on to grow a fortune worth about $600 million), attended by News Limited boss, Kim Williams, Seven Director, Bruce McWilliam, Macquarie Group's Nicholas Moore and CBA's CEO, Ian Narev, among the captains of industry and big business. John Symond had founded Aussie Home Loans in which , by May 2013, the Commonwealth Bank of Australia had increased its stake from 33% to 80% (and has since announced

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its intention to move eventually to 100% ownership). John Symond remains the Executive Chairman (2).

At this point it is instructive to consider the prevailing culture in the insolvency industry and how ASIC, through the personalities in its leadership and their common affiliations with insolvency practitioners and bankers, toes the line with the institutional and corporate oligarchs, who continue to exert a strong influence on the way in which ASIC executives behave in setting ASIC's priorities and inducing its failures.

I intend to shed light on why decisions are so often made by ASIC to do nothing and why ASIC too often, uses politics and public relations as a substitute for real action, often looking for headline­ grabbing short term fixes rather than enforcing the law as is its bounden duty, without showing favouritism or discrimination

PPB over the past several years, appears to have been the CBA's favourite source of liquidators. A review of key PPB executive profiles derived from Linked In, reveals the following: , Sydney was previously a solicitor in the Legal Department of the CBA. (37)

, joined PPB Advisory in November 2012, heading the Property and Construction National Team and was immediately prior, the Head of Property at CBA. (38)

, moved in the opposite direction, from being for a period of ten (10) years, a director of PPB Advisory in Adelaide, to becoming a Senior Legal Counsel at the CBA in Adelaide. (39)

an official liquidator moved to PPB Advisory's Brisbane Office as partner, having previously been a partner at Grant Thornton in Sydney (also a firm of insolvency practitioners) and prior to that, Head of Client Relationship Management, (NSW) for the CBA. (40)

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at PPB Advisory, Brisbane, was previously a Relationship Banker at the CBA. (41)

, a director of PPB Advisory has in excess of ten (10) years' banking and finance experience including roles with GE Capital, St George Bank and the CBA. has also been the lead PPB director in the Trio Capital liquidation including transitioning ten (10) managed investment schemes ($300 million in funds under management) to a new Responsible Entity, administering the winding-up of the five (5) managed investments that had exposure to problematic assets, including Australia's largest superannuation fraud and assisting relevant authorities with criminal charges against those involved. (42)

, at PPB Melbourne Australia was previously a manager of the CBA. (43)

at PPB Advisory, Melbourne was previously Financial Planner at Colonial First State (a wholly-owned subsidiary of CBA) and prior to that, participated in the CBA's Graduate Program. (44)

Corporate Recovery and Turnarounds at PPB Advisory, was previously a Customer Service Representative of the CBA. (45)

What impact does all this cross-over have?:

ASIC's role with respect to the Trio Capital failure was one of the catalysts for the current inquiry into ASIC, launched by the Australian Senate. According to Ben Eltham writing in New Matilda.com on 25 June 2013:

11After one too many high profiles bungles, the Senate has launched an inquiry into the Australian Securities and Investment Commission." (46)

He continued:

"Remember Trio Capital? One of Australia's largest frauds. Trio Capital was a vehicle for syphoning superannuation investments to offshore bank accounts in the British Virgin Islands, where the money disappeared forever. All told, according to the Parliamentary Inquiry into the affair, investors were fleeced of at least $176 million." (46)

In August, 2011, frontman for Australia's largest superannuation theft, Shawn Richard, former CEO of Trio Capital, was sentenced to a minimum of 2 years and 6 months in jail in the NSW Supreme Court for his role in the disappearance of $26.6 million from Albury Fund Manager, Trio Capital. (47)

The sentencing judge, His Honour Justice Peter Garling, accepted at the sentencing hearing that Mr Richard was acting on instructions from Jack Flader, whom ASIC had called the "ultimate control/et' of the fraud. (47) and (48)

In June, 2013, ASIC decided it did not have enough evidence to proceed against Flader. ASIC delayed commencing its investigations, it failed to liaise properly with the Australian Federal Police and with the

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Australian Prudential Regulation Authority ("APRA"), according to Elthan ~ which meant precious months were lost. The Senate Inquiry found that (47):

"When ASIC commenced its active surveillance of [Trio] in June 2009, it did not seem aware that Trio was not providing the prudential regulator [APRA] with basic facts about the existence of assets and their values." (4 7)

Of greatest concern are Eltham's following comments:

"ASIC may know more than it is letting on. Troublingly, the Commission has signed a confidentiality agreement with Trio's liquidator, PPB, which means it has access to approximately 6,000 found documents for one of Jack Fladers companies, Global Consultants and Services Limited, which was listed as the custodian of Trio's funds and of which Flader was the CEO. Trio's victims, who have formed a fighting group called the 'Victims of Financial Fraud', are pursing the release of those documents against ASIC. " (47)

Similarly, ASIC has tried to suppress information concerning ASIC's grant of exemptions from filing company reports to some liquidators and administrators. (28)

All this has to be seen in th~ light of the culture of PPB which is effectively an ASIC/CSA hybrid.

Rupert Smoker, Head of Responsible Entitiy Service for The Trust Company, wrote to investors with respect to the Trio Diversified Funds on 7 March 2012, referring to the Senate Committee's interim report and specifically, to the following issues which emerged from the interim report namely:

• "The capacity of tha financial services regulatory regime to deal with international fraud;

• "The extent to which gatekeepers, including auditors, custodians, research houses and financial planners, have failed. This is particularly in light of comments made by Greg Medcraft, Chairman, ASIC that "This particular crisis - what happened in Trio and ARP - is a good example of what I think is gatekeeper failure. It does start with the responsible entities: the directors and the executors of the responsible entities, the investment manager, the compliance committee, the compliance plan audi~ the research houses, the custodians, the advisors." (49)

Additionally of relevance is the critical role played by Responsible Entities.

Commonly, when CBA is calling up its customers' loans, it appoints KordaMentha as the receivers and seeks the appointment of PPB as the liquidators or- with PPB starting as administrators, appointed by CBA under a charge in favour of CBA.

This duo is a typical CBA insolvency combination.

As alluded to earlier, the role of the insolvency practitioner may be either compared to that of a mid-wife or of an abortionist, depending upon the instructions received from the appointor, usually the bank.

On 28 October 2010, CBA applied to the Courts for PPB Advisory to be appointed as administrators for the ten (10) companies comprising The Willmott Forests Group, who operated a managed investment

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scheme comprising over 6,500 grower/investors and over 50,000 hectares of land. Michael West in his article, "Liquidators' Grayy Train Rolls Along" (54), written 29 October 2012, summed the situation up well:

"In the demise of plantation company, Willmott Forests, the Commonwealth Bank had funded 80% of the growers in the various Willmott Schemes. Few made money out of Willmott, save the promoters and the professional advisers. And when it bit the dust, the banks appointed KordaMentha and the directors appointed PPB. Fees cradle to grave.

"Commbank went to the creditors' meeting and didn1 like the fact that Willmott had appointed its own administrator. So the bank objected and used its sway - at the creditors' meeting you can use the full amount of your debt rather than the value of your security to vote - and went for PPB. Next thing you know, Arnold Bloch Liebler, supposedly independently, became of the view the Banks ought to rank before growers in the sale of Willmott's land".

"How many major claims have been brought by major liquidators against major banks? It doesn't happen, say industry insiders." (54)

Michael West, after citing a signal exception, then concluded with startling insight: "Save on these rare occasions, though, the hard questions go unasked, the hard deeds never get done, the prospective claims are left to wilt and the merry-go-round of KordaMentha as receiver and PPB as liquidator- and vice versa-proceeds apace". (54)

There are many other examples: Peter Hemphill, in April 2013 wrote "Two more large-scale dairying operations in south-east Australia have fallen victim to financial strife", referring to PPB Advisory's appointment as receiver of Pedra Branca Dairying Pty Limited and Hines Dairy Farm Limited by CBA, in the "Weekly Times". (56)

The appointment of PPB Advisory as receivers and managers of the Healthzone Group immediately following their appointment as administrators on 17 November 2011 was preceded by CBA's appointment of PPB Advisory as investigating accountants, in early September 2011. (57)

It is certainly not rare for the investigating accountants to recommend to the client's lending bank, their own appointment to an insolvency administration role, with all of the rewards and perks that such appointment can bring to the practitioners involved and for their firms.

A case in point was Ernst & Young's (EY) appointment as Receivers to the Moltoni Group in Perth, by Westpac/St George when EY had not only acted as investigative accountants for the Moltoni Group but had even acted for the Moltoni Group to refinance the Group away, from ANZ to St George Bank before it was taken over by Westpac in 2008.

Then there was also the situation of PPB Advisory being appointed as investigative accountants to look at CBA's exposure to City Pacific as Responsible Entity for the Pacific First Mortgage Fund, which suffered impairment losses of more than $500 million, and a halving of the unit price to investors, whose funds remained frozen.

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Michael West wrote on 21 November 2011 in the Sydney Morning Herald that "When Ansett's balloon went up, KordaMentha's star rose," {61) and it is true.

KordaMentha has drawn on the resources of ASIC, hiring Glen Unicomb (60) as a permanent Senior Consultant at KordaMentha, joining the firm in January 2012 after more than 30 years' regulatory experience with the Australian Securities and Investments Commission and its predecessors.

Michael West reported that Ansett was probably the biggest and almost certainly, the most profitable insolvency in Australian corporate history, which "shot Mark Korda and his partner, Mark Mentha to stardom on the liquidators' scene" (61).

According to West, "An investigation by Business Day ... has found the Australian Securities and Investment Commission cannot explain why eight (8) years of audited financial accounts for the Ansett Group are missing. ASIC says it issued a financial reporting exemption covering the other two (2) years of this ten (10) year administration." (61)

KordaMentha has counted TimberCorp Westpoint, Griffin and Frigrite among its array of lucrative insolvencies.

It is not surprising that the Griffin administration involved ANZ and the CBA as the major secured creditors of the Griffin Group which included Griffin Coal.

Not surprisingly the TimberCorp Group of companies again involved the CBA as a major secured creditor and, with respect to the TimberCorp Group of companies, KordaMentha, upon its appointment as administrators of TimberCorp, provided a "Declaration of Independence, Relevant Relationships and Indemnities" disclosing that it had, had relationships with the listed secured creditors, due to the nature of its business but contending that none of those relationships would give rise to a conflict in its undertaking the administration of the TimberCorp Companies. (64)

If indeed, "the proof of the pudding is in the eating," then PPB and KordaMentha have eaten a lot of pudding for which the CBA has provided the ingredients.

An application on behalf of KordaMentha as liquidators of TimberCorp Securities Limited, TimberCorp Limited and the TimberCorp Group of Companies, in which ASIC was recorded as being quiescent, seeking the Court's approval for the CBA being paid out before the unsecured creditors could get a look in, was approved, as recorded ••1n the matter of TimberCoro Securities Limited On liquidation) & Others", by His Honour Justice Pagone, in matter number 9299 of 2009 in the Supreme Court of Victoria at Melbourne [20091VSC597. (65)

In June 2013, in Queensland Country Life, Jonathan Barrett wrote of financiers seizing one of the country's biggest urban estates, boasting five (5) residences, a polo field, two helipads, a private airfield, river, dam and large agricultural grounds, all as part of the bounty from the Griffin Coal empire, tied to Ric Stowe and the collapsed, Griffin Coal. The new "owner of the estate, the Commonwealth Bank of Australia" and receivers, PPB Advisory, had been trying to sell the famous estate for more than 3 years. (63)

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As mentioned above, KordaMentha had been appointed administrator to six (6) Griffin Group companies. KordaMentha had also worked with PPB on behalf of CBA and St George Bank in disposing of the assets at Willmott Forests. (62)

When in December, 2008, CBA proceeded with the acquisition of BankWest from the Royal Bank of Scotland (HBOS) pursuant to an earn-out contract, which meant that CBA paid a price adjusted to the extent by which it could write down BankWest's Loan Book, KordaMentha and PPB were among the big winners, gaining multiple appointments from CBA to take-over its customers' assets.

KordaMentha as receivers and managers for the Commonwealth Bank (BankWest was ultimately subsumed within the Commonwealth Bank), sold the RaineSquare Development, to Charter Hall. (69) RaineSquare, located in the heart of the Perth CBD, includes approximately 45,000 square meters of commercial office space leased to BankWest. The development was placed in receivership in January 2011 and KordaMentha then completed the construction of the complex, co-ordinated and initially held back the leasing of the retail centre and led the asset management of the complex through to sale, granting its benefactors, CBA/BankWest, the anchor tenancy, all upon the premise that as receivers, KordaMentha were the agents for the borrower and not for the bank!

All this, while the dispossessed RaineSquare developer, Luke Saraceni was litigating against BankWesUCBA, inter alia alleging that KordaMentha had not been validly appointed. Then, ASIC, in a pincer movement with CBA instigated a public examination, with Saraceni as an examinee. (70)

Yet ASIC had taken no effective action to investigate the circumstances of CBA's acquisition of HBOS, despite the still raging controversy surrounding the questionable loan impairments which followed it - and CBA's motivation behind them.

ASIC also failed to bring any charges against anyone in Colonial First State Investments Limited ("Colonial") (CBA's wholly-owned subsidiary) or against the corporation itself, as it could have done, under s1311 of the Corporations Act 2001, in respect of Colonial's breach of the preMrequisites for the terminations of the Colonial-Badged Storm Index Funds, which occurred in December 2008, at a time when former Colonial First State CEO, Brian Bissaker was still at the reins. Bissaker could not have made the decision to terminate the Storm Funds without the full involvement of the Board of CBA, who needed to recall and access CGI Margin Loan funds quickly, including to fund the initial BankWest downpayment of $1.86 billion, due within ten (10) days. (24)

My memorandum written on this matter dated 9 January 2012 entitled, "Unlawful Termination of Colonial First State Storm - Badged Index Funds - The connection between the termination of the Storm Funds and the acquisition of BankWest by CBA," is attached (23), together with a Preliminary Opinion obtained from Mark Friedgut of Counsel in relation to a potential claim against Colonial First State Limited for wrongfully terminating the Storm-Badged Index Funds, of which they were the Responsible Entity (Paragraph 14 redacted). (25)

Paul Cleary's article publishing in the Australian on New Year's Eve, 2011: "Don't bank on it: how ASIC failed to land a killer blow on the CBA", is illuminative. (24)

It is not as if ASIC did not know what to do. ASIC has interceded in other similar circumstances - albeit, too late: for example, with respect to Trilogy (See attached copy of the decision of his Honour

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Justice Dalton in RE Bruce et anor v LM Investment Management Umited et ors [2013] QSC 192 (26) and in particular, on page 9), where ASIC intervened with respect to the approach to be taken to the termination of r.ertain funds, and the substitution of an interim responsible entity.

Publically, ASIC played no role in the termination of the Storm funds and has made no public statement concerning the unlawful terminations by Colonial/CSA. Not only did Colonial give no advance notice of the terminations to the Funds' members, who were entitled to such notice under the Corporation Act but additionally, the termination did not conform to requirements of the Funds' own Constitutions and no reasonable opportunity was given to the members to have another responsible entity substituted for Colonial; nor was any application made to the Court by Colonial or ASIC for exemption from any of the statutory and constitutional/contractual legal obligations owed by Colonial to Funds' members with respect to a termination proposal

Not surprisingly, the main creditor of Storm Financial Limited, the CBA, appointed KordaMetha to be receivers and managers of Storm Financial on 15 January 2009. (66)

A further Declaration of Independence was provided by KordaMentha (67) in relation to its appointment as Receivers and Managers of companies in the CRI Group, declaring relevant relationships with the CBA over the 24 months preceding the 7 October 2008. The declaration incorporates the following paragraph:

"As can be seen from the above, KordaMentha has an ongoing relationship with the Commonwealth Bank as part of its business. However, these relationships are generally governed by regulations and are conducted on a professional basis". (67)

It beggars believe that such extensive relationships could be maintained without affecting the impartiality of an insolvency practitioner, whether or not governed by regulations and irrespective of whether an insolvency practitioner was also an offir.er of the Court.

There is persistent evidence that ASIC fails the ICAC test, namely, that public officials in the service of ASIC are frequently engaging in conduct that constitutes or involves the partial exercise of their official functions (Section 8 (1) (b)) which could constitute or involve reasonable grounds for dismissing, dispensing with the services of, or otherwise terminating the services of the public officials. (9 (1) (c) of the Independent Commission against Corruption Act 1988 (NSW)).

It is also contended that some of the conduct of ASIC officials constitutes or involves a breach of public trust (Section 8 (1) (c)) or could adversely affect, directly or indirectly, the honest or impartial exercise of official functions by a public official or public authority (Section 8 (1) (a)).

We would contend that the record speaks for itself.

There are a large number of instances that have been cited, which cast doubt on ASIC's diligence and competenr.e. They must be seen in the light of ASIC's antecedent relationships, and the way in which ASIC approaches its role. Tony D'Aloisio impliedly admitted in his Senate testimony on 21 October 2010, that ASIC is constrained in its attempts to "do the right thing" by the need for it "to be across the range of interests it is seeking to protecf'. (29)

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The question may well be asked, what interest was ASIC seeking to protect when having admitted to the Senate in June 2013 that between 2006 and 2009, standards at CBA's financial planning arm were "considerably below what was required', ASIC had failed to take any effective or adequate action against CBA over the matter? (8) and (9)

Deputy ASIC Chairman, Peter Kell was being questioned by the Senate on Fairfax Media's allegations that "CBA had concealed improprieties by Financial Planner, Don Nguyen, who once controlled about $300 million in retirement savings on behalf of at least 1,300 clients". (Misprison or concealment of a serious criminal offence, is itself a serious criminal offence). (8) and (9)

According to the allegations, Mr Nguyen, who has been banned by ASIC for seven (7) years, allegedly forged clients' signatures, created unauthorised investment accounts and overcharged (acting as a financial planner} on fees. Some clients lost more than half their life savings, forcing them to seek help from Centrelink as they battled the CBA for compensation. ASIC was crWcised by Senator Doug Cameron (Labor NSW} for only seeking a seven (7) year ban against Mr Nguyen, which meant that he could once again, act as a Financial Planner in 2018. (8) and (9)

This comes back to Victorian Supreme Court of Appeal, Judge Mark Weinberg's criticism of ASIC's interpretation and purported implementation of the requirement under Section 1 (2) of the ASIC Act, that ASIC must strive to take whatever action it can take to enforce and give effect to the laws of the Commonwealth (Section 1 (2) {g) of the ASIC Act}, when His Honour commented: "/ mean no disrespect to ASIC when I say that despite its expertise in Corporate Regulation, I very much doubt that it is fully across all the intricacies associated with punishing those who commit offences against the Commonwealth" (95). His Honour highlighted the recent criticism of ASIC for "its failure to have responded adequately to a series of allegations arising out of the bribery of foreign officials" (95). His Honour emphasised that "the task of sentencing should never be reduced to one of 'rubber stamping' deals done (by ASIC) in secrer.

On 19 June 2013, prior to Deputy Chairman, Peter Kell's testimony, Malcolm Maiden (7) in the Sydney Morning Herald referred to the Nguyen affair, claiming "ASIC let CBA off far too lightly by extracting only an enforceable undertaking in October 2011. It could have opted for tougher action that sent a message to the advisory industry that improper or illegal behaviour that enriches advisers at the expense of clients would attract significant penalties. It was also slow to react or at least from the outside, appears to have been. Almost a year-and-a-half passed between AS/C's first contact with a CBA whistleb/ower and the final elevation of the matter to a serious investigation in March 201 (J'. (7)

ASIC has also been criticised because it did not look to investigating possible associated corporate offences that may have been committed in the context of allegations brought to ASIC's attention by the Australian Federal Police in 2011, based on information received from US Anti-Corruption Investigators that BHP Billiton employees and consultants had made improper payments to officials in China, Cambodia and Western Australia. (46)

While ASIC's inaction and failures are sometimes explained by ASIC's as having too much on its plate, it appears that it is only because it chooses to be distracted by trifles and in pursuing its own errands, while missing the main game.

Its recent forays, interfering with civil actions between class representatives and banks and taking matters on appeal in order to foster the interests of the Litigation Funding Industry are cases in point -

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while trying to make law in furtherance of its quest for omniscience, and diverting resources away from performing its most vital functions, namely, to take whatever action it can take and is necessary, to enforce and give effect to the laws of the Commonwealth (Section 1 (2) (g) of the ASIC Act).

What if anything, has ASIC done to investigate whether there were Corporation Law breaches committed in the context of CBA's allegedly being involved in laundering money siphoned off by corrupt PNG politicians and officials into Australian companies?

On 27 August 2013 on "Today Tonight" (10), it was alleged that in July 2009, $45 million (K96m, PNG), was deposited at the Lismore Branch of the Commonwealth Bank into an account owned by a company, Woodlawn Capital. The money is alleged to have represented the proceeds of a loan advanced pursuant to a transaction which was illegal in PNG. PNG Minister, Arthur Somare, son of former PNG Prime Minister, Sir Michael Somare, pointed the finger at the CBA in Lismore, (who received the $45 million) stating:

"There's such a thing called due diligence and I would have expected that during a due diligence process, someone would have given us a call'.

A CBA spokesman responded:

"We can confirm generally, that the bank systematically reviews transactions including those of significant va/uen. (10) and (11)

Inevitably, ASIC will accept CBA's explanation at face value, notwithstanding that "It is not known whether either Woodlawn Capital or the Commonwealth Bank did any due diligence on where the money was coming from and whether it was the proceeds of crime. It is also not known how or why the K96 million did not attract the attention of the Australian Anti-Money Laundering Agency (AUSTRAC)". {10) and (11). According to the on-line news service "pngexposed.wordpress.comH the "Commonwealth Bank could be vulnerable to a civil lawsuit if it can be shown that they have handled stolen wealth and administrative measures and even criminal prosecution, if they have failed to practise proper due diligence on anti-money laundering grounds". (11}

On 6 September 2013, it was reported in the Sydney Morning Herald by Business Columnist, Adele Ferguson, that ASIC was "red faced' over "The "Opes Prime verdicf' (6). It appears that ASIC, having plea bargained with his two (2) co-accused, in order to procure their incriminating testimony against former director and founder of Opes Prime, Julian Smith, Julian Smith walked away from his jury trial with full acquittals, while the co-accused, Laurie Emini and Anthony Blumberg were each jailed in 2011, after pleading guilty, pursuant to a deal which included their agreement to testify against Smith. (6)

Ferguson reported that, "the elephant in the room" at Smith's trial was the deal which ASIC had struck with the ANZ Bank (6):

"The so-called deal or enforceable undertakings, involved ANZ and Merrill Lynch writing a $226 million cheque to the Opes Prime liquidators, to enable 1,200 Opes Prime creditors to receive 37 cents in the dollar. In return, ASIC wiped the slate clean on all pending and future litigation against ANZ and Merrill Lynch. While the enforceable undertaking that ASIC imposed on ANZ did not preclude ASIC from pursuing criminal invesUgations, ASIC felt no need to take any further action against the banks".

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According to Ferguson, "Opes Prime was one of the worst cases of the Global Financial Crisis. When it collapsed ft wreaked havoc on the Australian Share Market as ANZ and other financiers, including Merrill Lynch, began selling down the broker's $1.4 billion securfties lending portfolio to recover secured loans". (6)

Again, compare ASIC's approach to law enforcement against major banks, with its treatment of company directors in the private sector. While the company directors cop the feather duster, the banks get treated to the feather.

There is a contrast with the treatment meted out to the banks by the US Justice Department as exemplified by the example made of J P Morgan, which involved not only extracting a $13 billion settlement, much of it ($9.2 billion) in fines and penalties but also which left the way open for further criminal investigation and possible criminal charges against banks and bank officials.

Ferguson wrote on 2 March 2013 that: "ASIC (was) asleep as Insolvency Industry worsens" (12), and referred to the case of Stuart Ariff, a former liquidator, currently serving.out a six (6) year prison sentence after being found guilty on nineteen (19) counts of criminal fraud relating to HR Cook Investments. Ferguson reported that an FOi request indicated ASIC had received at least sixty (60) complaints about Ariff over several years, while he continued to practise and to attract more and more clients. The Insolvency Practitioners' Association had also received numerous complaints about Ariff. As a result of the insouciance and neglect of ASIC and the Insolvency Practitioners' Association, investors lost millions of dollars to Ariff.

The Ariff Affair is said to have been a major factor prompting the 2010 Senate Inquiry into the Financial Services Sector. (12)

Then, in late September, 2013 there was a new furore over ASJC's abnegation of its law enforcement obligations with respect to its failure to investigate possible Corporations Law breaches by company officers implicated in the boycott-busting activities of former employees of the Reserve Bank subsidiary, Note Printing Australia, and for bribery in Iraq in 2007 - even though Australian Federal Police had laid bribery charges. [(17) - (21 ), inclusive]

ASIC's response was to attempt to call upon the six (6) year Statute of Limitations which ASIC had itself allowed to pass, as an excuse for its continued inaction. Similar criticisms have been levelled of late over ASIC's failures to investigate the probity (or otherwise) of Leighton Holdings Company officers, in the light of ASIC's probable Corporations Law breaches by the directors of Leighton Holdings, in connection with the company's alleged involvement in paying a $42 billion bribe for a $750 million construction contract in Basra, Iraq three and half (3 Y2 ) years ago. (96)

Among the litany of ASIC's failures are ASIC's failed prosecutions of Mark Silbermann, Andrew Forrest (Fortescue), Martin Kemp (ABC Leaming), AWB, and Norman Carey and Graeme Rundle (Westpoint), in addition to what has been covered elsewhere in these submissions.

FISHING FOR WHITEBAIT WMILE THE SHARKS SWIM BY

ASIC's laissez faire approach to the big players in the financial system, while going after and demonising others, is to be contrasted with its recent expensive foray into the litigation arena, to ensure that "mum and dad" investors who had scraped together their own last money to fund a Class Action

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against Macquarie Bank, could not receive a Funder's Premium, while ASIC endorsed third party litigation funders receiving a Funder's Premium of up to 45% plus their money back: this occurred in the recently heard Full Court Appeal in Richards v Macquarie Bank in the Federal Court at Brisbane, decided in early August, 2013.

In a harbinger for President Vladimir Putin's stand against Greenpeace, who charged protesters at an offshore oil-rig with piracy and then with hooliganism, ASIC prosecuted 25 year-old anti-coal campaigner and environmentalist, Jonathan Moylan, charging him under the Corporations Act with an alleged offence carrying a maximum penalty of ten (10) years' imprisonment and a $495,000.00 fine, for his allegedly issuing a hoax press release from his laptop, to attempt to focus the nation's intention on "how the proposed Whitehaven Coal Mine will destroy thousands of hectares of Leard State Forests". Moylan's press release had wrongly suggested that ANZ, had withdrawn its support for the $700 million Maules Creek Coal Mine because of "volatility in the global Coal Market, expected cost blow outs and ANZ's Corporate Responsibility Policy". ASIC has charged Moylan with making false or misleading statements and asked that the matter be dealt with in the Supreme Court. [(71) -(74)1

As Bernard Keane wrote in Crikey on 5 July 2013 in his article "Double standards as gutless ASIC targets the little guy": "If Moylan was backed by a large company, you can bet ASIC would at worst, have demanded an enforceable underlaking not to do it again, or maybe instigated a multi-year investigation that quietly ends without charges". (71)

Moylan's lawyer, John Sutton, was quoted in the Sydney Morning Herald by Gareth Hutchens on 24 September 2013, saying "There was a similar issue when David Jones went through a share issue ...... (where) someone put out a false prospectus. What happened to that? Nothing". (73)

With these examples which hardly present an exhaustive list, the Australian public are entitled to question whether ASIC discharges its responsibilities to an acceptable standard, whether it is truly independent and whether there is equal treatment before the law for all Australian citizens regardless of corporate or other affiliation.

It is meet at this point, yet again, to recall the words of Federal Opposition Leader, Bill Shorten, when he was Assistant Treasurer and Minister of Financial Services and Superannuation, and wrote to me on 30 August 2011 :

"Regarding AS/C's funding for Storm litigation, as you may be aware, ASIC is an independent statutory authority. Under its governing legislation, the Australian Securities and Investments Commission Act 2001, the Government has only limited powers of direction over ASIC and is unable to direct the Commission in relation to particular cases. The Government's powers of direction are more relevant to investigations that ASIC may undertake in relation to a general problem or policy issue. This independence is necessary to ensure that investigations are impartial and to keep the confidence of all stakeholders in the fairness and objectivity of the process#. (1)

The key words:...... "independence"...... "imparlial" ...... "fairness and objectivity". .... !

It has been said that truth is stranger than fiction . Here, truth and fiction appear to converge.

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The approach to post-separation employment for ASIC officers

In my foregoing Submissions, I have mainly examined the relationship between ASIC, two (2) Insolvency firms, PPB Advisory and KordaMentha, and the CBA. The culture which ASIC shares with the banks and major insolvency firms: the strong collegiate relationships prevailing between ASIC and those whom it should be policing, are only too well established and extend far beyond the affiliations which I have specifically identified. The reference above to Adam Schwab's article on Crikey.com, "ASIC boss rubs shoulders with the business elitesn (2), affords just some superficial evidence of this. Mechanisms for the avoidance of this excessive cross-fertilisation which may have a corrosive or even corrupting influence on public officials and their administration of public policy, have been introduced in a number of other jurisdictions.

A stringent regime exists under the New South Wales Gaming and Liquor Administration Act 2007 (108) which at Section 16, makes it an offence to move across from being a key official or former key official and without authorised approval, then to become an employee or to have any direct business or financial association in the relevant industry.

However, given ASIC's record, a similar provision would not necessarily work because the approval would rarely if ever been withheld.

Conflict of Interest- Employment post-public office

In New South Wales, there is no legislation restricting public officials in their employment after public service.

Current and former ministers (within 12 months) are able to seek the advice of the Parliamentary Ethics Adviser in relation to post-separation employment scenarios but are not required to do so. There is no restriction, except as imposed by contract on a former public servant joining a private sector competitor or one of the entities that it was responsible for investigating.

In Queensland, the Crime and Misconduct Commission ("CMC") investigated the case of Scott Flavell, a former Director-General of the Department of Employment and Training and made recommendations based on the results of its investigations.

Mr Flavell had allegedly been involved in the sabotage of a government-run training scheme, and in the foundation of a rival, private sector training scheme with an acquaintance, to whom he allegedly passed 'in confidence' departmental material and information. The day after Mr Flavell resigned from his role at the Queensland Department of Employment and Training, he accepted a position as the Chief Executive Officer of the rival company.

Shortly afterwards, the rival company hired the staff of the government training scheme - actions Mr Flavell had previously suggested, would help the government initiative 'collapse'.

Although there was ultimately, no prosecution of Mr Flavell due to "lack of evidence" and "lack of appreciable benefit at the time of the misconduct", the CMG recommended, in its paper: "Public Duty, Private Interests," (82) the introduction of an offence into the Queensland Criminal Code, of 'Misconduct in relation to public office'.

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The offence, inserted by the Criminal Code and Other Legislation (Misconduct, Breaches of Discipline and Public Sector Ethics) Amendment Act 2009 No. 25, relates to the misuse of infonnation gained as a result of public office or from the partial performance of duties of office, and was inserted into the Criminal Code as s92A.

·Public Dutv. Private Interests• (82) also looked at the conflict of interest in circumstances where fonner public officials have been able to influence serving officials. This is a situation similar to that complained of in relation to former Federal staff of regulatory and investigatory bodies (for example, ASIC employees), accepting positions with those companies that they were fonnerly charged with regulating or investigating.

The CMC states "It is unacceptable for some parties in a process to gain an unfair advantage, either by exploiting a personal association with a decision-maker or by using confidential information only available to those who are, or were formerly, inside of government. When decisions are made not in the public interest but on behalf of private interests, good and honest public administration is compromised" (p40) . In relation to an acknowledged risk to public sector integrity, the CMC report confirmed: "Where there is increased contact between government and former public officials who have moved to the private sector, there is an increased risk that proper processes may not be followed ... .. " The risk will depend upon: Mthe degree of influence the former public official is able to exert on cun-ent public officials to gain preferential treatment on behalf of private interestsN. (82)

Further, the CMC noted at page 42: "The nature of political life and public administration is such that even after public officials leave office, they may continue to hold considerable sway with former colleagues and associates .. .. .Similarly , former senior public servants may continue to wield influence in their former department. Problems may arise where these figures are employed on behalf of a commercial entity that wants to do business with the government. In certain circumstances, there may be a perception, accurate or not, that the former public official has inappropriately exerted influence (in any form) over a government decision-maker". (82)

The CMC paper is restricted to making recommendations for contractual provisions in employment contracts rather than statutory intervention. Statutory intervention is limited to the use of infonnation or the exercise of power for the benefit of another.

Some International approaches to conflict of Interest

Irish (Republic of Eire) civil servants are required to abide by the Civil Servants Code of Standards and Behaviour (89), which forms part of the terms of employment of each Irish Civil Servant. The Code of Standards and Behaviour forbids Civil Servants in 'designated positions' (being positions with a salary of over €92,000) from accepting an appointment or being engaged in a particular consultancy project that could lead to a conflict of interest or the perception of such, within twelve (12) months of ceasing employment as a Civil Servant, without gaining the approval of a board known as the 'Outside Appointments Board'.

In 2007, France introduced the Act on Modernisation of Public Service which outlines prohibitions on Public Officials moving from public to private service. (91)

The prohibitions last for three (3) years from separation from the public service, and apply to any move by Public Officials to a company that they have 'controlled or supervised, or with which they have

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negotiated or signed contracts on behalf of public authorities during the previous five years. This also covers any organisation in which the State holds at least a 30% stake.

A second prohibition, prevents Public Officials from engaging in a private activity if, by virtue of the nature or the conditions under which it is exercised, it risks undermining the dignity of their former administrative duties or in compromising the day-to-day operation, independence or neutrality of a government department. The secondary prohibition lasts for a period of three (3) years after the Public Official has left the public service.

France also has an Ethics Commission established to guide Public Servants and Public Authorities in relation to moving between Public and Private service, established in reaction to the privatisation of previously rationalised industries in the 1990s. (91)

The Commission is concerned with the issue of Public Officials accepting positions in the same companies with whom they had dealt while in a governmental capacity.

The Ethics Commission was created in order that State organisations could refer individual cases of public servants leaving the State structure and joining private enterprise for its consideration. The Commission may examine any case and make recommendations as to the movement of public servants which, while not mandatory, are customarily followed.

Breaches of the Act on Modernisation of Public Service can lead to penalties of imprisonment and fines of up to €30,000.

Levitt Robinson Recommendations

(e) Senior positions in ASIC should be internationally and widely advertised - the selection process should be open, transparent and merit-based and so far as possible, senior roles should be filled from the ranks of retired Judges, Senior Prosecutors, Public Defenders, former Attorneys­ General, Senior Academics and Senior Lawyers with a Consumer Action background.

Overseas appointments, particularly from similar jurisdictions, should be favourably considered.

The US system of having Senate confirmation hearings for discretionary appointments should be adopted. Applicants with a material history of professional relationships with major players in the financial services industry, should be ineligible for appointment.

(n Legislation should be enacted to provide that there is a rebuttable presumption that receivers and administrators and purveyors of financial services, including but not limited to mortgage brokers, are the agents for banks or other financial institutions and not for borrowers or investors.

(g) Australia should follow the US Bankruptcy legislative scheme which puts recovery ahead of burial. Under the US Bankruptcy legislation. using Chapter 11, the directors of an insolvent company may submit a Plan of Reorganisation to the unsecured creditors to be approved by the US Bankruptcy Court. The Court then supervises compliance with the Plan. So long as the security of the secured creditors is protected, the secured creditors (usually banks) are bound by the Plan of Reorganisation and have to stand back.

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Where the Plan of Reorganisation fails, a trustee may be appointed in Chapter 7, to assume a role like that of a liquidator. Even then though, the trustee is more regularly and genuinely accountable to the Courts than an Australian liquidator is in practice.

(h) An act to regulate insolvency practitioners including to provide for mandatory, reasonable fee scales and enforceable ethical rules, should be passed by the Federal Parliament along similar lines to the Legal Profession Acts, which obtain in each State and Territory in Australia.

(e) An insolvency firm which has acted as an investigative accountant. whether engaged by a borrower or lender or who has investigated a corporation or provided advisory or other services to a corporation, should be deemed to be conflicted and not be eligible to accept appointment as an external administrator of that company, whether as a liquidator, provisional liquidator, administrator, controller or receiver.

(Q ASIC should not be entitled to make policy on matters which ought properly to be the subject of legislative consideration and enactment. For example the role and limits of litigation funding in class actions and the returns which self-funded litigants are entitled to receive for outlaying legal fees on behalf of the non-contributing class members, should be the subject of legislation and regulation - not of bureaucratic fiat or judge-made law.

(g) ASIC's prosecutorial role should be hived-off to a Corporate and Banking Division of the Office of the Commonwealth Director of Public Prosecutions and ASIC should have no right to engage in "plea bargaining" at any level. Cases, when properly investigated by ASIC, should be referred to the Commonwealth DPP for prosecution and any negotiations on charges or penalties, should be left to the Office of the Commonwealth Director of Public Prosecutions.

(h) ASIC should be excluded from the role of negotiating compensation for victims of malpractice in the financial services industry and from intervening in civil litigation between parties who have independent legal representation.

(ii) ASIC should refrain from bringing civil actions, other than to extract civil penalties, and only act in a prosecutorial role, where the Office of the Director of Public Prosecutions declines to initiate or maintain a criminal prosecution.

ASIC should not be permitted to bring civil proceedings where there are parallel private civil proceedings in progress, in which the parties are separately and independently legally represented.

SUMMARY

The adoption of the foregoing recommendations would have the effect of improving standards in the financial services industry, protecting unsecured creditors, promoting freedom of action and self-help by private citizens, reducing ASIC's intervention and intrusion and accordingly, would greatly reduce the burden on tax payers of high legal expenses being incurred by ASIC. Substantial economies should result.

The incidence of corporate failures would also be reduced, by imposing proper controls on the insolvency industry and cutting the cord between banks and the insolvency industry.

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KEY OUTCOMES

0) ASJC's - unwelcome and unwarranted incursions into private litigation would be minimised and public resources better deployed in the public interest.

(k) The integrity of ASIC would be fostered and ASIC's history of abject failure as a prosecutor recognised, with the prosecutorial role largely reallocated to the Commonwealth Director of Public Prosecution in a specialist Corporate and Banking Division.

(I) The importance of protecting small business in the face of corporate failures and promoting the independence and to the greatest extent possible, the integrity of the insolvency profession, would be prioritised, thereby reducing the prevalence of corruption within the insolvency industry and preventing practitioners from acting as the effective servants of banks and other large financial institutions.

(I) Indeed, a complete overhaul of our insolvency laws to bring them in line with the recovery­ focused US Bankruptcy Laws, is past due

With compliments,

Stewart A Levitt Principal Solicitor &Advocate

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LIST OF DOCUMENTS

Legislation

1. Letter from the Hon. Bill Shorten, Assistant Treasurer and Minister for Financial Services & Superannuation, dated 30 August 2011, addressed to Stewart Levitt.

2. Download from Crikey: "ASIC Boss Rubs Shoulders with the Business Elitesn, by Adam Schwab, December 16, 2011.

3. Article: Money Management: "Brian Bissaker to depart Colonial First Staten, 8 May 2012 by Mike Taylor.

4. Article: Money Management, 14 November 2008: "Funds Lost in the Storm", by Lucinda Beaman.

5. Two pages extracted from Australian Government Attorney - General's Department, Legal Services Expenditure Report, 2011/2012, comprising Figures 2, 3, 5 and 6 from pages 5 and 7.

6. AusTender Contract Notice View - CN263263 incorporating reference to legal costs paid to Clayton Utz pursuant to contracts with ASIC: pages CN338835, CN396715, CN371343 and CN764381.

7. Article: "ASIC has far too much in its plate", by Malcolm Maiden, Sydney Morning Herald, 19 June 2013.

8. Article: "ASIC Grilled Over Role in Financial Planning Scandaln, by Chris Vedelago and Adele Ferguson, 5 June 2013, Sydney Morning Herald.

9. Article: "CSA Covered up Misconduct by Rogue Financial Planner", by Adele Ferguson and Chris Vedelago, 1 June 2013, "Examiner".

10. "Today Tonight" feature: "PNG Corruption", 27 August 2013 - James Thomas, "Today Tonight".

11. "PNGExposed" Blog: "Woodlawn Capital - The Australian company at one end of the K96m MVIL Fraudn, 25 November 2011.

12. Article: "ASIC Asleep as Insolvency Industry Worsens", by Adele Ferguson, 2 May 2013, Sydney Morning Herald.

13. Article: "ASIC Red-Faced over Opes Prime Verdier, 6 September 2013 by Adele Ferguson, Sydney Morning Herald.

14. Article: "Not Guilty over $630 million Opes Prime Collapse", by Sarah Danckert, "The Australian", 7 September, 2013.

15. Annotation of Transcript of Public Examination of BoQ Officers, October 2009.

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16. Article: "ASIC drops Westpoint case, Carey to Sue," by Eli Greenblat, May 14, 2013, Sydney Morning Herald.

17. Article: "ASIC to Restart RBA Probe•, by Patrick Durkin, Australian Financial Review, Wednesday, 2 October 2013.

18. Article: "Probe Sought on RBA Bribe Scandal", 1 October 2013, The Australian Financial Review, by Gemma Daley and Patrick Durkin.

19. Article: "RBA's Dirty Saddam Deal", 30 September 2013, by Nick McKenzie and Richard Baker, Australian Financial Review.

20. Article: "Busting UN Sanctions Wearing White Collars·, Monday, 29 September 2013, by Richard Baker and Nick McKenzie, Australian Financial Review.

21. Article: "Deals with Saddam Hussain", by Nick McKenzie and Richard Baker, Sydney Morning Herald, Monday, 30 September, 2013.

22. Article: "In the Eye of the Storm", Paul Barry, Monthly, February, 2011.

23. Unlawful Termination of Colonial First State Storm-Badged Index Fund, 9 January 2012 by Stewart Levitt, Principal, Levitt Robinson Solicitors.

24. Article: "Don't Bank on it: How ASIC failed to land a killer blow on the CBA•, by Paul Cleary, 31 December 2011, "The Australian•.

25. "Preliminary Opinion of Mark Friedgut of Counsel in relation to potential claim against Colonial First State Limited for terminating the Storm-Badged Index Funds of which they were Responsible Entity" (partially redacted at paragraph 14, page 7) dated 18 February 2011 .

26. Report: RE Bruce et Anor v LM Investment Management Limited et Ors, [2013] QSC 192.

27. Article: "Australia's Bankrupt Bankruptcy Laws", by Stewart A Levitt, Principal, Levitt Robinson Solicitors.

28. Article: "ASIC recall in question•, Michael West, SMH, 15 June 2010.

29. Hansard: Senate Economics Legislation Committee, 21 October 2010, page 12 - exchange between the Hon. Senator John Williams and then ASIC Chairman, Tony D'Alosio.

30. Zoomlnfo.com - Michael Kingston, Chief Legal Officer, ASIC, Internet download, 27 October 2013.

31. BoQ, Board of Directors, Stuart Grimshaw, PMD., Managing Director and CEO, Internet download, 27 October 2013.

32. ASIC, Storm Financial website, 22 December 2010 entry, et sequentes.

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33. Article: "D'Aloisio's role as ASIC Chairman puts him between the forces of fear and greed,~ Paul Cleary, The Australian, June 12, 2010.

34. PPB Advisory- Tony D'Alosio, AM, Non-Executive Director.

35. Linkedln- Tony D'Alosio, downloaded 3 October 2013.

36. Article: "PPB Lures former ASIC Boss", 4 June 2012 by Erin Jonasson, Australian Financial Review.

37. Linkedln -Steven Purcell, CEO at PPB Advisory, 3 October 2013.

38. PPB Advisory- Peter Barnes, Chairman of Real Estate.

39. Linkedln - Andrew Magers, Senior Legal Counsel, CBA, download 3 October 2013.

40. PPB Advisory- Michael Owen joins PPB Advisory's Brisbane Office.

41 . Linkedln - Matthew Kearney, Senior Manager, PPB Advisory, 3 October 2013.

42. PPB Advisory- Brett Manwaring, Director, PPB Advisory, 2 October 2013.

43. Linkedln - Sophie Zapantis, Senior Manager, PPB, 3 October 2013

44. Linkedln - Julian Martin, Supervisor, PPB Advisory, 3 October 2013

45. Linkedln - Adrian Jacobs, Graduate - Melbourne Restructuring Group, PPB Advisory, 3 October 2013

46. Article: "The Corporate Watchdog is Fast Asleep", by Ben Eltham, New Matilda, 25 June 2013.

47. Article: "Trio Capital Fraudster 'Shawny Cash' Jailed", Stuart Washington, 12 August 2011, Sydney Morning Herald.

48. Article: "Another Black Mark Against ASIC", Stuart Washington, Business Day, July 19, 2010.

49. Letter, Rupert Smoker, Head of Responsible Entity Services, The Trust Company - Investor Update - Trio Diversified Funds, 7 March 2012.

50. On-line Bulletin, Candidate for Throsby, Independent, Trio Capital, download, 3 October 2013.

51 . Item, "Willmott Forests Assets for the Chop", Australian Financial Review, download 7 September 2010.

52. Notification: "PPB Advisory appointed Managers to Willmott Forests Group".

53. Willmott Forests Limited - items -

(a) "Banks take haircut in Willmott sale", 7 December 2011;

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{b) "Sales of Timber Operators Gaining Traction", 17 November 2010;

(c) "Case Raises Conflict Questions", 27 October 2010

all in Australian Financial Review.

54. Article: "Liquidators' Gravy Train Rolls Along,n by Michael West, Sydney Morning Herald, October 29, 2012.

55. Article: "Newsflash - High Court Grants Special Leave to Appeal in Willmott Forests - Disclaimer of Leasesn, by Carrie Rome-Sievers, 4 October 2013 download.

56. Article: "Receivers move on Dairiesn. by Peter Hemphill, 24 April 2013, Weekly Times.

57. Item 4 from an announcement by HLB Mann Judge: "4. Receivers &Managers ", with respect to PPB Advisory's appointment to the Healthzone Group.

58. Article: ·csA Executives were warned about risks to Brand", by Leonie Lamont, 20 March 2012, Business Day.

59. Letter from Rodger Bacon and Andrew Griffin, Joint Chief Executives of Balmain Trilogy to unit holders dated 20 April 2012 re: Trilogy Funds Management Limited as Responsible Entity for All Pacific First Mortgage Fund.

60. Linkedln - Glen Unicomb, downloaded 11 October 2013.

61. Article: "When Ansett's Balloon went up, KordaMentha's Star Rose", by Michael West, 21 November 2011, Sydney Morning Herald.

62. Article: "Griffin Administrator Moves Step Closer to Salen, by Colin Kruger, 6 February 2010, Sydney Morning Herald.

63. Article: "Devereaux Sale Coming Aparr, by Jonathan Barrett, 20 June 2013, Queensland Country Life.

64. Declaration of Independence of KordaMentha re: Timbercorp Group of Companies.

65. Judgment of Pagone J., in the Supreme Court of Victoria, Commercial and Equity Division in the matter of Timbercorp Securities Limited (in liquidation) et Ors, No. 9299 of 2009, delivered 30 September 2009.

66. Wikipedia download on Storm Financial as at 11 October 2013, referring to the appointment of KordaMentha as Receivers and Managers on 15 January 2009 by the main creditor, Commonwealth Bank.

67. Declaration of Independence by KordaMentha in respect of CR1 Australia Pty Limited describing relationships with the Commonwealth Bank of Australia over two (2) years preceding 7 October 2008.

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68. Article: "Willmot Forests Felled", by Lucinda Beaman, 7 September 2010 in Money Management.

69. Article on KordaMentha website: "Raine Square sold to Charter Hall" by Tony O'Callaghan, download, 11 October 2013.

70. Article: "Luke's luck takes a Raine check", in CBD, Sydney Morning Herald.

71. Article: "Double Standards as Gutless ASIC Targets the Little Guy - ASIC charges Jonathan Moylan over Whitehaven Coal Hoax, Crikey", 5 July 2013, Bernard Keane, downloaded 19 October 2013.

72. Article: "Charge laid after Whitehaven Hoax email", 2 July 2013 by Mark Hawthorne and Benjamin Preiss, Sydney Morning Herald.

73. Article: "Accused ANZ Hoaxer, Johathan Moylan, to face NSW Supreme Court Trial", Gareth Hutchens, 24 September 2013, Sydney Morning Herald

74. Article: "Jonathan Moylan Hoax Case to Supreme Court", 24 September 2013, Newcastle Herald.

75. Article: "Castle quit ASIC's Storm investigation over lack of resources" by Paul Cleary, The Australian, 21 June 2010.

76. Article: "View from the Top - Greg Medcraft - Amid what is being labeled as "The Sub-Prime Mortgage Crisis of '07', in the United States, Greg Medcraft, Managing Director and Global Head of Securitization at Societe Generale Corporate and Investment Banking, speaks this month to Matthew Smith about the market and what went wrong", (20 March 2007), Advance.org - downloaded 19 October 2013.

77. Article: "Questions being asked over ASIC Chief's previous role", by Nick McKenzie, Richard Baker and Simon Mann, 11 November 2011, Sydney Morning Herald.

78. ASIC website: "ASIC Senior Executives", Greg Medcraft.

79. An excerpt from Wikipedia on Societe Generale re: the US Government bailout of AIG listing Societe Generale the largest recipient of assisting the 2008 US Government bailout.

80. Article: "Goldman's Offshore Deals Deepened Global Financial Crisis", By Greg Gordon, 30 December 2009, McClatchy DC.

81. Australian Government's Australian Customs and Border Protection Service, Post-Separation Employment, March 2009 - Instruction and Guidelines.

82. Crime and Misconduct Commission, Queensland, "Public Duty, Private Interests - Issues in Pre-Separation Conduct and Post-Separation Employment for the Queensland Public Sector," December 2008.

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83. Australian Government Department of Innovation, Industry & Science, Research Policy Statement Code of Conduct.

84. Australian Government Department of Defence Instructions (General), Notification of Post­ Separation Employment and Defence Department Policy document, Chapter 6, part 3, section 6 (Defence Workplace Relations Manual - Post Separation Employment Policy Review, July 2013).

85. Australian Public Service Code of Conduct (power for determining breach is conferred on the Chairperson of ASIC).

86. Queensland Government Public Service Commission, Directive No. 2/09: Employment Separation Procedures under Public Service Act (Qld). 2008, effective date, 13 February 2009 and proposed Post-Separation Employment Provisions.

87. Chapter 8, Model Code of Conduct, (NSW); Note, in particular pages 16 to 19.

88. "Managing Post-Separation Employment" Discussion Paper, April 1997, (ICAC, NSW).

89. Chapter 20, "Acceptance of outside appointments and of consultancy engagement following resignation or retirement- Standards in Public Office Acf', (2001), Republic of Ireland.

90. "Rules on the acceptance of outside appointments by Civil Service", - Northern Ireland Civil Service HR Policy- "Standards of Conduct", particularly annexures 4 and 5.

91. Conference on Public Integrity and Anti-Corruption in the Public Service, Bucharest, 29 to 30 May 2007 - "Prevention of corruption in State Administration: France", by Pierre-Christian Soccoja, Ministry of Justice, France.

92. ASIC website announcement 12 - 227MR, Friday, 14 September 2012: "ASIC and CBA reach Storm Financial Settlemenr.

93. ASIC website announcement 13 - 122MR, Wednesday, 29 May 2013: "ASIC settles in Storm Financial Proceedings" (re: The Doyles).

94. Article: "J P Morgan set for record $13 billion settlement with US Justice Department", 20 October 2013.

95. Article: "Judge says ASIC too light on Offenders", by Patrick Durkin, Australian Financial Review, 22 October 2013.

96. ABC News 24, Transcript, Reporter, Greg Hoy, 14 October 2013: "ASIC defends itself against 'appalling' criticisms".

Legislation

97. AS IC Act 2001, Section 1.

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98. ASIC Act 2001, Section 11.

99. Corporations Act 2001 - Section 1311.

100. Corporations Law - Section 601 NC (repealed).

101 . Corporations Law- Section 601 ND (repealed).

102. Corporations Law - Section 601 NE (repealed).

103. Corporations Law- Section 601 MA (repealed).

104. Restrictions on former officers, employees and elected officials of the executive and legislative branches, Ethics in Government Act. 1978 (U.S.), Title 18; Section 207, US Code.

105. Conflict of Interest Act. 2006 (Canada), sections 33 to 37, from page 18et seq.

106. Public Service Act. 1999 (C'th), section 13 (NB section 13 (10)).

107. Independent Commission against Corruption Act. 1988 (NSW), ("ICAC"), sections 8 and 9.

108. Gaming and Liquor Administration Act. 2007 (NSW), section 16.

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