ASIC con­tender blames ALP ‘per­sonal at­tacks’ for with­draw­ing



Credit Suisse’s John O’Sul­li­van has for­mally with­drawn from the se­lec­tion process to re­place Greg Med­craft as ASIC chairman, cit­ing “dis­turb­ing per­sonal at­tacks” by fed­eral La­bor.

Mr O’Sul­li­van with­drew his can­di­dacy in a let­ter to Trea­sury sec­re­tary John Fraser yes­ter­day.

He told The Aus­tralian: “I was happy to put my hand up for public ser­vice but you don’t sign up for that sort of abuse.”

The news comes as it was also con­firmed Mr Med­craft would take up a se­nior role with the OECD in Paris once his term at ASIC ex­pired next month.

Mr O’Sul­li­van had been re­garded as a fron­trun­ner to take over when Mr Med­craft’s term as Aus­tralian Se­cu­ri­ties & In­vest­ments Com­mis­sion chairman ended next month.

How­ever, his can­di­dacy has come un­der fire in state­ments from op­po­si­tion Trea­sury spokesman Chris Bowen.

Mr O’Sul­li­van was the pre­ferred can­di­date se­lected by head­hunter Hei­drick and Strug­gles but is a long-time friend of Mal­colm Turnbull, which was cited by the ALP in op­pos­ing his ap­point­ment.

The public ser­vice com­mit­tee which presided over the rec­om­men­da­tion was com­prised of Trea­sury sec­re­tary John Fraser, ACCC chief Rod Sims and the then head of the Depart­ment of In­dus­try, Glenys Beauchamp.

Gov­ern­ment sources said the at­tack showed the ALP “lives in glass houses be­cause none of the due process was fol­lowed when Med­craft got the job in 2011”.

Mr O’Sul­li­van is un­der­stood to have had con­ver­sa­tions with As­sis­tant Trea­surer Kelly O’Dwyer since re­turn­ing a few days ago from six weeks over­seas. Some in­sid­ers claim the gov­ern­ment be­gan walk­ing away from Mr O’Sul­li­van al­most as soon as the op­po­si­tion at­tacks started in June after leaks of his can­di­dacy.

The saga has been al­lowed to roll on for al­most a year since ex­pres­sions of in­ter­est closed last Novem­ber. Mr Turnbull was not in­volved in the process given the close friend­ship be­tween the two men since univer­sity days.

But it re­mains hard to be­lieve Mr O’Sul­li­van would have put his name for­ward with­out some en­cour­age­ment from other se­nior politi­cians; and it al­most de­fies credulity that it would not have been dis­cussed be­tween Mr Turnbull and Mr O’Sul­li­van at some point — and that Mr Turnbull did not ob­ject.

The de­ba­cle over Mr O’Sul­li­van points not just to a lack of courage in gov­ern­ment but a fail­ure of po­lit­i­cal in­stinct. La­bor was al­ways go­ing to op­pose Mr O’Sul­li­van given his friend­ship with Mr Turnbull. Mr O’Sul­li­van had also been en­tan­gled in a side is­sue of the 2009 God­win Grech af­fair where Mr Turnbull was hu­mil­i­ated after fall­ing vic­tim to a dam­ag­ing faked email from a Trea­sury of­fi­cial.

Mr O’Sul­li­van was cleared of any wrong­do­ing by sev­eral in­quiries, but his ASIC can­di­dacy opened the gates for the op­po­si­tion to re­vive the story.

In his let­ter to Mr Fraser, Mr O’Sul­li­van said he was “deeply shocked” by me­dia re­leases from Mr Bowen “at­tack­ing any pos­si­bil­ity of me be­ing ap­pointed”.

“The per­sonal na­ture of that at­tack, even in­clud­ing in­sin­u­a­tions of old and long since dis­cred­ited al­le­ga­tions, and the fail­ure to make even the slight­est in­ves­ti­ga­tion as to the process fol­lowed, my qual­i­fi­ca­tions for the role or the steps I pro­posed to take to en­sure my fu­ture im­par­tial­ity, was un­prece­dented and dis­turb­ing.

“Those me­dia re­leases, and sub­se­quent com­men­tary at­trib­uted to the op­po­si­tion, made it clear to me that the op­po­si­tion would con­tinue to wage a cam­paign against me, and through me ASIC, that would be in nei­ther my in­ter­ests nor ASIC’s. I must there­fore with­draw my name from fur­ther con­sid­er­a­tion.”

Mr O’Sul­li­van was highly fan- cied for the ASIC job, with a strong back­ground in law as a part­ner at Free­hills, then as chief gen­eral coun­sel for the Com­mon­wealth Bank and most re­cently as Credit Suisse’s Aus­tralian chairman.

The gov­ern­ment is due to con­sider the re­place­ment for Mr Med­craft next week, with one po­ten­tial ap­pointee be­ing ASIC com­mis­sioner Cathie Ar­mour along with one other un­known per­son.

Mr Bowen blamed the gov­ern­ment. “Mal­colm Turnbull and Scott Mor­ri­son are re­spon­si­ble for the fail­ure to ap­point a suc­ces­sor to Greg Med­craft,” he said.

The Turnbull gov­ern­ment’s process to ap­point a new head of the cor­po­rate reg­u­la­tor is in dis­ar­ray fol­low­ing the for­mal with­drawal of the lead­ing can­di­date, John O’Sul­li­van.

With just five weeks left to run in in­cum­bent Greg Med­craft’s term, the gov­ern­ment is now scram­bling to find a re­place­ment Aus­tralian Se­cu­ri­ties & In­vest­ments Com­mis­sion chairman ca­pa­ble of deal­ing with sig­nif­i­cant chal­lenges in­clud­ing a monster law­suit against the big banks that starts within a fort­night.

Mr O’Sul­li­van, the chairman of the Aus­tralian in­vest­ment bank­ing arm of Swiss bank Credit Suisse and a for­mer CBA ex­ec­u­tive, wrote to Trea­sury sec­re­tary John Fraser yes­ter­day with­draw­ing from the race.

In his let­ter to Mr Fraser, Mr O’Sul­li­van said he was pulling out be­cause of op­po­si­tion trea­sury spokesman Chris Bowen’s “un­prece­dented and dis­turb­ing” per­sonal at­tacks on his close friend­ship with Mal­colm Turnbull and his role in the 2009 “Ute­gate” po­lit­i­cal scan­dal.

Mr O’Sul­li­van is also a for­mer gen­eral coun­sel of CBA, which is be­ing pur­sued by fi­nan­cial in­tel­li­gence unit Austrac for more than 53,000 al­leged breaches of an­ti­money laun­der­ing and coun­tert­er­ror­ism fi­nance laws.

ASIC is con­sid­er­ing its own in­ves­ti­ga­tion into the Austrac al­le­ga­tions.

Mr Bowen said re­spon­si­bil­ity for the stalled ap­point­ment process be­longed to the Prime Min­is­ter and Scott Mor­ri­son. “We have known for the last 18 months this day was com­ing, the gov­ern­ment just needs to hurry up now and make a de­ci­sion, and get this ap­point­ment right,” he said.

The Trea­surer was in Wash­ing­ton yes­ter­day for In­ter­na­tional Mone­tary Fund and World Bank meet­ings and un­avail­able for com­ment.

A spokesman for Rev­enue Min­is­ter Kelly O’Dwyer, who has re­spon­si­bil­ity for ASIC, said the gov­ern­ment fol­lowed a “mer­it­based se­lec­tion process” to find a re­place­ment for Mr Med­craft.

“The gov­ern­ment will make an an­nounce­ment re­gard­ing the chair of ASIC be­fore the re­tire­ment of the ex­ist­ing chair on Novem­ber 12,” he said.

Mr O’Sul­li­van emerged as the lead­ing can­di­date fol­low­ing a year-long search by ex­ec­u­tive re­cruit­ment firm Hei­drick & Strug­gles. As soon as his name was men­tioned in me­dia re­ports in June, Mr Bowen at­tacked the idea, point­ing to email con­tact be­tween Mr O’Sul­li­van and the key player in the Ute­gate saga, thenTrea­sury of­fi­cial God­win Grech.

Mr Grech faked an email from an ad­viser to then-prime min­is­ter Kevin Rudd seek­ing spe­cial treat­ment for a car dealer and La­bor donor.

Un­til the fraud was dis­cov­ered, the email bol­stered ef­forts by Mr Turnbull, who was then op­po­si­tion leader, to pur­sue Mr Rudd in par­lia­ment.

As The Aus­tralian has re­ported, in re­cent weeks the

gov­ern­ment has backed away from ap­point­ing Mr O’Sul­li­van to the job.

It is un­der­stood the gov­ern­ment will now go back to other short-listed can­di­dates, in­clud­ing over­seas op­tions, and hopes to make an ap­point­ment within two weeks.

If no an­nounce­ment is made be­fore Mr Med­craft’s last day on Novem­ber 12, an act­ing chairman will need to be ap­pointed from among ASIC’s ex­ist­ing com­mis­sion­ers.

This role would nor­mally fall to deputy chairman Peter Kell, but for­mer Mac­quarie Group gen­eral coun­sel Cathie Ar­mour has also emerged as a pos­si­ble lead in­ter­nal con­tender for Mr Med­craft’s role.

Ex­tend­ing Mr Med­craft’s term, as Mr Mor­ri­son did in April last year, is not an op­tion be­cause he is un­der­stood to have ac­cepted an­other job with the Or­gan­i­sa­tion for Eco­nomic Co-op­er­a­tion and De­vel­op­ment in Paris.

At the same time as he extended Mr Med­craft’s term, Mr Mor­ri­son at­tempted to fend off calls for a royal com­mis­sion into the banks by an­nounc­ing a fund­ing boost for ASIC that re­v­erses some of the cuts im­posed on it by pre­vi­ous La­bor and Lib­eral gov­ern­ments.

Mr Mor­ri­son also an­nounced beefed-up pow­ers for the cor­po­rate reg­u­la­tor in an ef­fort to tackle the scan­dal-rid­den fi­nan­cial ser­vices in­dus­try.

As spec­u­la­tion swirls about Mr Med­craft’s re­place­ment, the reg­u­la­tor is pre­par­ing for a months-long Fed­eral Court trial of its claims that ANZ, Na­tional Aus­tralian Bank and West­pac rigged the BBSW in­ter­est rate bench­mark. The trial is due to start on Oc­to­ber 23.

Other big is­sues on the reg­u­la­tor’s plate in­clude deal­ing with the scan­dal-rid­den life in­sur­ance in­dus­try, crack­ing down on dodgy lenders and mov­ing to an in­dus­try-funded model.

The gov­ern­ment has also yet to find a re­place­ment for com­mis­sioner Greg Tanzer, whose term ex­pired on March 5 last year.

It is be­lieved the gov­ern­ment planned to con­sult with any in­com­ing chairman about who should fill this role.

Across the public ser­vice, the Turnbull gov­ern­ment has left a num­ber of key roles va­cant.

These in­clude the chief ex­ec­u­tive’s po­si­tion at Austrac, a deputy chairman’s job at the Aus­tralian Com­pe­ti­tion & Con­sumer Com­mis­sion, and mem­bers of the For­eign In­vest­ment Review Board and the Aus­tralian Char­i­ties and Not-for-prof­its Com­mis­sion.


Greg Med­craft, in Mel­bourne yes­ter­day, is set to join the OECD in Paris after he fin­ishes up as ASIC chairman


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