Building industry super funds ordered to probe CFMEU links
Two building industry super funds, Cbus and the Queensland based BUSSQ, have been ordered to conduct a review of their ties to the CFMEU.
The Australian Prudential Regulation Authority has ordered two building industry super funds, Cbus and the Queensland based BUSSQ, to engage an independent expert to conduct a review of their ties with construction industry union CFMEU.
Both super funds have members of the union on their boards.
The financial regulator announced on Wednesday that it was imposing licensing conditions on the two funds “to address concerns regarding fitness and proprietary processes and fund expenditure management.”
Cbus has $92bn in funds under management, and 923,000 members, with BUSSQ having $6.7bn in funds under management and 73,000 members.
APRA said it was taking the action after “recent public allegations regarding serious misconduct within the Construction, Forestry and Maritime Employees Union and the steps taken by state and federal governments and the Fair Work Commission.”
“While these allegations are yet to be tested or proven through a court or tribunal process, APRA is concerned about the potential impact on trustees,” it said.
The CFMEU has three directors on the 14-member board of Cbus.
The Queensland division of the CFMEU, which is a separate legal entity to the national union, has appointed four directors to the eight-member board of BUSSQ, three of whom are CFMEU officers.
APRA has ordered both super funds to “engage an independent expert to conduct a review in relation to the requirements under Prudential Standard SPS 520 Fit and Proper and the trustees’ compliance with the duty to act in the best financial interests of beneficiaries of the funds in making expenditure decisions.”
It said it was taking the action to provide “transparency and reassurance to members” of both funds following recent allegations against the union which, it said, “have had wide coverage in the public domain and raise matters of significant public interest.”
Cbus Super chief executive Kristian Fok said the fund supported APRA’s request that it undertake an independent review of its board governance and expenditure arrangements.
He said the new independent review would build on work that Cbus had already started.
“Cbus continues to work constructively with the regulator and will fully co-operate with the independent reviewer,” he said.
“We note the allegations of criminal activity in the building and construction sector, and we condemn such activity,” he said.
“We support efforts by governments, regulators, and union organisations to eradicate such criminal behaviour.”
But the chair of BUSSQ, Chris Taylor, accused APRA of using its licensing conditions to “force a review of issues that have been examined at length by APRA over the past 2 years, without any negative findings.”
He said the fund’s directors met “the requisite standards” and all third-party payments, including those to the CFMEUQ, were “made on commercial terms, aimed at maximising the value for members.”
He said BUSSQ was a “boots on the ground fund” which did not “waste members’ money on sponsoring sporting teams or on TV advertising” and was “committed to acting in the best interests” of its members.
APRA’s deputy chair, Margaret Cole, said super fund trustees were in a privileged position of managing billions of dollars of assets on behalf of their members.
“Compliance with these conditions allows Cbus and BUSSQ the opportunity to provide third party assurance to their members.”
Ms Cole said APRA was “prepared to take strong action to give members confidence that trustees are making decisions in their best financial interests.”
Ms Cole said fulfilment of the requirements under the additional licence conditions would “support improved outcomes for members and ensure that there is an appropriate level of independence, rigour and transparency in relation to United Super and BUSSQ’s compliance with the law.”
“APRA expects trustees to have robust processes, policies and procedures in place to ensure they are upholding strong governance practices and complying with the best financial interests duty and fit and proper obligations, as set out in APRA’s prudential standards,” she said.
The action by APRA comes as Workplace Relations Minister Murray Watt seeks to have the CFMEU administration bill fast-tracked through the Senate by Thursday.
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