Federal opposition assistant treasury spokesman Mathias Cormann has fired a salvo at the government for failing to advertise the position of ASIC chair before filling it.
Treasury recommended Greg Medcraft for the $700,000-a-year ASIC job, which Medcraft began on 13 May.
Medcraft has come under fire for sub-prime mortgage woes at French bank Societe Generale, where he oversaw the bank’s securitisation business from 1999 to 2007. He resigned from the bank in the middle of 2007.
The bank has been the subject of two lawsuits over whether it engaged in misconduct in relation to the instruments between 2005 and 2008.
Medcraft has not been named in either sub-prime-related lawsuit, but oversaw the bank’s mortgage securities operations for at least part of the time under investigation.
He has denied any wrongdoing in relation to the lawsuits.
Cormann put a question earlier this week to Finance and Deregulation Minister Penny Wong, who was representing Treasury in Parliament at the time.
“Why did the Gillard government appoint Mr Medcraft as chair of ASIC without first advertising the position, in clear breach of the government’s own guidelines for merit and transparency in senior public service appointments and announced with much fanfare by the then special minister of state, Senator Faulkner, back in February 2008? ” he said.
Wong told Parliament that Treasury sought an exemption from the full selection process.
“Some circumstances may arise, and I do not propose to read them all – I assume the senator is aware of them. There is a process flagged in those guidelines whereby the minister is required to request the Prime Minister’s approval to fill a position without conducting a full selection process,” she said.
In a supplementary questions, Cormann asked why the exemption was sought, why it was granted and why the position was not advertised.
He added: “Was any other candidate considered for appointment as chair of ASIC other than Mr Medcraft? If not, why not?”
Wong said: “Treasury advised that, since Mr Medcraft was highly qualified, it was preferable not to advertise the position, to minimise disruption at ASIC and to facilitate a seamless changeover.”
Cormann pressed, asking what investigations were conducted.
“Prior to Mr Medcraft’s appointment as chair of ASIC, what investigations or due diligence, if any, did the government conduct into his role on Wall Street with the French bank Societe Generale and the contribution of its securities products to the global financial crisis?” he said.
Wong replied that Treasury had publicly answered the question.
“Treasury has said: Mr Medcraft also disclosed to Treasury the existence of civil proceedings from 2004 in the United States brought against Societe Generale and several other respondents,” she said.
“Treasury advised Mr Medcraft that, given the proceedings had been withdrawn in full, it was not necessary to disclose the matter to the government.”
