Gareth Parker:
Michael Sukkar, good morning.
Michael Sukkar:
Good morning, Gareth. Good to be with you.
Gareth Parker:
Thank you for your time. I appreciate you coming on. What do you know about this story?
Michael Sukkar:
Well, Gareth, I know that ASIC started reviewing a number of the matters surrounding Stirling First in early 2017. It lead to some action in 2018 in relation to some of the products that were being promoted. It seems as though after that date other products were then promoted quite separate to that and we're now left with a situation with 101 people whose future is somewhat uncertain. Certainly their financial future but also the roof over their head and ASIC, I can assure you, is ploughing huge resources - and I have emphasised the urgency of this - huge resources in their investigation, to try and determine, firstly if and what rules and laws have been broken and what action can be taken, against those that may have done that. You can understand that with investigations like that and with individuals involved in these sorts of schemes, it's very important from a legal perspective that ASIC dots the i's and crosses the t's.
I want to thank you, Gareth. I think the fact that you've been out advocating for these individuals since early May has helped. Last week when you made contact it became obvious to me that there wasn't great communication from ASIC and I think from their perspective and in their defence, they are head down, tail up actually conducting the investigation. But I emphasised to them the importance of communicating what they were doing because there are over 100 people who are very anxiously waiting and watching to see what action is being taken and I think that they've taken some steps to at least outline what it is that they are doing within the boundaries of what they can release publicly.
I know that they've obtained the support of Macquarie Bank who's not involved in any way, shape or form as a promoter of these activities but Macquarie, who will make available their vulnerable client team, to receive or to be in contact with the 101 tenants to discuss their circumstances so I think that's something that we're grateful that Macquarie is doing for those. And there's obviously a lot of co-ordination with the WA state consumer protection commissioner who will also consider, from a state perspective, their consumer rights under the Residential Tenancies Act.
So there's the investigation that's being conducted, and I'm very keen to make sure that that's done thoroughly. I'm also keen though to make sure that ASIC actually speaks to those individuals because I think that are affected because I think that their evidence is going to be extraordinarily important and also emphasise to ASIC the importance of, within the boundaries of not jeopardising any future legal case, actually trying to be as open with where they're at in the investigation so we don't end up with situations presumably, Gareth, where you have people contacting you saying, 'look, we have no idea what's going on. Can you go in and bet for us?' which I thank you for doing for them.
Gareth Parker:
Well, I'm really pleased to hear you say that that's your approach to ASIC. I have made really clear that the last thing that I want to do is jeopardise an investigation that may have civil aspects to it, it may have criminal aspects to it. I'm told that both angles are being pursued. So the last thing that I want to do is jeopardise that investigation because if there's been wrong-doing, people need to be held accountable and of course we all understand that.
My strong criticism of ASIC has been that they have failed in their consumer watchdog angle. They haven't been communicating to people, not just about the investigation, which is about what's happened in the past. It's about practical advice to people who are in a really dreadful situation now.
Michael Sukkar:
Yeah, I agree and ASIC is also - and this is not public but I'm happy to make it public now - ASIC is also conducting their own internal investigation of their activities to see if there was more that they should and could and were able to do as far as some of these products. Obviously, and I've got to be a little bit careful in what I say, but it's clear here that there was a whiff of impropriety somewhere along the line that peaked ASIC's interest. As you would be aware, Gareth, there are literally hundreds and indeed thousands of these sorts of products out in the market and ASIC has oversight over them and here, what I want to know and what the Government will be keen to know is, was that investigation thorough enough and were they proactive enough in making sure that once those sorts of broad issues - albeit it with a different product - was on the agenda, that they were doing everything they could to make sure that new potential investors were not being duped into pretty crazy products.
Gareth Parker:
So that's significant. There's a couple of significant bits there. The fact that ASIC are conducting their own internal inquiry. I'm pleased about that because I think they should. I want to take you to the timeline that you've outlined which is broadly in alignment with what we've previously reported and that is that ASIC first became aware of this operation in early 2017. You said that they didn't take action until early 2018. That's obviously a gap of a year. When they did take action, they prevented the directors from selling and marketing a certain product but the directors then restructured and went out and sold another product.
What to me, has been the missing gap in all of this, was any attempt by ASIC to warn the public. They certainly did regulatory activity. They made investigations. They called the directors in, for example, for a section 19 hearing. But not at any point did they go and say to retirees, 'don't put your money in this. We think it's dodgy.'
Michael Sukkar:
Yeah and Gareth I think that is what I'm hoping this investigation internally will flush out. We determined in the last budget that, not just in situations like this but emanating from the banking royal commission as well, that to oversee the sheer volume of these types of products and I don't want to prejudice this case but there are in many areas around the country, unscrupulous individuals promoting products. I'm not suggesting that here although the investigation will tell the story. It became very clear to use that ASIC just needed more resources to have a greater presence on the ground and more cops on the beat, so to speak. That's why we put in place a $400 million package for ASIC to beef up those sorts of resources. But I think that you're broadly right. It seems curious to me that there was a red flag here certainly in 2018, if we're going to be very generous…interrupted.
Gareth Parker:
Very generous because state regulators knew about it on 2016.
Michael Sukkar:
Absolutely. A red flag here. What efforts were made to really make sure that people, when they saw these individuals regardless of the product that was being flogged by them, that they were aware that there was something that might not have been quite right about it from a regulators perspective and that's what I'm hoping that the investigation will determine.
Gareth Parker:
Is there any prospect at all, for some sort of compensation for victims here, or is it a case of buyer beware if you do, bad luck?
Michael Sukkar:
Well look, the reality is that the Government is never going to be in a position where we can protect every individual around the country from these sorts of situations although we try our very best.
There is an opportunity here under the Australian Financial Complaints Authority for some of the investors - not all - but I think for some of those who invested in the Stirling Income Trust, potentially, for compensation through the existing frameworks.
For the other 36 who invested into the Silverlink shares, there doesn't seem to be any existing ability to provide that and I understand from what I've been briefed from ASIC that the administrators don't think that there's going to be a great deal to flow back to investors once the assets and once everything has been wound up.
It's something I'm happy to consider but I certainly don't want to create false expectations, Gareth.
Gareth Parker:
Well we'll continue to pursue that with you as more facts become clear and I do want to keep in touch with you and your office on this issue as it unfolds.
Is there anything that you believe can be done to keep victims in their homes or again, will it depend on individual circumstances and the generosity of landlords, or not?
Michael Sukkar:
We'll we're keeping a very close eye on this. I think some of it will depend on the outcome of the work that will be done by the state housing department, the Consumer Protection Commissioner under the state WA Residential Tenancies Act.
From my perspective, I sort of where two hats as you've alluded to, Gareth and putting on my housing hat, you would certainly from my perspective - and I'd be appealing to Macquarie here, who is the secured creditor - certainly while investigations are underway, that individuals both tenants but also landlords who have been affected by this, are protected. I would've hoped that there'd be a status quo arrangement on those sorts of things while investigations are underway and that's what we'll be working towards but we will be doing that in conjunction with the state authorities.
Gareth Parker:
It's a reasonable point to make. You'd think that an organisation like Macquarie could absorb a haircut here. They have much more capacity to do that than do vulnerable retirees who may've lost their lifesavings.
Michael Sukkar:
Well they are in no way at-fault. I think who are at-fault, it's pretty clear, and I think you've outlined it really well, Gareth. But it would be a great thing for them to do and it would, I think, ingratiate them as an organisation with many people in Western Australia and indeed around the country.
Gareth Parker:
I agree. Generally speaking, can directors be prevented from doing this sort of thing again? Because again, without prejudicing the investigation, some of the cast of characters in this have form and lots of it.
Michael Sukkar:
Well, Gareth, yes. I mean the reality is, like any law, the laws are there and people break laws everyday sadly. In a white-collar crime sense, we do have a great ability much more so now through digital means, of ensuring that we have a pretty good understanding of what these sorts of characters are up to.
You know, whether they are doing it in the form of as an individual or through one organisation or a company or indeed many hundreds of different companies that often these people are involved with. And so the ability now under the current framework, to stop these sorts of activities by people who, as you say, have form, is much greater. But a lot of that, Gareth, and I stress, a lot of that depends on the outcome of this investigation and the prosecutions and civil and/or criminal penalties. Because once you've been able to prove and prosecute an individual for improper conduct, that's the point at which you can stop it. When it's just, there might be whiff of dodgyiness about somebody but there's been no civil or criminal penalty and it's never gone to court, those are the times when, sadly, if you look at this situation you might think 'that's a bit of a dodgy character' but we can't stop someone if they haven't actually broken the law. That's why I've been really careful here, I don't want to do or say anything that's going to stop us from making sure that these people never do this again.
Gareth Parker:
We are running short on time but I do just want to ask a few very quick questions.
Do you know when ASIC will speak to people affected?
Michael Sukkar:
No, I don't. But I've asked through my office for them to make sure that they absolutely do that. I'm not an investigator but I would've thought that that would be a pretty early port of call as far as gathering the information.
Gareth Parker:
Do you have any information about how long these investigations may take to conclude?
Michael Sukkar:
I don't but I can assure you and I've emphasised this to the agency that this is top priory and it's got to move quickly. People's lives are on hold, their financial future, the anxiety associated with it means that it's being dealt with very expeditiously.
Gareth Parker:
Assistant Treasurer Michael Sukkar, last question. Has the system let these people down?
Michael Sukkar:
Well I think we will know that once we have had a look at both the external and internal investigation.
My extinct, my gut feeling is probably 'yes'. But I really want to see exactly what happened, determine what level of misconduct occurred and at that point in time we'll make the call. If there's anything that needs to be rectified, to make sure that, to the greatest extend possible it doesn't happen again, I can assure you that we'll do it.
Gareth Parker:
I appreciate your time and please keep us up to date and in the loop.
Michael Sukkar:
Good on you, Gareth. Look forward to speaking again.
Gareth Parker:
Michael Sukkar, the Federal Assistant Treasurer.