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Australia’s former top corporate law-enforcement officer, James Shipton, recorded a tense conversation with his deputy Karen Chester, in which she asked him to lobby senior business leaders to help repair her reputation and stated she could have “destroyed” his career.
In the nine-minute audio recording, Ms Chester accused Mr Shipton of harming herself and others, and makes four allegations against him, which he described as “very serious”. The accusations were edited from a 12-minute recording of the video meeting Mr Shipton provided to The Australian Financial Review on Wednesday.
Ms Chester stated she was professionally frustrated and angry with Mr Shipton, the Australian Securities and Investments Commission’s chairman from 2018 to 2021. She asked him to fix the problem by contacting influential figures and praising her performance while Treasurer Josh Frydenberg was choosing his successor.
Former ASIC deputy Karen Chester and former chairman James Shipton. Michaela Pollock
On Wednesday afternoon, Ms Chester’s lawyer said the “selective quotes” were from an unauthorised recording of a private and unscheduled call from Mr Shipton to Ms Chester. “What has been provided is unbalanced and does not reflect the true nature of the conversation,” the lawyer said.
The conversation reveals how badly relationships at the top of the corporate watchdog had deteriorated under the last government, which made Ms Chester acting chair while Mr Shipton was temporarily stood aside awaiting the completion of an investigation into his work expenses.
e conversation, which was recorded on April 9, 2021, began with a discussion about the selection of Mr Shipton’s successor. Ms Chester said she was one of two final candidates.
“So, James, I’m putting it to you that you have a chance before the treasurer makes a decision on the appointment,” Ms Chester said.
“This has no impact on the appointment. But you have a chance to do what I would call thoughtful remediation. For you to phone up those people and say something nice about me. That I ‘did a damn good job’ and I ‘was incredibly professional in my parliamentary hearings’. It’s totally up to you if you want to do it, I’m just giving you the offer.”
Contact list
On the recording, Ms Chester asked Mr Shipton to praise her “restraint” at parliamentary hearings in 2020 when she was acting chairwoman. Reporting from the hearings portrayed Ms Chester as undermining Mr Shipton by suggesting he had kept key information from fellow commissioners. Mr Shipton was cleared of any wrongdoing.
Ms Chester’s lawyer, Janet Whiting, confirmed some parts of the conversation, including that she told Mr Shipton she was professionally disappointed in him, had given him an opportunity to “remediate” and said: “That’s why I never tossed you under the bus ... I’m not that sort of person.”
Ms Chester had “governance and accountability concerns” about Mr Shipton while he was chairman, the lawyer said, which Ms Chester dealt with through appropriate channels. They included a decision by Mr Shipton to self-report her allegations to the government, a step Ms Chester said she recommended.
The former deputy chairwoman, whose five-year term expired in January, did not elaborate further on the 2020 parliamentary hearings, but ASIC’s 2018 decision to become more legally aggressive with its “why not litigate” approach, especially towards banks, insurers and other financial companies, had upset the financial sector and triggered lobbying of Mr Frydenberg.
The people Ms Chester wanted to be called were edited from the recording provided by Mr Shipton, who chose not to contact them on Ms Chester’s behalf. Mr Shipton said they were two bank chairmen, one bank chief executive, two former government officials and two journalists.
Three weeks after the conversation Mr Frydenberg appointed Joe Longo to head ASIC.
Ms Chester declined to speak to the Financial Review. In the recorded conversation, she repeatedly stated that she would not act on the allegations because it would not be in ASIC’s best interests.
Mr Shipton self-reported the accusations made by Ms Chester to Treasury Secretary Steven Kennedy. After some were reviewed, Treasury determined no further action was required, according to government sources.
‘Professionally disappointed’
“This is why I am sharing why I am professionally disappointed with you and why I would like to give you an opportunity to remediate,” she said. “It’s up to you to take that offer or not; I don’t care. It’s up to you James. It’s a chance for you; it is an opportunity and a chance for you to remediate.”
Mr Shipton responded by saying: “These are very serious allegations Karen.” To which she responded: “James, James. They’re not allegations. They’re statements of fact.”
Ms Chester went on to say: “People [are] suggesting in the media that I was the ruthlessly ambitious bitch that threw you under the bus. [That] couldn’t be any further from the truth and I think that needs to be corrected.
“There are two ways to correct it, and it’s going to be up to you. It’s your decision which way we do it. Because if I had wanted to throw you under the bus, I could have done it my first year here. I could have leaked to a journalist.
“So, now going to what I’d like to ask of you, and it’s totally up to you whether you do it or not. Seriously it is, I’m not going to do anything with these views because I don’t want to bring any more damage to ASIC’s name.
“That’s why I never tossed you under the f---ing bus. Because tossing you under the bus would not have been in ASIC’s best interest and what is in ASIC’s best interest is in my best interest.
Former ASIC commissioner Danielle Press. Eamon Gallagher
“If I wanted to toss you under the bus, I would have done it in my first year here, and you would have never known about it and your career would have been destroyed then.
“OK? I never did that. I’m not that sort of person. So, what I would like to ask of you is; certain people have formed very, very bad views of me because of this; because of what’s been said about me.”
Growing tension
The conversation came after weeks of growing tensions between the pair expressed in private and public settings, including commission meetings.
At one point, Mr Shipton and Ms Chester agreed it would be best not to be in a room together without other people present. Former commissioners Sean Hughes and Danielle Press sometimes acted as mediators.
Mr Shipton made a formal complaint to the government about Ms Chester, which led to a legal investigation – the outcome of which has not been made public. However, no disciplinary action was taken against Ms Chester. She has accused him, privately, of running a “smear campaign” against her.
ASIC chair Joe Longo in Canberra last December. Alex Ellinghausen
ASIC chair Joe Longo is due to appear before a Senate committee on Thursday and may face questions about the conflict, given it related to his predecessor.
Asked for comment on Wednesday, Mr Longo referred to his previous comments to the Senate. He had said that he decided not to take any further action because the allegations were “historical” and before his time as chairman. He said he felt the likelihood of the conduct reoccurring to be “very low”.
He said in his seven months at ASIC there were no sanctions for code of conduct breaches by commissioners, and cited a “lack of utility in re-investigating the matter”.
Mr Shipton said part of the reason he decided to go public was because, despite repeated requests both during his tenure and after, he felt his complaints were not dealt with effectively.
The former chairman said he wants his story to raise awareness about what he believes is inappropriate workplace conduct, even at the executive level, and said the governance structures for holding regulators to account were flawed and, and it was in the public interest to raise these matters and seek change.
In November, Finance Minister Katy Gallagher said the government wanted the power to suspend public service leaders for code of conduct breaches, including at statutory agencies.
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Aaron Patrick is the senior correspondent. He writes about politics and business from the Sydney newsroom.Email Aaron at apatrick@afr.com
Ronald Mizen reports on the intersection of politics, business, economics and the law from Parliament House, Canberra. Connect with Ronald on Twitter. Email Ronald at ronald.mizen@afr.com
Patrick Durkin is Melbourne bureau chief and BOSS deputy editor. He writes on news, business and leadership. Connect with Patrick on Twitter. Email Patrick at pdurkin@afr.com
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