Sunsuper issues mea culpa over political donation to Labor

Sunsuper has issued a mea culpa over a political donation it made to Queensland Labor last year, despite an APRA probe finding no fault.

Australian Prudential Regulation Authority (APRA) deputy chair Helen Rowell. Picture: AAP

The $70bn industry super fund Sunsuper has issued a mea culpa over a political donation it made to the Queensland Labor Party last year, despite an investigation by the prudential regulator finding no fault with the transfer.

Sunsuper donated $11,000 to Labor by sponsoring a state budget breakfast event two months before the fund, whose chairman, Andrew Fraser, is a former Labor state treasurer, confirmed it was in discussions with Queensland’s public servant fund, QSuper, regarding a potential merger that would create the nation’s largest super fund with $180bn in assets under management.

Under a grilling from Liberal senator Andrew Bragg at a Senate Estimates hearing in March, APRA deputy chair Helen Rowell said the regulator did not have a view about super funds making political donations and that the amount donated was “immaterial in the context of a very large superannuation fund”.

Senator Bragg has argued that the donation breached the sole purpose test, which requires that super funds make decisions for the sole purpose of providing retirement benefits to members.

In June, Ms Rowell issued a follow-up letter to Senator Bragg, advising that APRA had reached out to Sunsuper for clarification on the donation.

“Based on the information available, and taking into account all of the circumstances, APRA’s view is that it would be difficult to demonstrate objectively that the payment breached the sole purpose test,” she wrote to Senator Bragg.

But Sunsuper on Sunday revealed its internal investigation of the issue concluded it had breached its own policies.

“The decision to sponsor the event was made by a former employee, who at the time, believed that it was a commercial sponsorship opportunity. They did not consider this payment to be a donation to a political party,” the fund said.

“As soon as Sunsuper’s chief executive officer became aware of this payment, an internal investigation was undertaken which determined the payment was in breach of our longstanding internal policies.

“As a result of this breach, our internal processes have been tightened to ensure this does not occur again. Sunsuper will not support this or other similar events in the future for any political party,” Sunsuper said.

Welcoming Sunsuper’s statement, Senator Bragg said it highlighted the ridiculousness of APRA’s position

“The fund has given itself a red light, while APRA has given political contributions a green light,” he told The Australian.

“They’d want to tread very carefully with this.

“We don’t want to see mutual funds, established effectively by the government mandate, using retirement savings for political contributions.”

UNSW Law Associate Professor Scott Donald labelled APRA’s take on political donations as “quite astonishing”.

The regulator’s review of the sole purpose test, currently under way, was also a concern, he said.

“The reason for the sole purpose test is to assure that assets there to meet members’ retirement needs are only employed for that purpose. In around 2000 or so they had a circular that said political advertising, and so on, would contravene the sole purpose test. Under some pressure, they seem to have backed away from that.”

From a legal standpoint, there was no lack of clarity on the sole purpose test, he added.