Chapter 19 – Louise Macaulay misleads Jon: the true story of how ASIC forced Dover to close

Jon writes to Louise

On 8 October 2018 an ex-employee of Dover, Jonathon Hayward[1], wrote to Ms Louise Macaulay, ASIC’s Chief Supervisory Officer, and one of the senior ASIC staff responsible for closing Dover. It was from the heart. Jon asked why ASIC shut Dover down.

Jon was age 50 and concerned if he lost his job he might never work again. Jon worked for Dover’s in-house company formation service, Legal e Docs. Jon set up companies, trusts and SMSFs for Dover advisers for nil fee (except for ASIC disbursements on new companies). Jon was on good terms with most Dover advisers and helped them with technical questions.

It’s worth sharing the first few paragraphs of Jon’s letter here[2]:

Louise writes to Jon

Louise Macauley responded on 23 October 2018.

Or rather, Peter Kell instructed Louise to sign a letter prepared and reviewed by a team of senior ASIC executives and lawyers. These were Kate Metz, Warren Day, Leigh Coughlan, Bruce Standfield, Glenn Childs, Andrew Thomas, James McAllister-Harris, Joanna Bird, Tristan Moseby, David McGuiness, Tim Mullaly and Ruki Weerasinghe[3].

It’s a remarkable group effort: a total of 16 ASIC executives involved in preparing one simple and short letter, followed by a discussion as to who would sign it, and finally an instruction from Peter Kell that Louise Macaulay should sign it.

Her, or more accurately, their letter, contrasted with Jon’s warm tone[4]. Louise skipped each of Jon’s concerns, offered no empathy or sympathy, to coldly conclude:

“While ASIC recognises that regulatory action can often impact adversely on those who work in entities which are the subject of action, ASIC’s mandate requires it to actively protect against consumer loss caused by failure to comply with financial services laws.”

Jon was concerned by ASIC’s conclusion. Everyone knew there was no consumer loss involved in Dover’s closure.  ASIC’s letter writing collective appeared to be pushing the truth a bit here. But Jon left it there and got on with his life.

Louise misleads

But Louise’s group think letter has a significance beyond this. Her letter shows 16 senior ASIC executives and lawyers colluding to create a misleading and deceptive statement, a false statement, a lie, about Dover’s closure.

Louise wrote:

“… Dover voluntarily offered to give a Court enforceable undertaking (EU) which would make provision for a timetable under which Dover would cease to operate its financial services business. ASIC accepted this offer from Dover and Mr McMaster. In this regard we do not accept your assertions that ASIC shut down Dover.” (emphasis not added).

Louise stresses, and even underlines, her word and concept “voluntarily”. The Cambridge dictionary defines “voluntarily” as meaning “done, made or given willingly, without being forced or paid to do it”. The other major dictionaries provide similar definitions. Louise tries to convey the broad idea ASIC did not force Dover to close. That Dover willingly offered to cancel its Australian financial services licence.

There was nothing voluntarily about Dover’s closure. Louise knew this.

 The 1 June 2018 meeting between ASIC and Dover

 In the meeting held on Thursday 1 June 2018 at ASIC’s offices at Collins Street Melbourne ASIC officers unequivocally told Dover’s representatives[5] that Dover had to close its doors by Friday 8 June 2018. There was nothing optional, or voluntary about this. ASIC made it clear that if Dover did not close ASIC would close Dover.

As one would expect, this opening finality was a bit of a  barbecue stopper. The Dover representatives were shocked. Experienced AFSL compliance lawyers, they had not encountered a situation like this before. An immediate closure would be a catastrophe for all connected to Dover: its owners, its staff, its advisers, its clients. A complete catastrophe.

ASIC said it would cancel or suspend Dover’s licence immediately, or at the Delegate’s meeting soon after. If this happened Dover’s 410 advisers would lose their businesses, their goodwill and their livelihoods overnight. Thousands of advisers, staff and their families would be adversely affected. As would tens of thousands of clients and their families.

This was a terrifying proposition. It would wreak havoc and wreck lives. ASIC used it as a negotiating tool. ASIC exploited Dover’s concerns for its 410 advisers.

Adrian McMaster thought hard. He came up with an alternative. If Dover agreed to stop advice on Friday 8 June 2018, which should allay ASIC concerns about bad advice, would ASIC allow four months, ie until 8 October 2018, for Dover’s 410 advisers to arrange new AFSLs?

ASIC responded favourably. It agreed that if Dover stopped providing advice on Friday 8 June 2018 its advisers could have to 8 August 2018, ie 8 weeks, to find a new AFSL. Dover still had to shut, but at least it did not have to shut straight away.

However, once hands were shaken, so to speak, the ASIC team left to confer with ASIC executives. They returned, apologetic, saying the 8 weeks had to be cut to 4 weeks. Take it or leave it. If you leave it ASIC will shut Dover as soon as possible with no notice. Overnight[6].

Shutting overnight would be catastrophic for Dover’s advisers and clients.

This was ASIC threat if Dover did not agree to close on 8 June 2018.

ASIC had nothing to gain by cutting the 8 weeks to just 4 short weeks. If the advisers could not advise what difference did it make to ASIC? ASIC did it anyway. Sheer malice.

What else did Louise not tell Jon?

Louise did not tell Jon what happened at the 1 June 2018 meeting.  Further, Louise did not:

  1. refer Jon to the ASIC letter dated 5 June 2018 addressed to Dover’s lawyers[7] where Mr Andrew Thomas, if there was any doubt about what had transpired at the 1 June 2018 meeting, made it clear to Dover in writing its closure was not voluntary. Dover had no choice but to close: it literally confirms the decision to close Dover was not made by Terry McMaster. Any such suggestion is “misconceived”. This letter is reproduced below
  2. explain to Jon that Peter Kell directed Dover be shut back in 2016. The supposed bad advice[8] of Terry meant section 1324 and 1101B injunctions were planned. This was the real reason ASIC wanted to shut Dover down, as Gervase Greene and ASIC’s other media staff told numerous journalists from Friday 8 June 2018 on
  3. give Jon the e-mail back story to Tim Mullaly’s 2017 submission to Treasury for increased ASIC directional powers for where it is explicitly stated ASIC wanted to shut Dover down, apparently because it was growing too fast. (Tim gave Treasury the impression Dover was growing twice as fast was it really was. He doubled the numbers, not explaining each adviser also had a CAR, or a corporate authorised representative. It’s very misleading stuff) and
  4. explain to Jon ASIC intended “within a matter of months” move to revoke Dover’s licence and had been saying so for quite a while to journalists around Australia[9]. For example, to Matthew Smith of Professional Planner, as reported by Matthew in his article dated 29 June 2018 titled “Choose your next licensee carefully”.

No. Louise said nothing about these matters. Instead Louise lied to Jon. Louise wrote Dover voluntarily closed. Louise even underlined the word “voluntarily’, as if to stress Dover closed willingly and was not forced by ASIC.

Louise goes so far as to write Dover voluntarily offered to close. That is, without any force from ASIC Dover offered to give an enforceable undertaking with provision for a time table under which Dover would cease to operate, and ASIC accepted this offer from Dover.

This is not true. It is another lie. As you can see from paragraph 6 of the 5 June 2018 letter it is ASIC that offers to accept an undertaking from Dover to close on an ASIC specified timetable. He then adds if Dover does not accept ASIC will close Dover down.

You can read Jon’s e-mail and Louise’s letter at the end of this chapter.

What is the 5 June 2018 letter from ASIC to Dover all about?

ASIC lawyer Andrew Thomas[10] aggressively confirms his early verbal statements that ASIC would “pursue the administrative enforcement action” to close Dover if Dover did not shut down on ASIC’s time table and sign an enforceable undertaking to do so.

ASIC’s administrative enforcement action, Dover feared, would wreck Dover’s advisers’ businesses overnight. More than 400 businesses would close without notice, losing valuable client lists and commission contracts[11], with many going under as a result of debt. Thousands of staff without jobs. Numerous bankruptcies. Tens of thousands of clients left without an adviser, many of whom would have transactions such as life insurance applications on foot.

What would happen if a life insurance applicant suddenly died? Who would be responsible?

It was a highly irresponsible threat, matched only by its clarity. ASIC left Dover in no doubt as to what ASIC intended to do if it did not close on ASIC’s time table. Dover had no choice but to do as ASIC said and shut down. There was nothing voluntary about the closure of Dover.

 Where this fit into the scheme of things?

Louise’s conduct lies highlight the organized and orchestrated nature of ASIC’s media disinformation campaign. Numerous media articles blamed Terry for closing Dover, and suggested he did this as some sort of escape mechanism, fearing greater more sinister revelations. As late as September 2018 ASIC’s media representatives were contacting journalists to make sure they stick to the story that Terry, not ASIC, caused Dover’s closure. Usually of course they added extortions to tell fibs like “Investigations are still continuing”.

This was not true. As you can read in ASIC’s letter of 5 June 2018 gave Dover no choice but to close. ASIC threatened a worse fate for Dover and its 410 advisers if Dover did not agree to close its doors in line with the timetable set down in his letter.

What does this say about ASIC’s culture?

Louise was a trooper. Louise was not a leader. Louise played the ASIC party line, even though she knew it was not true and ASIC had forced Dover to close. Peter Kell told her to sign a document she knew was not true, and she signed.

Peter Kell, Louise Macaulay, Kate Metz, Peter Kell, Warren Day, Leigh Coughlan, Bruce Standfield, Glenn Childs, Andrew Thomas, James McAllister-Harris, Joanna Bird, Tristan Moseby, David McGuiness, Tim Mullaly and Ruki Weerasinghe. No less than 16 senior ASIC executives and lawyers conspired to create a lie. It’s a remarkable insight into the ASIC culture: 16 senior executives worked together to create a lie, a false document, to mislead and deceive[12]. Not one spoke up. Not one did the right thing.

 

[1] Jon had a strange hand in naming Dover. Terry and Jon met when Jon was swimming the English Channel for the second time, back in 2004. Dover UK is the home of Channel swimming.

[2] The letter is reproduced in full and can be read at the end of this chapter

[3] Source: FOI documents provided to Jon Hayward in May 2019

[4] The letter is reproduced in full below

[5] Integrity Legal’s Rhett Das and Adrian McMaster. At this stage Terry was not mentally fit to attend. The materials he read on the Royal Commission website on ASIC’s intentions to close Dover had affected his mental health. Requests were made to defer the process based on Terry’s health but these were promptly denied

[6] See chapter 17.3 for more ASIC emails confirming this

[7] Reproduced below and elsewhere in this book

[8] This was based on fabricated evidence, as Louise Macaulay must have known at the time as she was ultimately in charge of the staff involved in the fabrication and was responsible for their work

[9] These comments, as detailed previously, are remarkable breaches of both the Privacy Act and INFO 152

[11] Groups like the CBA’s Colonial Firs State did this: they cut off all Dover adviser payments, and kept the amounts for themselves even though clients were still charged management fees: another form of fee for no service

[12] Yes, this is a paraphrase of ASIC’s barrister Mr Quinn QC’s immediately withdrawn comment in the Federal Court on Wednesday 12 June 2019. ASIC has no trouble falsely accusing others of lying if it suits their case and cause.

The Dover Group