Australia’s two key financial services regulators, the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA), moved a step closer to concluding their actions around the collapse of Trio/Astarra and, in doing so, underlined the magnitude of their failure.
APRA announced that it had concluded its enforcement action against the former directors of Trio, while ASIC used the conviction of Tony Maher, (formerly known as Paul Gresham), on 20 criminal charges to give a wrap-up of where things stood in terms of Trio/Astarra – the culprits and the victims.
And the bottom line is that while a great deal has been learned over the past four years and that while Maher/Gresham and Shawn Richard have been jailed, with others being the subject to bannings and enforceable undertakings, the man long believed to be the mastermind, Asian-based US lawyer, Jack Flader, remains largely untouched.
A Parliamentary Committee has already closely examined the performance of ASIC and APRA with respect to Trio/Astarra – and its findings were damning.
At the core of the Parliamentary Joint Committee (PJC) report was a finding that the two regulators failed to appropriately detect and act on the fraud which ultimately emerged within Trio Capital.
The Parliamentary Committee went so far as to say that the collapse of Trio/Astarra was more troubling than the collapse of Storm Financial because, while Storm Financial involved Australian investors being persuaded to put their money into investment vehicles which were much higher risk than was appropriate, Trio Capital had actually involved fraud.
Raising strong concerns about the performance of the financial services regulators – APRA and ASIC – the PJC report said the Trio Capital fraud “appears to have been designed to take advantage of vulnerabilities in the superannuation system”, with a key element of the scheme having been to move the funds of Australian investors overseas.
“A key finding of this report is that key checks and balances in the Australian financial and superannuation system did not work to identify the existence of fraudulent conduct and to shut it down rapidly,” the PJC report executive summary said.
“It was left to an alert industry participant to uncover the Trio fraud.”
However while ASIC and APRA arguably had little to be proud about with respect to detecting and preventing the Trio/Astarra fraud, they have achieved an element of redemption from the manner in which they have subsequently set about pursuing those responsible and in seeking to prevent similar events happening in the future.
It is worth reflecting, though, that unlike the consequences which attached to the collapse of major insurer HIH, nobody within the upper echelons of either ASIC or APRA was seen to fall on their sword.
