Statistics produced by Australia’s corporate regulator reveal that it treats only 11% of the unfavourable statutory reports it receives from insolvency practitioners as serious enough to warrant any action.
Insolvency practitioners must lodge a report with the Australian Securities and Investments Commission (ASIC) when they suspect an offence under any Australian law relating to the company to which they are appointed.
In one of ASIC’s submissions to the Senate Committee’s inquiry into liquidators and administrators (see page 76 of the March 2010 submission), there is a chart showing the number of such reports – described as “reports of alleged misconduct or suspicious activity” – received in the financial years 2007, 2008 and 2009, and in the 6 months to December 2009.
See the copy of ASIC’s chart at the end of this article.
[All public submissions to the Committee may be found at http://www.aph.gov.au/senate/committee/economics_ctte/liquidators_09/submissions.htm ]
The chart in ASIC’s first submission reveals that during the period 1/7/2006 to 31/12/2009 ASIC received 20,225 “inital” statutory reports alleging misconduct or suspicious activity. Of those only 2,918 (14.4%) were flagged or escalated for further consideration.
In the 06/07 and 07/08 financial years the number of reports escalated equalled 17%. But in the 08/09 financial year and the half year to December 2009, that figure dropped to 11%.
Why are 89% of reports by liquidators and administrators not acted upon? There would be several reasons. Isn’t the public entitled to know what those reasons are and how many cases there are in each category?
