Wayne Swan defends controversial CFMEU appointments to Cbus board

Cbus chair Wayne Swan has defended the controversial appointments of three CFMEU-linked directors to the board of the $94 billion superannuation giant, as he apologised to 10,000 members who waited too long to receive their death and disability benefits.

Swan was hauled before a Senate committee on Friday morning, where he was grilled over the governance failings engulfing the embattled fund, including its links to the disgraced construction union and a Federal Court action for allegedly failing to process insurance claims in a timely manner.

Wayne Swan appeared before a Senate committee on Friday morning.

During an at-times testy exchange between Swan and Liberal MP Andrew Bragg, a heavy critic of industry super funds, the committee also heard Cbus had handed the prudential regulator an independent report it had been ordered to conduct into its governance, and the entire superannuation sector was grappling with issues stemming from third-party administrator Link.

“I want to apologise to all those who’ve been affected in our fund and [say] that we, as a board, when we first became aware of the magnitude of this problem, set out to rectify this problem, and something like 80 per cent of the unresolved cases have now been dealt with,” Swan said.

“We are also engaged in a very substantial uplift in our fund across the whole area of risk management, and part of the restructuring of the executive in our fund in recent times has been a new chief risk officer. So we have frameworks in place, and we are working with the regulators to ensure that they are the best possible frameworks.”

Cbus is facing action from both the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA).

Strict conditions

ASIC is suing the fund over delayed claims handling, while APRA three months ago placed strict licence conditions on Cbus after this masthead revealed corruption, criminal infiltration and intimidation in the union.

In a statement on Friday afternoon, APRA confirmed it had received the final report of the independent expert it ordered Cbus to engage to review the fund’s ties with the CFMEU, and examine whether its directors had acted in members’ best financial interest and were fit and proper people to sit on a board.

“Cbus is now required under the licence conditions to publish the report,” it said. The fund is expected to release the report on Tuesday.

On Friday, Swan said the fund had handed APRA the independent report by Deloitte, after the regulator last week slapped down Cbus for appointing Paddy Crumlin, Jason O’Mara and Lucy Weber to the board, saying the fund had not satisfied the licence conditions because the review was not yet made public.

“There was some urgency to make those appointments, and we did so correctly after performing fit and proper processes,” Swan said, in reference to the Superannuation Industry Supervision Act that requires industry funds to have an equal number of employer and union representatives and for vacancies to be filled within 90 days.

“APRA has the Deloitte report, and they will deal with it within the time frames they decide … I’m in continual conversations with APRA, and those conversations are ones that I hold with them in a confidential way.”

The former treasurer also defended the appointment of Crumlin, who was previously chair of Maritime Super, which was ranked as the worst default super fund in the Australian Prudential Regulation Authority’s first annual performance test in 2021.

He said Crumlin had “extensive experience” in running funds, and characterising the performance of Maritime Super as a reflection of his competence was unfair. Swan also said O’Mara had extensive governance skills, having gone on an education assignment to the United States and upgrading his finance qualifications.

In response to questions from Bragg about whether Cbus would continue to donate to the CFMEU, which has been placed into administration, Swan said, “all our partnership agreements at the moment with the CFMEU are suspended, subject to the independent inquiries that are going on.”

He said the $2.3 million in payments Cbus made to the union were “partnership agreements,” and he was confident the Deloitte review would “demonstrate they are successful programs which deliver good value.”

“Rather than spending that amount of money in other areas, such as advertising, what we are getting here is very good bang for our buck, which, if it were a retail fund, they would be spending on advertising and other forms of promotion,” Swan said.

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