Another epic fail by regulator ASIC provokes pitched battle by Consolidated Builders Ltd shareholder

Introduction

There is a difference between a regulator receiving a complaint and a regulator doing something about it.

There is also a difference between a shareholder making allegations about a company and a former company director making a report of misconduct directly to the corporate regulator.

In the case of Canberra-based Consolidated Builders Limited (CBL), newly obtained documents raise questions about what happened after that second thing occurred.

The documents show that ASIC received a report from former CBL director Rein (Ray) Heins in January 2025 and internally instructed its Regulatory Insights & Assessment division to register and assess it as a “fresh ROM” – report of misconduct.

More than a year later, ASIC has refused to release the report.

And its internal review of that refusal reveals just how far the regulator is prepared to go to keep the one-page document confidential.

It began with a shareholder’s concerns

Anthony Pesec may be the person in this story who simply refused to go away.

For years, the Canberra investor has been asking questions about Consolidated Builders Limited – questions involving company accounts, share options, the value of shares issued to its managing director, the company’s long-standing auditor and, eventually, a misconduct report lodged with ASIC.

He has taken those questions to the courts.

He has taken them to ASIC.

They have reached Senate Estimates.

And now, through a Freedom of Information process, something rather remarkable has emerged.

ASIC has confirmed that a misconduct report concerning Consolidated Builders was provided to the regulator.

ASIC still won’t tell the public what was in it.

That doesn’t make Anthony Pesec right.

But it does make his persistence rather harder to dismiss.

Pesec is not a corporate campaigner who wandered into this dispute yesterday. His public professional history includes investment banking, corporate finance and renewable-energy investment, and he holds an MBA from the Australian Graduate School of Management. He has worked in Australia and overseas and now operates in the renewable-energy sector.

In other words, he understands financial statements, corporate structures and investment.

And he has spent years trying to obtain information about a company in which he owns shares.

The question that started it

At the heart of Pesec’s concerns was a deceptively simple question:

Why was the managing director able to acquire shares at option prices that, according to the evidence before the court, were substantially below the company’s own reported net asset values as well as prices at which the company itself was prepared to buy shares from other shareholders?

The issue centred on share options granted to CBL managing director Josip Zivko over a number of years.

In 2015, CBL changed the company’s constitution allowing Zivko to be granted options for over 150,000 CBL shares. Those options were ultimately exercised, with the shares allotted to XO 1 Pty Ltd, a company associated with Zivko. The ACT Supreme Court recorded that Zivko paid approximately $3.15 million for the 150,000 shares.

Prior to the 2015 constitution change, the granting of options would have required shareholder approval under the company’s old Articles of Association. However, it seems that CBL directors never sought this for 370,000 options granted to Zivko on three earlier occasions.

As a result of these options, Zivko acquired the largest single shareholding in the company in which he initially held only 5,000 shares in, turning a control of less than 0.5% of the shares issued to a control of about one third CBL.

But the issue for Pesec wasn’t simply that Zivko acquired shares.

It was whether the prices available to the managing director through the option arrangements accurately reflected the value of those shares at the time – particularly when CBL was reporting net asset values while also doing share buy-backs at substantially higher prices.

The court record shows that CBL conducted share buy-backs in 2005, 2007 and 2018 at prices significantly higher than prices at which Zivko exercised options around some of the same periods.

Questions also remain regarding the company’s own reported asset values. Property assets are recorded at cost in the company’s financial statements and, in some instances, depreciated over time. Properties like the former NDIS headquarters on Northbourne Avenue in Canberra, which has been held by CBL since the 1990s, would surely be worth more than the cost at which it is booked. Pesec and other CBL shareholders have formally requested valuation information on several occasions, but on each occasion this has been denied by CBL directors.

That created obvious questions.

If the company was prepared to pay substantially more to acquire shares from ordinary shareholders, why could its managing director acquire shares through options at considerably lower prices? Also, why are these prices below the company’s own reported net asset values, which are surely lower than the true net asset value that reflects the value of CBL’s property assets?

These questions sit at the beginning of the dispute that has now grown into a much larger question about shareholders, corporate governance and ASIC’s handling of allegations concerning CBL.

It is important to be precise.

The courts did not ultimately find that Zivko had engaged in misconduct simply because the option prices differed from the company’s share buy-back prices and reported asset values. Pesec’s claims were contested, and the relief he sought was not ultimately granted.

But the issue was serious enough to generate litigation and judicial examination.

Pesec kept going

Anthony Pesec’s connection with Consolidated Builders goes back much further than his becoming a shareholder in 2016.

His parents were founding partners of CBL. Following his father’s death, Pesec inherited shares in the company and subsequently bought a further stake from his mother.

He therefore wasn’t an investor who simply wandered into the company from the outside.

He says he had been following CBL since its beginnings in the early 1990s and became increasingly concerned about the company’s affairs and the treatment of shareholders.

Pesec has pursued those concerns for years – through ASIC, through the courts and through repeated attempts to have the company’s affairs examined.

His legal battle has now cost him well over $2 million, according to his own account.

For someone who could theoretically have sold his shares and walked away, it is an extraordinary commitment of time, money and effort.

But Pesec says he couldn’t simply do that.

His argument is that shareholders have been unable to establish a fair value for their interests in the company and that selling to company insiders at the prices being offered would mean accepting only a fraction of what the shares may actually be worth.

Those are Pesec’s claims and should not be treated as established fact.

But there is an important history behind them.

In 2019, the ACT Supreme Court gave Pesec access to company documents after he raised concerns about transactions involving CBL managing director Josip Zivko.

In 2021, his application to bring a derivative action was ultimately dismissed, but the judgment recorded that four of the five statutory criteria for allowing such an action had been satisfied.

The courts did not find that the alleged misconduct had been proved.

But neither was Pesec’s case simply dismissed as having no foundation.

And there is another fact that cannot be attributed merely to Pesec.

ASIC itself subsequently found serious problems with CBL’s auditing arrangements.

A company said to be worth $140 million

The scale of the company is also important.

Material supplied to us puts CBL’s value at approximately $140 million, making it a substantial property investor rather than a small family business in which a handful of shareholders are arguing over a few dollars. By contrast, the company’s reported net asset value was $38.5 million as of 30 June 2025.

That scale matters because disputes over the value and treatment of shares can have very substantial consequences.

Pesec also says shareholders have been unable to obtain an independent valuation of the company’s underlying property assets.

The company reportedly carries substantial debt secured against its property portfolio, making the question of asset values particularly relevant to the question of what the company’s shares are actually worth.

Again, these figures and claims should be tested against CBL’s own records and any independent valuations.

But they make one thing clear:

This is not a dispute without financial consequences.

ASIC found problems with CBL’s auditor

In 2024, ASIC announced that it had accepted a court-enforceable undertaking from auditor Robert Johnson and audit firm Hardwickes following an ASIC investigation into the auditing of CBL.

Johnson had audited CBL for approximately 32 years.

ASIC said the length of the relationship created a familiarity threat to his independence.

It also said Hardwickes had provided non-audit services to CBL and its directors, including preparing financial reports that Johnson subsequently audited.

Johnson admitted failing to ensure that the audit of CBL complied with relevant independence requirements.

Hardwickes resigned as CBL’s auditor in March 2024 and Johnson undertook to cancel his auditor registration and not reapply.

That does not establish Pesec’s allegations about CBL’s management.

But it does raise an obvious question:

What examination, if any, was made of CBL’s historical financial statements audited during that 32-year relationship?

Pesec says he had been raising concerns about CBL’s financial reporting with ASIC since 2016.

ASIC’s own documents now provide another piece of the puzzle.

Then came Rein Heins

Heins was not an outsider.

He was a former director of Consolidated Builders.

On 16 January 2025, ASIC received material from Heins concerning CBL.

An internal ASIC email sent later that day specifically asks the Regulatory Insights & Assessment division to:

“… register and assess the attached email as a fresh ROM from reporter Rein (Ray) Heins, a former director of Consolidated Builders Ltd (CBL).”

That is important because it isn’t Pesec describing what happened.

It is ASIC describing what happened.

The same ASIC correspondence says the regulator had previously received and investigated reports concerning CBL from another reporter, Anthony Pesec, described as a minority shareholder.

The ASIC records therefore establish that Heins’ material entered the regulator as a new report of misconduct.

And ASIC registered it.

The question is what happened next.

The one-page report

A subsequent Freedom of Information request sought correspondence between Heins and ASIC, together with related documents.

ASIC’s original FOI decision of 12 March 2026 identified four documents.

The internal ASIC schedule gives us more detail.

One document is described as an internal email attaching a report of misconduct.

The attachment itself – Document 1.1 – is a one-page Report of Misconduct dated 16 January 2025.

ASIC has refused access to it in full.

Chamberlains, acting for Pesec, sought an internal review of that decision.

The reviewer says:

“I have made a fresh decision.”

But the fresh decision did not release the report.

Instead, ASIC affirmed the exemption under section 45 of the Freedom of Information Act and added further exemptions under sections 47E(d) and 47F.

In other words, the second examination produced additional reasons for withholding the document.

Why won’t ASIC release it?

ASIC’s principal argument is confidentiality.

The reviewer rejected the argument that the report had lost its confidential character because Heins had subsequently confirmed its existence to Pesec by text message.

The report was marked “confidentially”, the reviewer noted.

ASIC also points to its stated policy that reports of misconduct are treated as confidential.

There is an understandable regulatory principle behind that.

People may be less willing to report suspected misconduct if they believe confidential reports will subsequently be released.

But ASIC’s internal review goes further.

It says releasing the report could have a substantial adverse effect on the proper and efficient conduct of its operations, because disclosure could affect the regulator’s ability to receive similar information from the public in future.

ASIC also considered privacy and personal-information concerns.

Ultimately, it concluded that the potential harm from disclosure outweighed the public-interest arguments for releasing the material.

That may be legally defensible.

But it doesn’t answer the central question.

Pocock turns up the heat

The issue was not confined to correspondence between Pesec and ASIC.

On 3 December 2025, Senator David Pocock put the matter directly to then ASIC chair Joe Longo during Senate Economics Legislation Committee Estimates.

And it was not a polite exchange about an ordinary shareholder complaint.

Pocock challenged ASIC’s characterisation of the CBL matter as essentially a private dispute between shareholders.

He raised allegations concerning the unlawful issue of options, misleading financial disclosures and the transfer of shareholder value.

He reminded Longo that he had previously raised the matter with ASIC and had written to him about it.

Longo acknowledged those earlier discussions.

But his response was essentially that ASIC has to make choices about where it deploys its limited investigative resources and cannot pursue every matter brought to its attention.

Pocock pushed back (@ 36 minutes)

His argument was that this wasn’t simply a disagreement over the price of shares or a private commercial dispute. The allegations potentially involved breaches of the Corporations Act and matters requiring regulatory oversight.

Longo maintained ASIC’s position.

According to Pesec’s subsequent correspondence, Longo’s response also indicated that ASIC had not taken the matter any further since their earlier discussions.

And this is where the newly obtained documents become particularly interesting.

At the time Longo was telling Senate Estimates about the matter, ASIC’s own records show that a former CBL director had already submitted a fresh report of misconduct.

So the question becomes:

What did ASIC do with it?

A new ASIC chair

Joe Longo is no longer ASIC chair.

Sarah Court became chair on 1 June 2026, providing the regulator with a new leadership regime and an opportunity to examine difficult matters inherited from the previous administration.

That makes the timing significant.

Pesec’s concerns have been running for years.

ASIC has acknowledged problems with CBL’s auditor.

A former CBL director submitted a fresh misconduct report.

Senator Pocock subjected the former ASIC chair to a searching examination over the matter.

And ASIC has subsequently fought to keep that misconduct report secret.

The arrival of a new chair provides an obvious opportunity to ask whether the matter should now be looked at with fresh eyes.

Pesec and Climate 200

There is another part of Pesec’s story worth mentioning because it demonstrates how far his involvement in public affairs extended.

Pesec was a Climate 200 candidate in 2019, when he identified an opportunity for an independent to secure a Senate seat in the ACT from a weakening incumbent Liberal senator. Many believed that was impossible at the time. A projected swing against the Liberal Party did not occur in 2019 and in 2022 he stood down and gave his support to David Pocock, amid the continuing legal and financial pressures associated with the CBL dispute. Pocock went on to secure that independent Senate seat amongst a broad swing against the Liberal Party.

But the political story is secondary.

The central issue remains what happened to the allegations after they reached Australia’s corporate regulator.

The questions ASIC should answer

What happened to the misconduct report after ASIC registered it as a fresh ROM?

Was it assessed?

If so, what was the outcome?

Was any investigation undertaken?

Was the report considered when ASIC determined that the CBL matter was essentially a private shareholder dispute?

What did ASIC know about the report when Joe Longo appeared before Senate Estimates?

Why was the one-page report withheld in full?

Why did the internal review add further grounds for exemption?

And, following ASIC’s findings about CBL’s auditor, was any broader examination made of CBL’s historical financial reporting?

These questions do not require anybody to declare Anthony Pesec right.

They don’t require anybody to declare CBL’s directors guilty.

They don’t even require us to conclude that ASIC acted improperly.

They require something considerably less dramatic.

An explanation.

The regulator deserves scrutiny too

ASIC is right about one thing.

It cannot investigate everything.

Regulators have limited resources and must decide where those resources will have the greatest impact.

But discretion makes accountability more important, not less.

When a regulator receives a complaint from a shareholder, it can decide not to investigate.

When a former director submits a fresh report of misconduct, ASIC can still decide that the matter doesn’t meet its enforcement priorities.

But when that happens, the public is entitled to ask what happened.

And if the regulator says the report must remain secret because confidentiality is essential to the future flow of information, there is an obvious second question:

How can anyone independently assess whether the regulator made the right decision?

Pesec now has the option of seeking external review of ASIC’s FOI decision through the Office of the Australian Information Commissioner.

Perhaps that will provide another piece of the puzzle.

Until then, we have a remarkable documentary trail:

A shareholder with family ties to the company raises concerns.

A court finds sufficient evidentiary foundation for him to investigate them.

ASIC later finds serious independence failures involving the company’s long-term auditor.

A former CBL director submits a fresh misconduct report.

ASIC registers it.

A senator subjects ASIC’s chair to a sustained questioning over the matter.

The chair says ASIC has taken it no further.

ASIC then refuses to release the report.

And an internal review confirms that refusal.

Perhaps the report contains nothing significant. Perhaps ASIC has perfectly good reasons for what it did.

But if so, those reasons should not be impossible to understand.

Because the question now isn’t simply what happened at Consolidated Builders.

It is what happened when the concerns reached the regulator.

The unsung hero?

There is a temptation with a long-running corporate dispute to dismiss the whole affair as an argument between a disgruntled shareholder and a company.

That would be easy.

But Pesec didn’t walk away.

He pursued documents.

He went to court.

He spent millions of dollars of his own money.

He approached ASIC.

He approached politicians.

And he kept asking what, at its heart, is a remarkably simple question:

What is the company – and therefore its shares – actually worth?

Now we know that a former director with three decades on the company’s board submitted a misconduct report to ASIC.

We know ASIC received it.

We know ASIC withheld it.

And we know the regulator had already found serious independence problems concerning the company’s auditor.

Perhaps ASIC made the correct decision not to investigate further.

This possibility must remain open.

But if Anthony Pesec has spent years knocking on the regulatory door, perhaps the most interesting question now is not whether he should stop knocking.

Perhaps it is whether someone inside ASIC’s new leadership should finally open the door.

Because this is no longer simply the story of one shareholder who wouldn’t give up.

It is a story about a substantial property company, tens of millions of dollars in alleged shareholder value, a former director’s misconduct report, an auditor whose 32-year relationship with the company raised independence concerns, and a regulator that says it cannot investigate everything.

Nobody is asking ASIC to investigate everything.

They are asking whether it investigated this.