"Labor does not do this lightly. We do this in light of our most serious concerns and our respect for the importance of ASIC's independence.

"The reputation of the corporate regulator and its leadership team must be beyond reproach and so to appoint Mr O'Sullivan would raise serious questions around ASIC's independence and its ability to command trust across markets and the Parliament."

A spokesman for Financial Services Minister Kelly O'Dwyer said no final decision had been made on Mr Medcraft's replacement.

Utegate scandal

Labor made reference to Mr O'Sullivan, the chairman of investment banking at Credit Suisse, becoming embroiled in the Utegate scandal in 2009 which helped end Mr Turnbull's leadership. At the time, Mr Turnbull and Senator Eric Abetz were duped by a crooked Treasury official Godwin Grech into accusing Kevin Rudd and Wayne Swan of improper dealing with a Brisbane car dealer who was seeking financial assistance from a government agency called OzCar.

OzCar was a proposed government funding scheme for car dealerships that had lost access to financing as a result of the global financial crisis.

After the episode backfired and Grech was revealed as a Treasury leaker and fabricator, subsequent inquiries unearthed emails between Grech and Mr O'Sullivan. There is no suggestion of any wrongdoing by Mr O'Sullivan. Credit Suisse was the bank chosen to work on OzCar.

Mr Bowen said any association with Mr Grech should be viewed as a negative.


"On 24 June this year, in response to earlier reports that this appointment was receiving serious consideration by the Turnbull government, Federal Labor provided a clear warning on appointing such a partisan figure linked to the Utegate affair which clearly tainted Malcolm Turnbull, to such an important economic institution.

"There were emails released as part of the investigations into the Utegate affair which showed contact between Mr O'Sullivan, then chairman of Credit Suisse's Australian investment banking operations, and disgraced Treasury official Godwin Grech."

They also criticised his political allegiance.

"Mr O'Sullivan has been a Liberal Party member in Mr Turnbull's electorate, a president of the Liberal Party's Wentworth federal electoral conference and previously donated to Mr Turnbull's Wentworth Forum.

"Australia has well-respected economic regulators based on a tradition of non-partisan appointments."

Mr O'Sullivan reportedly has strong support among the business and banking communities.

He was a corporate lawyer at Freehills and from 2003 to 2007 as chief counsel for Commonwealth Bank.