The Australian Securities and Investments Commission’s (ASIC’s) outgoing chairman, Greg Medcraft may have warned the media about Australia facing a possible Enron-style corporate collapse if accounting firms don’t improve their auditing standards but he leaves behind a significant cover-up in the Trio Capital scheme, according to a victim’s group.
The Victims of Financial Fraud (VOFF) issued a statement quoting Medcraft, who said Deloitte, KPMG, PWC and Ernst and Young needed to improve standards while he also urged for criminal rather than civil penalties for fraudulent crime and wanted “Australia to be a hellhole for white-collar criminals”.
“Australia’s Enron-style corporate collapse was the Trio Capital fraud. Victims of Financial Fraud, since early 2012, released press statements stating the systemic failure of the Australian financial system enabled the Trio Capital Limited fraud to succeed,” VOFF said.
“The failure extends to bank custodians, auditors, research houses, and star rating firms, including the setting up by the international brokers (some had breached security laws in the United States) of a legitimate business – licensed, regulated, and governed by the Australian financial regulators.”
VOFF accused ASIC and then Minister for Superannuation, Bill Shorten, of politicising the crime rather than acknowledging the systemic failure. It said of the 6,090 people affected by the Trio fraud, ASIC and Shorten went after 10 per cent of the victims for placing their savings into a “troubled fund” ad 2.5 per cent of the 155 financial advisers for providing poor financial advice.
“ASIC and Mr Shorten turned a serious financial crime into a witch-hunt. Serious financial crimes need not only attract criminal rather than civil penalties but also should be in the hands of the police and not used as a political instrument,” VOFF said.
ASIC found the auditor failed to perform its auditor duties properly and failed to ensure each audit was planned and performed with professional scepticism.
VOFF said one of the main factors that led to victims losing money from their super savings in the Trio Capital fraud was due to non-evidence based auditing system.
“Another factor is ASIC’s abysmal regulatory failures throughout the operation of the Trio Capital scheme. Mr Medcraft can issue a warning as he departs but he leaves behind a massive cover-up,” VOFF said.
