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Thursday, 29 November 2012
Page: 14080

Mr RANDALL (Canning) (12:41): The Australian Securities and Investments Commission has failed in its duty to several of my constituents, who have contacted me over the course of the past 12 months. On ASIC's website under 'What we do', ASIC states:

The Australian Securities and Investments Commission Act 2001 requires us to:

administer the law effectively and with minimal procedural requirements

enforce and give effect to the law

Mr Peter Leech came to my office to seek advice in early 2012 after the company he worked for, SIG Security Intelligence Group Pty Ltd, was placed into administration. Peter and at least one other colleague, Aaron Carden, were left out of pocket with unpaid wages and superannuation for their work at the company. Mr Leech has been extremely diligent in his pursuit of the moneys to which he is rightly entitled. However, 18 months after the company wound up, Peter is no closer to having his problem resolved. The problem that we face is that the responsible regulatory body, ASIC, has shown no interest in pursuing this matter and yet this is the organisation with the resources—and indeed the obligation—to get to the bottom of any wrongdoings which may have occurred.

Mr Leech has asserted to me that this company has engaged in 'an intentional, deliberate and cyclic avoidance of taxation and superannuation obligations'. Mr Leech alleges the company has gone into liquidation leaving unsecured creditors, such as employees with outstanding superannuation entitlements, out of pocket. The company then re-emerges with a slightly different name and continues to operate within the same industry with the same clientele. Such liquidations allow the company to avoid paying unsecured creditors—such activity is known as a phoenixing.

Mr Leech has contacted the liquidator of the company, who was unable to retrieve moneys to pay employees left stranded. Mr Leech subsequently contacted the Australian Taxation Office, which was unable to assist. Assiduously, Mr Leech then contacted ASIC to report the company's activities, as is clearly recommended on ASIC's website. Mr Leech lodged a complaint with ASIC shortly after the liquidator was appointed, approximately 18 months ago, and this was subsequently rejected—ASIC was not interested. Mr Leech then appealed this decision and the appeal was rejected—ASIC was still not interested.

This whole affair leads me to ask: if ASIC is not interested in looking into such matters, who is? The answer is no-one. ASIC is the body that is tasked with this work. However, it has shown no interest in pursuing this on my constituent's behalf. Mr Leech is left with the unpleasant, expensive and likely futile option of pursing the unpaid wages and superannuation through legal action. I say futile because we have received advice that such legal action could cost thousands of dollars with a very unlikely chance of retrieving the money to which Mr Leech and other former employees are clearly entitled.

I made representations on Mr Leech's behalf to Minister Shorten in June 2012. By November I had still not received a response despite months of repeated calls to his office. On 2 November my office received an email from a Minister Shorten staff member arguing that the minister could not instruct ASIC what to do and that Mr Leech was effectively on his own. Another example of this issue can be found in the treatment of my constituents, Andrew and Daniel Vivian, by their former employer, Nelson Plastering. Andrew and Daniel worked for this company for three and six years respectively, but in this time none of the mandatory nine per cent superannuation was ever put into an account on their behalf. In 2011, the company went into receivership with very large debts, including Andrew and Daniel's unpaid super. Despite being in receivership, the business continued in a slightly different form, largely on a cash-only basis, with Daniel still working for the same person, under almost the same conditions.

The Vivians have been told by the liquidators assigned to the firm, Pitcher Partners, that it is highly unlikely that they will ever receive any of what is owed to them as unsecured creditors of Nelson Plastering, as there are few assets left in the business to meet this obligation. Their mother has made numerous reports to the ATO about the fact the business is still operating in some form, but it has thus far not taken any action against the person running it that they are aware of. The current penalties for not paying superannuation are solely of a financial nature. This effectively means a firm can neglect to pay superannuation, declare itself bankrupt and then avoid their debts along with the supposed punishment for their wrongdoing. There is no regulatory body and no government minister willing to step in and enforce rules that relate to this practice of 'phoenixing'—although it is illegal, it is being allowed to happen by the likes of ASIC while employees like Andrew and Daniel Vivian are left high and dry without the many years of superannuation they are entitled to.

Are ASIC overburdened? Do they have adequate resources to undertake such investigations? Are ASIC under instruction to pursue only large companies? If this is the case, who is regulating and who is pursuing those small- and mid-tier companies who are accused of wrongdoings? I had very great respect for the former chairman, Mr Tony D'Aloisio. Unfortunately, his replacement, Mr Greg Metcalfe, seems to have dropped the ball on this issue. He should do better. (Time expired)