The ACCC’s legal action against Medibank Private stands to capture some of the bluest of blue chips from the Australian legal and financial sectors. But how did it get to this? In late 2013, the then Abbott government appointed a high-powered scoping committee to look at the possible privatisation of the health fund. In March 2014, Finance Minister Mathias Cormann held a press conference to announce the results of the scoping inquiry, during which he thanked “… [the] scoping study advisers Lazard, Herbert Smith Freehills, Ernst and Young, the Australian Government Solicitor and Newgate Communications and of course my own Department for their outstanding and professional service as we continue to progress this sale carefully, methodically and purposefully”.

The questions raised by the ACCC action is: did this inquiry do its job? And the same question can be asked of the various financial firms involved in the float. These include joint lead managers Deutsche Bank, Goldman Sachs and Macquarie, co-lead managers Bell Potter Securities, Commonwealth Bank of Australia, Morgans Financial and UBS Wealth Management Australia, and two co-managers: Evans and Partners and Ord Minnett.

One of the ACCC’s allegations goes straight to the float itself. The commission claims:

“Medibank calculated there was a risk that the publicity around the benefit change would damage Medibank’s brand and reputation, and have a negative impact on its planned initial public offering of securities;”

The question for those in the scoping inquiry and managing the float is what steps, if any, did they take to check the information being provided to them by Medibank executives and advisers? Did they seek to check the data with what was in the books of Medibank, or did they accept what they were being told at face value and institute no checks?

The Australian reported in October 2014: “Investment banks, lawyers and accountants working on the government’s $5.5 billion Medibank Private privatisation are set to share in a fee bonanza of more than $26 million, the insurer’s prospectus shows.” Nice money, if you can get it.

*Heard anything that might interest Crikey? Send your tips to boss@crikey.com.au or use our guaranteed anonymous form