Monday, May 26, 2008

Monday Postscripts - Henson, driving licenses, Opes Prime and problems with compliance

I often add postscripts to the end of posts to provide updates. Tonight I thought that I should put the recent lot into a single post.

In Bill Henson, art and child pornography I made a brief comment on the controversy currently obsessing Sydney, whether Henson's photos of young children should be classified as child pornography.

Coming home from work I had no choice but to listen to another round. John Watkins, the NSW Deputy Premier, commented that Australians had become more socially conservative over the last twenty years. I am sure that this is true.

I find the current debate confusing. I remember the sexual drives, tensions and conflicts of my teen and early adult years too well to be too censorious on sexual issues. My problem is that the discussion combines so many issues as to be a total mess and also appears to hark back to a Victorian age that I thought was long and rightfully gone.

The only positive that I can see from my viewpoint is that the issue has again awakened my interest in looking at social history to delineate some of the major changes. I suppose that that's a plus.

As I write, NineMSN is running an on-line poll on the question should L-Platers have to do 120 driving hours before obtaining a driver's license.

I took looked at this in Saturday Morning Musings - the burden of compliance. I suggested that, from a practical viewpoint, this was poorly judged and socially discriminatory. That remains my view. However, I note the figures on the NineMSN poll are running at 23,481 in favour of 120 hours, 8,982 against. So I am very clearly in a minority.

In a comment on the burdens of compliance post, Kangaroo Valley David referred, among others, to the Opes Prime case. He said in the context of compliance and rules: So, if not abolished then at the least ignored, and at morally worst, subverted.

David makes a fair point, and Opes Prime does bring out some of the conflicts.

The failure of the ANZ Bank to declare a substantial interest in certain companies appears to have been treated as a technical breach. However, to my mind, this misses the point.

The purpose of the disclosure rules is to ensure an informed market. Had ANZ in fact declared a substantial interest, then clients of Opes Prime might have realised that the shares that they thought were theirs in fact belonged to the ANZ. I am not a lawyer. However, I would have thought that non-disclosure in these instances was more than a mere technical breach.

I am not opposed to regulation per se. However, creation of a legal and regulatory environment that breeds selective disregard of, or at least movement around, the law creates problems.

At the big end of town, there are legions of high paid specialists to help companies and wealthy individuals. Every so often the really greedy or sometimes just the unlucky are lopped off.

At the opposite end of the spectrum are the parents and kids who will work round what are in fact unworkable driving regulations by falsifying log books. Again, at least some of the gross cases will get caught.

Just as the Opes Prime case has led to moves to tighten corporate regulation, so the NSW Government will be forced to work out new ways of combating these breaches of the law. I am not quite sure how they might do this. Perhaps create a new compliance division within the NSW Roads and Traffic Authority?

And so the process continues.


Anonymous said...


Regarding the Opes Prime debacle (for that’s what it is for all involved) I would like to make a couple of further points, and explain my continuing unease – not to say contempt – with the ‘fairness’ of this situation.

1) Under the old mercantile laws I believe that you cannot give any better title to something than that security of title you enjoy as present owner. This means that ANZ’s on-selling of shares it gathered to itself may now be held by others under faulty title. The unpicking of this situation would have been almost impossible to rectify, so the regulators and lawmakers natural response was to recognise a ‘dispensation’ of the need to comply. Eddie Mabo would understand my point.

2) Some of those holdings assumed by ANZ were in fact superannuation assets. I would like it explained just how ANZ gained good title in those shares. The trustees of those funds could not give any title to either Opes or ANZ, other than by sale. Yet somehow they did, so why aren’t those same trustees now being prosecuted?

3) And the question of timing: If an Opes client decided to move the broker of record away to another organisation, and if there was no margin loan outstanding, I assume the shareholdings were simply recorded with the new broker. There was no question of title being ‘transferred back from’ ANZ to the innocent owner – and certainly no ‘consideration paid to’ ANZ by that owner. But this all changed when the receiver/administrators stepped in. So shares acknowledged on Monday as in the ownership of Opes clients became on Tuesday the absolute property of ANZ?

My bet is that sometime this year ANZ will ‘reach an accommodation’ with the so-called unsecured creditors with respect to their shares. No wonder some older people still hoard their savings under the bed.

Sorry to be boring – maybe we should just put ASIC and ASX in charge of drivers licencing?


Jim Belshaw said...

Nothing boring about this, David. I would be interested to know what some of our legal colleagues think - I think that Legal Eagle had a post on some of the issues.