APRA told super payments allegedly used to prop up CFMMEU

Australia’s financial regulator has been told of allegations that hundreds of thousands of dollars from an industry super fund were improperly used to prop up a failing union.

Australia’s financial regulator has been told of allegations that hundreds of thousands of dollars from an industry super fund were improperly used to prop up a failing union.

In August last year a union whistleblower alleged that between 2018 and 2022 the Manufacturing Division of the CFMMEU skimmed money it was being paid by industry fund First Super to deliver services to the funds’ members and used it to keep the union solvent.

Under a contract which began in 2018, First Super was paying the union roughly $2.7m a year to provide services to members.

A letter written by an official at the union last August alleges that the secretary of the CFMMEU’S Manufacturing Division Michael O’Connor “orchestrated” a scheme that saw the staff carrying out the contract underpaid by around $200,000 a year.

A union source said the allegations were denied.

News Corp has been told Australia’s financial regulator APRA has been made aware of allegations.

APRA chair John Lonsdale. Picture: Chris Pavlich

On Wednesday APRA chair John Lonsdale, told a Senate Estimates hearing it had launched a formal investigation into millions of dollars that have flowed between industry super funds and trade unions.

The allegations about the misuse of the money are outlined in a letter from Craig Smith, then Assistant Secretary of the Manufacturing Division, to the union’s National Secretary Christy Cain, which has been obtained by News Corp.

Mr Smith alleged that money paid by First Super to the union had been used to “maintain its operations and remain solvent”.

Since 2018 Mr Smith had been employed by the Manufacturing Division to oversee the contract with First Super, during which time he alleged there was “significant under expenditure of fees paid by First Super” which had been “repurposed to fund the Division’s operations”.

In total, he alleged he and his staff were underpaid by around $200,000 a year under the scheme which had been “orchestrated” by Mr O’Connor.

In addition to being the Secretary of the Manufacturing Division, Mr O’Connor is also co-chair of First Super which operates from the same Melbourne office.

Australian Electoral Commission records show that between 2018 and 2021 First Super paid the CFMMEU $8.1m, and $17.3m since 2006.

News Corp has been told APRA is aware of Mr Smith’s allegations in relation to First Super but a spokesperson declined to comment.

Mr Smith, who public documents show was being paid $163,000 a year, has since settled his dispute with the union over the underpayment and now left. He declined to comment.

The arrangement between First Super and the Manufacturing Division has since been terminated.

Asked about Mr Smith’s allegations Mr O’Connor said “no comment”.

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Originally published as APRA told super payments allegedly used to prop up CFMMEU