ASIC contender blames ALP ‘personal attacks’ for withdrawing
O’SULLIVAN CITES ‘UNPRECEDENTED AND DISTURBING’ PERSONAL ATTACKS
Credit Suisse’s John O’Sullivan has formally withdrawn from the selection process to replace Greg Medcraft as ASIC chairman, citing “disturbing personal attacks” by federal Labor.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