Pro Forma Response from ASIC

The following pro forma letter was sent to the Chairman of ASIC. The Chairman was given the opportunity to draft his own set of reasons as to why ASIC has advised the following to the responsible Minister:

“ASIC has given extensive consideration to this matter and there are no grounds for further regulatory activity”

If the Chairman of ASIC cannot provide an alternative reason, the reasons provided in the following pro forma letter must be taken to be correct.

The Hon Josh Frydenberg MP

Assistant Treasurer

Dear Assistant Treasurer

Re: Pensions for Widows

I am writing to the Minister responsible for ASIC in my capacity as the Chairman of ASIC as well a member of the Board of the Australian Crime Commission following the publication of evidence on the website Evidence has also been posted on the website of the Australian Crime Commission.

The evidence relates to one of Australia’s oldest occupation pension funds that was established on the 23 December 1913 in the State of South Australia. A subsidiary company of the National Australia Bank (NAB) assumed responsibility for the payment of benefits for this Fund on 20 January 2014.

Documents have been published in relation to survivorship pensions for the widows of former employers of the company once known as Elders IXL Limited and subsidiary companies.

The relevant documents and website addresses are:

  • – Deed of Variation dated 18 January 1955 – copy here.
  • – Deed of Variation dated 20 November 1974 – copy here.
  • – Evidence sourced from the Parliament of South Australia – copy here.

    The original Trust Deed dated 23 December 1913 did not make provision for the payment of survivorship pensions to widows, however the member contribution rate was only 2.5% of salary originally.

    When the member contribution rate was increased to 5% of salary, additional benefits were provided, including a survivorship pension by way of the Deeds of Variation listed above.

    Regulation 30A provides for an “automatic” survivorship pension for widows.

    When the Minister responsible for Superannuation inspects these documents, the Minister may raise the following questions:
  • – (i) When was the pension fund in question closed to new members? and
  • – (ii) Does a Deed of Variation exist that repeals Regulation 30A that provides the survivorship pensions? and
  • – (iii) Have the trusts associated with this scheme been revoked and the associated Trust Estate (Fund) wound-up?

    The fund in question was not closed to new members until 1 December 1997 and the NAB lawyer that is on secondment to ASIC has confirmed that the incumbent corporate Trustee, PFS Nominees Pty Ltd, has been unable to locate any Deed of Variation executed in accordance with the provisions of the Power of Amendment that has repealed Regulation 30A.

    The original Trust Deed provided a power of revocation to wind-up the trusts and associated fund, however the trusts have not been revoked nor the Fund wound up in accordance with these provisions {Regulation 52}.

    Furthermore it would require an Act of the Parliament of South Australia to allow the Trust Estate to be transferred to another Fund and the membership of the members transferred to another fund. {Refer to the Elder’s Trustee and Executor Company Ltd Provident Funds Act 1971 (SA).}

    Therefore on the evidence now before ASIC, the widows of all male officers who have completed at least 15 years of service are entitled to a survivorship pension if they were married to the male officer at the time of his leaving the service of the sponsoring employer.

    The Position of the National Australia Bank

    It is the position of the NAB is not to pay the widows their pensions.

    The NAB relies on a document dated 26 August 1986 that bears the signature of Ken Jarrett. Mr Jarrett served a term of imprisonment for dishonest conduct after three major investigations by the former National Crime Authority (NCA). The Australian Crime Commission has now taken over the role of the former NCA.

    The NAB is already paying compensation to customers who received negligent advice from NAB Financial Planners in Australia as well as paying compensation to customers in the United Kingdom due to the “mis-selling” of business loans that was recently the subject of a UK Parliamentary Inquiry.

    The payment of pensions to widows in accordance with the terms of the trust as properly construed by the Supreme Court of Victoria would therefore have a further negative impact on the reported profit of NAB.

    NAB has also confirmed that it will not be seeking advice and directions from the Supreme Court of Victoria as to a “true construction” of the terms of this 100 year old trust in accordance with a general recommendation by the High Court of Australia.

    I therefore reiterate the position of the former Chairman of ASIC, Tony D’Aloisio, given in a letter dated 31 March 2011:

    “ASIC has given extensive consideration to this matter and there are no grounds for further regulatory activity”


    Allegations against Tony D’Aloisio

    Following the recent sentencing of an Australian Public Servant for the offence of the abuse of public office {Section 142(2) of the Criminal Code -Refer to Appendix A}, there have been calls that ASIC should prepare a Brief of Evidence for the Commonwealth Director of Public Prosecutions in relation to the conduct of the previous Chairman of ASIC, Tony D’Aloisio.

    Mr D’Aloisio purchased the business assets of the Oakridge Winery from the receiver of Evans & Tate when he was the Chairman of ASIC in a secretive deal, when the assets should have been disposed of by auction or open tender so as to maximise the return to the secured and other creditors.

    The receiver was appointed by ANZ bank which was at the time under investigation by ASIC in relation to the Opes Prime collapse.

    ASIC was requested, and agreed:

    – To release ANZ from potential claims arising from both the managed investment schemed and s181 investigations.

    A copy of the enforceable undertaking can be found here.

    A receiver stands in a fiduciary position with respect to the creditors of the company in liquidation and the receiver has a duty to act in the interests of the creditors and not in the interest of the receiver or other parties {Refer to Sydloq Pty Ltd v TG Kotselas Pty Ltd [1996] FCA 1384; (1996) 65 FCR 234; (1996) 144 ALR 159; (1996) 14 ACLC 846; (1996) 20 ACSR 47 }

    The secretive purchase of the winery has been exposed in an exposé by Fairfax Media reporter Michael West. A copy of this article can be found here.

    In a more recent article, Michael West confirms that the former Chairman sought to find out the identity of the ASIC Whistleblower who leaked details of the Chairman’s secretive private business dealings . In an article published on the 13 March 2015 Michael West reports:

    “Four years ago, we received a call from an official at the Australian Securities and Investments Commission. The caller told us the majority of the wire-tap warrants sought by the agency in the previous year had related to an investigation of leaks from the agency itself, leaks which apparently resulted in a story in Fairfax Media.

    In the wake of the global financial crisis we had written a story about the sale of a winery to the then chairman of ASIC, Tony D’Aloisio. The vendor was the receiver of Evans & Tate, acting at a time when ANZ was being investigated by ASIC over Opes Prime.

    According to the ASIC source, the commission subsequently sought wire-tap warrants from the court to find the identity of the mystery leaker. The funny thing was there was no leaker. The story had been put together from public documents; you just needed to know where to look.”

    The full article can be found here.

    Allegations have been made that in contravening subsection 13(10) of the Public Service Act 1999 {Appendix B}, Mr D’Aliosio thereby defrauded the secured and unsecured creditors out of at least $500,000 compared to what they would have recovered if the assets had been disposed of by way of auction or open tender.

    With ANZ bank as the major secured creditor, ANZ bank was not in a position to object if it did not receive the maximum value of the assets sold to the former Chairman in a secretive deal. ANZ may have even approved the sale given the favourable outcome of the enforceable undertaking issued by ASIC at the time with respect to the Opus Prime affair.

    Hollingwood J sentenced a junior public servant to 2.75 years imprisonment for obtaining $19,500 as a result of the contravention of Section 142(2) of the Criminal Code.

    It is therefore likely that the previous Chairman would receive the maximum penalty of 5 years imprisonment if he were convicted of defrauding creditors out of $500,000, whilst in the position of the Chairman of ASIC.

    The previous Chairman also contravened Section 123 of the ASIC Act 2001 by failing to declare his direct pecuniary interest in the Oakridge Winery to two Responsible Ministers in the previous Labor Government. No doubt the Chairman did not wish to have the Ministers raise questions of Conflicts of Interest in relation to ANZ Bank and the Opus Prime affair.

    It would also not have been in the interests of the previous Chairman to undertake an investigation into allegations of fraudulent conduct associated with an occupation pension fund associated with Australia’s largest maker and distributor of wines, the renamed Elders IXL Limited. The former Chairman may have wished to have obtained assistance with the distribution of his own wines both locally and internationally so as to restore the profitability of the Oakridge Winery.

    The Chairman therefore used his “discretion” {refer here. provided by the Parliament not to investigate the purported corporate Trustee of this Fund, even though the purported Trustee had been criminally concealing the Deeds listed above from the widows and other beneficiaries of the trust.

    There is a long tradition in the Australian Public Service that a senior public servant will not take action that would lead to charges being laid against another senior public servant, and as the incumbent Chairman of ASIC I do not propose to break this long established tradition no matter how serious the allegations that have been made against the former Chairman of ASIC.

    Criminal conduct by a senior public servant causes embarrassment to the politician who appointed him or her.

    The Minister has the power to grant compensation to the widows since the fund in question is regulated by ASIC and APRA.

    The Leader of the Opposition, the Hon Bill Shorten MP, granted 100% compensation to the victims of the Trio Capital Superannuation Fraud, when he was the Minster Responsible for Superannuation in the previous Labor Government.

    The Press Release from Mr Shorten can be found here.

    The Minister may wish to emulate the Leader of the Opposition.

    Yours Sincerely

    ASIC Chairman

    Member of the Board of the Australian Crime Commission

    A copy of the complete pro forma letter with Appendices is on the following link.

    Pro Forma Letter from ASIC

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