Cbus members risk being forced to contribute to fund’s fines

Thousands of members face the prospect of their life savings being used to pay millions of ­dollars in ­penalties for the alleged mis­handling of money owed to grieving families and disabled people, as Labor stood by the fund’s chairman Wayne Swan.

ASIC deputy chair Sarah Court on Wednesday, left, Treasurer Jim Chalmers with former treasurer and Cbus chairman Wayne Swan. Picture: John Feder

Thousands of Cbus members could be forced to contribute their life savings to pay millions of ­dollars in ­penalties for the $94bn ­industry fund’s alleged mis­handling of money owed to ­grieving families and disabled people, amid fears failure to pay out death payments is endemic throughout the sector.

Labor on Wednesday stood by Cbus’s beleaguered chairman, ALP national president Wayne Swan, despite the growing scandal over the fund allegedly ­delaying up to $20m in death and disability payments.

If ASIC’s allegations are proved in court, it is understood the penalties Cbus would face would be between $33m and $49m.

In the wake of the allegations, Cbus chief executive Kristian Fok will appear ­before Thursday’s Senate economics committee hearing, where he will likely be questioned over the ASIC allegations.

ASIC deputy chair Sarah Court conceded on Wednesday that Cbus members could be exposed to the penalties – despite being the alleged victims of the fund’s ­failures – and that the watchdog was working to shield their ­investments.

“In the event that Cbus has breached the law, then absolutely we will be seeking significant penalties,” Ms Court said. “And we do that because we need to send a broader deterrent message to the sector more broadly.”

She said the penalties regime for superannuation trustees was complex. “There are specific laws about that and the court will need to take (this) into account, but ­certainly we are always mindful about any potential impact on members,” she said.

Ms Court said the possibility of members needing to pay was a ­factor the court was expected to take into account.

Jim Chalmers said on Wednesday the government would support ASIC to “do its work”. But the Treasurer declared it would be ­“inappropriate” to provide his ­personal reflections on the allegations, or whether his mentor and former boss, Mr Swan, should stand down, either immediately or at the time when any allegations were proven.

“We think it’s really important that the regulators do this work, and, where it’s appropriate, that those allegations are tested in court,” Dr Chalmers said. “Those allegations are now ­before the courts, and the standard practice, which I’m adhering to today, is that we don’t comment on matters before the court … But I’m a strong supporter of our regulators, and when they find issues that concern them, they should test them (at court), which is what they’re doing now.”

Dr Chalmers’ comments contrasted with what he said after the consumer watchdog announced it was taking Woolworths and Coles to court over alleged price manipulation.

“I need to be careful not to pre empt the legal and other processes that have been put in train by the ACCC but I will say this: Woolies and Coles shouldn’t be taking their customers for mugs,” the Treasurer said at the time.

“We don’t want to see ordinary Australians, families and pensioners, being taken for a ride by the big supermarkets.”

All of Cbus’s alleged failures from late 2022 up to this month ­occurred under Mr Swan’s watch as chairman. Cbus was contacted for comment on Wednesday. The fund, which was already under scrutiny before the ASIC charges due to its close connections to the CFMEU, apologised the day before for the alleged failures.

Financial Services Minister Stephen Jones said the super­annuation industry would increasingly be judged by its customer service throughout a member’s working life and retirement.

“The government has made its views clear: more focus is urgently needed on the standard of customer service across the industry,” Mr Jones said. “Funds can do more within the current laws. We have been clear that if there are laws that are needed to be changed, we will take action. This is why we are currently reforming our financial advice laws which will help funds better service the needs of their members by providing access to affordable financial advice and information.”

Mr Jones said the government expected funds to meet “the highest standards of governance”.

Numerous Labor sources said the Cbus matter did not necessitate Mr Swan stepping down as party president.

“He’s not the one who’s sitting there paying people, he’s not the chief executive, which is often the person who gets called in on operational matters … so I don’t think we have an issue,” one source said.

“I don’t think it’s a massive deal. He wasn’t responsible. And I think you actually want someone who’s got strong leadership to be able to do it … but maybe the CEO’s head needs to roll.”

Other Labor sources said they were satisfied with the way Cbus handled the issue internally.

However, one senior government source said it would be wise for Mr Swan to stand aside ­temporarily to ensure the matter did not cause further distraction for a government desperate for a reset.

“In a perfect world, probably the right thing, just to step aside, because … the PM doesn’t want to be answering questions about this, either outside at press conferences or inside parliament, and Wayne being the warrior that he is, should be aware of that,” the source said.

The Australian understands the former treasurer enjoys the confidence of the ALP national ­executive.

In the three years leading up to Mr Swan’s appointment, Cbus gave $4.3m to unions.

Since Mr Swan was appointed in 2022, Cbus gave nearly $6m to unions, including more than $1m to the CFMEU in the last financial year alone. The CFMEU directly donates to the ALP, giving nearly $2m in funds in the lead-up to Anthony Albanese’s election win, a 230 per cent jump from the $850,000 it donated for Bill Shorten’s campaign in 2019.

Ms Court revealed that the watchdog suspected delays to awarding payouts was broader than its case against Cbus.

“I think it’s fair to say that we do think this is a broader industry issue,” she said.

“So we are, at the moment, doing a deep-dive surveillance of superannuation trustees’s handling of death-benefits claims. More broadly, we are going to be writing to the CEOs of superannuation trustees shortly to really put them on notice as to what we are seeing and our concerns about that. We’re going to be putting out a detailed report early in the new year that really sets out the work that we are doing.”

Ms Court said the case was the first brought by ASIC in relation to delays on death and disability ­payments.