MPs pocketed $200,000 working for disgraced super fund

Two government MPs earned a combined $200,000 in directors fees last year to sit on the board of a superannuation fund found to have misled and deceived investors about its exposure to coal, gambling and Russian companies.

Penrith MP Karen McKeown and Leppington MP Nathan Hagarty.Credit: Louise Kennerley, supplied

Labor MPs Karen McKeown and Nathan Hagarty are among nine directors of Active Super, which was the subject of a landmark greenwashing judgment in the Federal Court last week, when Justice David O’Callaghan found it held interests in industries it explicitly stated it would eschew.

These included gambling companies including Skycity Entertainment and PointsBet Holdings, coal miners including Whitehaven Coal and New Hope Corporation and several Russian entities after it said it would no longer invest in Russian companies following the 2022 invasion of Ukraine.

It was the first successful greenwashing case brought by the Australian Securities and Investments Commission that was contested by the fund being prosecuted. Other cases have been resolved out of court.

Active Super managed about $13.5 billion in assets for 89,000 members by the end of the relevant period between 2021 and 2023. McKeown, who is deputy chair of the board, became a director in 2018 and collected $115,159 in fees last year plus $12,092 in pension and superannuation. Her responsibilities include sitting on the governance committee.

Premier Chris Minns, Nathan Hagarty and Health Minister Ryan Park at Liverpool Hospital in January.Credit: Edwina Pickles

Hagarty, the government whip, collected $82,256 in directors fees and $8637 in post-employment benefits. He sits on the risk committee and the audit and compliance committee.

Two Labor-affiliated councillors – Newcastle Deputy Lord mayor Declan Clausen and Sutherland Shire councillor Greg McLean – are also directors and earned $98,707 and $82,256 respectively.

Labor has said it is transitioning away from coal to meet its legislated emissions targets, but it has also been criticised for extending the life of Eraring, Australia’s largest coal-fired power station.

McKeown and Hagarty declined to comment while legal proceedings were still afoot. The matter will return to court for the costs and penalty. Hagarty is preparing to leave the board on June 30.

Company directors are required by law to guide and monitor the management of their company and to stay up to date with what it is doing, including regularly speaking to managers and staff about the affairs of the business.

Opposition environment spokeswoman Kellie Sloane said McKeown had overseen conduct found to be deceptive and misleading in her position as deputy chair of the board.

“It is entirely unacceptable that a member of the NSW parliament is paid $127,000 to be a director of a business that broke the law,” Sloane said.

“The premier can’t turn a blind eye to the fact two of his MPs are caught up in this landmark case brought by the corporate regulator. Greenwashing is a deceptive, misleading and illegal practice and I commend ASIC for its vigorous activities to weed it out.”

Premier Chris Minns declined to comment.

Active Super was originally known as Local Government Super and is a “profit to member” industry scheme, which means it reinvests its profits for the benefit of its members.

It stated on its website in 2021: “There are some industries in which we will not invest any money because we believe that the harm they cause is not worth any potential profit we could gain.”

This statement was removed in 2023.

Greenwashing describes the practice by financial institutions of misleading investors about the extent of their environmentally friendly, sustainable or ethical credentials, to encourage them to purchase their products.

Murray Ackman, a senior analyst at investment advisory firm Regnan, said greenwashing was a growing business risk and company directors needed to be across it as part of their fiduciary duties. As regulators around the world sought to crack down on bogus claims, “greenhushing” was an emerging phenomenon, he said.

“This is where you remove some of your claims or your ambitions around net zero in order not to fall foul of the regulations,” Ackman said.