Did Albo know? ASIC faces questions into bungled investigation of ABC Bullion

Prime Minister Anthony Albanese and a dozen ASIC officials face serious questions following a bungled investigation into the activities of a gold bullion dealer. Kim Wingerei with the story.

This story was updated on 28 August*, including a response from ABC Bullion.

Economist John Adams has been a vocal critic of ASIC; one of the principal drivers of Senator Andrew Bragg’s report which recommends the corporate regulator be scotched, or at least broken up. Its failure to conduct investigations into corporate crime and misconduct is Adams’ main concern.

And he cites, in support of his calls for a break-up, a failed investigation into a gold and precious metals dealer. From July 2022 to August 2023, ASIC investigated the directors of ABC Bullion for possible breaches of their corporate director duties following a 608-page report of alleged misconduct lodged with ASIC by Adams.

The report of alleged misconduct was a 10-month pursuit by Adams after an ABC Bullion employee, who would later become a whistleblower, raised serious allegations as to the integrity of ABC Bullion’s physical bullion storage services.

On 10 August 2023, ASIC concluded its 13-month investigation, costing approximately $300,000, by writing to Adams that “ASIC did not find evidence which establishes a contravention of the law.”

Albanese’s endorsement

However, ASIC’s investigation became marred by controversy when Prime Minister Anthony Albanese held a national media conference on 14 October 2022 with representatives from ABC Bullion and its parent company, Pallion Group.

The event resulted in the Prime Minister providing the directors of the corporate group an explicit personal endorsement – which included photographed in front of ABC Bullion logo banner – all of which was later splashed across social media.

The national media conference coincided with the official opening of a purported manufacturing building located at 2 Lilian Fowler Place, Marrickville.

While the Prime Minister’s state of knowledge regarding ASIC’s investigative activities remains unclear, the Albanese media conference raised such significant concerns with Adams that he lodged a formal submission with the then Senate inquiry chaired by Liberal Senator Andrew Bragg that was examining the investigation and enforcement performance of ASIC.

MWM submitted a series of questions to the Prime Minister’s Office asking what the Prime Minister knew at the time of the announcement but has not received a reply. Moreover, the Office of the Prime Minister has earlier refused to release documents on the basis that no joint press conference with Pallion took place (even though everyone else, including the PMO agreed that it took place).

This is the same inquiry that paradoxically Adams helped trigger when he published his own independent analysis of ASIC’s handling of reports of alleged misconduct on 6 October 2022.

Alleged misconduct

Central to Adams’ concern in 2022 were two core issues.

Firstly, the Prime Minister’s explicit public endorsement would improperly influence ASIC’s investigation, which was already in mid-stream.

Secondly, according to Adams, “even if the Prime Minister had no knowledge of ASIC’s investigation, he should have known, given extensive media reporting, that the Australian Taxation Office has been in a long pursuit of the directors of Pallion Group for an array of alleged contraventions.”

Dissatisfied with the conclusions reached by ASIC, Adams began a self-financed critical review of ASIC’s official investigation of ABC Bullion over an eight-month period. 

Via a barrage of freedom of information (FOI) requests and parliamentary questions on notice posed by One Nation Senator Malcolm Roberts, Adams was able to reconstruct a detailed day-by-day chronology of ASIC’s investigation, “uncovering multiple inconsistencies and unusual investigative practices,” according to Adams.

ASIC flawed investigations

First, Adams discovered that ASIC investigators did not conduct any physical inspection of ABC Bullion’s precious metals storage holdings for over 9.5 months from when the investigation first started on 4 July 2022, a delay that provided ample opportunity for critical physical evidence to be altered.

Second, ABC Bullion, after being notified by ASIC it was under investigation on 7 July 2022, was allowed to move an undisclosed quantity of physical bullion within weeks to the same building in which the Prime Minister would hold his national media conference at 2 Lilian Fowler Place, Marrickville.

In an email to an investor, ABC Bullion claimed that this building, commencing in July 2022, was their new storage facility for their premium and secure storage products. The fact that this coincided with the commencement of ASIC’s investigation was purely coincidental.

Third, while ASIC engaged Deloitte Australia to undertake a forensic audit of ABC Bullion’s precious metal holdings across its premium, secure and pool-allocated products, ASIC failed to obtain a search warrant to conduct the audit. Instead, ASIC obtained Pallion Group’s permission to access four physical locations (three in New South Wales and one in Western Australia).

This approach provided ABC Bullion with months of advanced notice to prepare for the audit.

If this wasn’t enough assistance, ASIC also controversially provided ABC Bullion 10-day advanced notice ahead of the first site inspection, which was conducted on Friday, 28 April 2023, in Sydney. An additional six days’ notice was provided prior to the last site inspection, which would later be held on 11 May 2023.

Fourth, a new whistleblower, who at the time of the Deloitte Australia forensic audit was employed by the Pallion Group, has emerged with claims they were personally instructed to transport a significant quantity of physical bullion that was company inventory within the space of 24 hours back to Sydney in late April 2023 prior to the first site inspection.

If such claims of co-mingling and substitution can be substantiated, then it would strongly suggest that the results of the Deloitte Australia forensic audit were heavily manipulated.

Unlawful building activity

Also among these discoveries, the movement of physical bullion by ABC Bullion to 2 Lilian Fowler Place, Marrickville, approximately 3.5 weeks after being notified by ASIC that an investigation had commenced, became an intense point of focus for Adams.

According to Adams, “the building had previously been used as a food processing facility and the building’s current tenants, Pallion Equipment Pty Ltd (another subsidiary company within the Pallion Group) had only lodged a development application to the Inner West Council on 3 June 2022 seeking consent to both change the use of the building and undertake a full-scale redevelopment of the building.”

Adams went on to discover that Pallion Equipment’s development application was only approved by the local council on 23 January 2023, that unauthorised building works had been performed on the building in July and August 2022 without development consent, the appointment of a principal certifying authority or a construction certificate,

and that the building had been occupied without an occupation certificate.

More than two years since ASIC started their investigation into ABC Bullion’s storage services, the Inner West Council has yet to issue an occupation certificate for the building purportedly holding the physical assets, in some cases the life savings, of investors.

In the past week, Michael Ryan, who is the Inner West Council’s Senior Manager of Health and Building, confirmed in a letter to Adams that upon investigation of his claims, 2 Lilian Fowler Place, Marrickville, had indeed been occupied without an occupation certificate and that this constituted “unlawful activity”.

Moreover, Mr Ryan confirmed that “there is sufficient evidence that breaches occurred for Council to undertake successful enforcement activity.”

This formal declaration of unlawful activity by the Inner West Council has significant implications for ABC Bullion, their clients, ASIC and Prime Minister Albanese.

* Update 28 August: An Occupation Certificate for the building was issued by Council on 27 August, the day after this story was first published.

ABC Bullion: altered storage

The directors of ABC Bullion must explain why they dramatically altered the configuration of the company’s storage program 3.5 weeks into an ASIC criminal investigation that resulted in hauling physical bullion from at least one lawfully occupied building to a building that was illegal, says Adams.

“For investors, they must quickly ascertain to what extent has the now confirmed unlawful activity been communicated to ABC Bullion’s and Pallion Equipment’s insurers, given federal statutory duties of the utmost good faith and disclosure and whether the insurers have a legal basis to void all insurance contracts relating to the Marrickville building.”

Investors also need to ascertain what other legal and financial ramifications flow from the confirmed unlawful activity.

Has ASIC skirted its responsibilities?

ASIC must answer the question as to how it gave ABC Bullion, a company with established ties with the Prime Minister, a clean bill of health while unlawful activity was occurring under its very nose.

This question is particularly relevant to Deputy Chair Sarah Court, who, on several occasions over the past 12 months, sought to reassure Federal Parliament that ASIC’s investigation was both “extensive” and conducted “with the utmost seriousness”.

“Lastly, for the Prime Minister, did he know that he was officially opening an unlawfully occupied building during a criminal investigation under his government, and did his public intervention have any direct or indirect influence on the investigative methodology and outcome of ASIC’s investigation?” Adams asks.

NACC submission

Given ASIC’s well-documented track record of secrecy and obfuscation, as noted by the recent Senate inquiry, the only entity that can get to the bottom of ASIC’s bungled investigation and whether any improper political influence played a role in ASIC allowing unlawful activity to go unchecked, is the National Anti-Corruption Commission (NACC).

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For this reason, Adams submitted his new 206-page Critical Review Report on 31 May 2024 to the NACC, which remains under assessment some 80 days later.

John Adams contends, “Given the plausible possibility of improper political influence over an ASIC investigation amidst easily identifiable unlawful activity central to allegations emanating from a former employee turned whistleblower, we may expect the Prime Minister of Australia and senior ASIC officials to be under investigation for possible corruption very shortly.”

Disclosure: John Adams is a principal of Adams Bullion – a precious metals trading company.

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