Union boss denies misusing position as super fund board director

Long-serving union secretary Michael O’Connor has denied misusing his position as co-chair of a $4.5 billion superannuation fund to bankroll the cash-strapped manufacturing division of the CFMEU, as he defended his conduct on the board of First Super.

O’Connor is facing a court-sanctioned ban as a super fund director after the Australian Prudential Regulation Authority (APRA) last year sued him, alleging he hired a union staffer to work full-time for First Super despite being “aware that the employee continued to undertake a significant portion of work for the CFMEU”.

Michael O’Connor, pictured this week, has defended his conduct on the board of First Super. Credit: PENNY STEPHENS

The allegations focus on the member and employer services coordinator (MESC) contract between First Super and the CFMEU’s manufacturing division in 2020. APRA has claimed O’Connor was quietly involved in negotiating an extension to the contract, instructing the union to raise the fee and then engaging a consultant to help the CFMEU with negotiations.

In his defence filed with the Federal Court in December, O’Connor said he had recused himself from First Super board members over the contract and that he had never spoken to other board members about the contract extension.

“He did not participate in any discussions or deliberations with the non-conflicted directors or employees of the trustee regarding the specifics of the MESC contract extension,” his defence states.

“He did not participate in any decisions regarding the MESC contract, including the MESC contract extension, on the part of the trustee. He declared his interest in the manufacturing division in the trustee’s conflict register.”

The court documents are the first public statements from O’Connor on the matter after APRA launched litigation in September. When this masthead approached the union secretary at a rally outside of paper manufacturer Opal headquarters in Melbourne on Wednesday, O’Connor walked off and declined to comment.

APRA has alleged O’Connor appointed a union delegate, referred to in court documents as BT, to a full-time role as MESC coordinator at First Super in March 2020 to form “part of her role as [an] … organiser for the union”. During that time, the manufacturing division of the union was “experiencing financial difficulties, and considering redundancies for some of its employees”, the regulator told the Federal Court.

It released a slew of Slack messages and emails it said showed the union secretary deliberately and over a substantial period of time misused his position as First Super co-chair, amounting to a breach of his director duties to act in the best financial interests of super fund members.

The regulator said O’Connor was quietly involved in negotiations on behalf of the union with the “intention of benefiting the union at the expense of First Super and its members’ best interests”. It alleged O’Connor had instructed the union’s MESC contract manager to invoice the super fund for the coordinator role, and then withdrew the advertised vacant position before appointing BT in that role with effect from April 1.

While the union boss admitted he provided the CFMEU manufacturing division’s finance and administration committee updates on the negotiations regarding the MESC contract in June, August and September 2020, he denied he was involved in the “ongoing conduct of the negotiation on behalf of the union”.

He also disputed APRA’s evidence that the union sent a $125,000 invoice to First Super on March 10, 2020, claiming the fee sought was $31,262.89.

“He says that on 25 March 2020, he sent an email to a manufacturing division employee with the initials PG, which approved draft correspondence to be sent to applicants for the First Super coordinator job and draft correspondence to be sent to the applicants for the admin officer job, which explained that the manufacturing division was withdrawing those vacant positions,” O’Connor’s defence states.

“Says further that the reason provided in the draft correspondence referred to above for the withdrawal of the positions was due to the COVID-19 pandemic and the consequent disruption across Australia.”

In October 2017, First Super and the CFMEU entered into a written deal known as the Member and Employer Co-ordinator Services Agreement, or MESC contract. Under the arrangement, the union was to manage the employment of the co-ordinator responsible for recruiting and retaining First Super members, while the fund would pay the union the employee’s fees and reimburse their expenses.

Two years later, O’Connor told a union employee, known as CS, the board of First Super had or would approve the contract’s extension without going to tender. He told CS this was “an opportunity to get some more money out of the fund”, according to documents APRA filed in court.

O’Connor denied those allegations.

APRA has asked the Federal Court to remove O’Connor from the board of First Super, ban him from acting as an officer of any super fund, and impose financial penalties.

The matter will return to court in April.

The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.