Dishonest business owners and their advisers could register Bob Marley, Homer Simpson and Elvis Presley as company directors in order to evade tax and fleece creditors, the corporate regulator has admitted.

Key points: A senate hearing has heard that deceased celebrities could be installed as directors of Australian companies

A senate hearing has heard that deceased celebrities could be installed as directors of Australian companies ASIC conceded it does not verify the identities of company directors

ASIC conceded it does not verify the identities of company directors An ABC investigation recently revealed how vulnerable Australians were unwittingly installed as dummy directors

Senior staff from the Australian Securities and Investments Commission (ASIC) told a joint parliamentary committee it was not possible to check whether people installed as company directors consented to the appointment, or even existed.

The ABC revealed this month that a Victorian firm of accountants was allegedly recruiting the homeless and people battling drug and alcohol addiction to act as "dummy directors" of companies.

ABC Investigations identified dozens of dummy directors linked to almost 200 companies, many of which went into liquidation collectively owing tens of millions of dollars to the tax office and other creditors, including employees and small businesses.

The practice of sinking a company in order to avoid paying its debts, then resurrecting the business under a different name, is known as phoenixing. It is estimated to cost the Australian economy billions of dollars a year.

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"The system in Australia for registration of directors is just that — it's a registration system, it's not a checking system," ASIC commissioner John Price said.

Greens senator Peter Whish-Wilson asked Mr Price what ASIC does to verify the identity of a director.

In response, Mr Price said: "We don't."

Greens senator Peter Whish-Wilson appeared bemused as he was told it was possible to register Elvis Presley as a company director ( Supplied: Parliament House )

"If Elvis Presley or Bob Marley wanted to register as a company director, they could?" Senator Whish-Wilson asked.

"Quite possibly," Mr Price responded.

Changes have been discussed… for 16 years

Mr Price said the Government was planning to introduce a number of measures to tackle widespread and blatant tax evasion through the use of dummy directors, including director identification numbers, which would enable authorities to better track who was being installed as company directors.

It is not clear exactly how this system would operate, and its introduction is at least two years away.

In response to questions from Senator Whish-Wilson, ASIC executive director Warren Day claimed that ASIC has been in discussions with government and Treasury for at least 16 years to introduce a director identification number system.

Rod Jackson was installed as the director of 26 companies against his knowledge. ( ABC News: Jeremy Story Carter )

The scheme uncovered by the ABC had been operating for at least a decade and a half and spanned a number of states.

In some cases, the dummy directors agreed to become the director of one company but were appointed as directors of a number of other companies without their knowledge. One man was the director of 26 companies, many from the trucking industry.

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The purpose of installing the dummy directors was often to enable clients of the accounting firm, Brown Baldwin, to avoid paying income tax on their employees' wages. In the event the company was liquidated, the dummy director would be held responsible for the company's failure.

The ABC also revealed it is easy to register somebody as the director of a company without their consent, and also possible to backdate the appointment to make it look like that person had been a director for years.

The scheme was able to operate at least partly because of the cooperation of a liquidator named Raymond Sutcliffe. He voluntarily turned his liquidator's license in three years ago after ASIC began investigating his conduct relating to a number of liquidations.

The accounting firm that allegedly carried out the scheme has now shut down, but the individual accountants implicated are still working and managing clients' money.

None of the accountants implicated responded to questions from the ABC.

