APRA orders Cbus to review fitness of CFMEU directors

APRA has ordered the Cbus and BUSSQ super funds to review whether its CFMEU-appointed directors are fit to hold positions in the wake of serious allegations against the union.

APRA Deputy Chair Margaret Cole says trustees are in a privileged position of managing billions of dollars of assets on behalf of their members. Picture: John Feder

The prudential regulator has ordered the $92bn construction industry superannuation fund Cbus and the Queensland-based BUSSQ fund to review whether its CFMEU-appointed directors are fit to hold positions in the wake of serious allegations against the union.

The Australian Prudential Regulation Authority imposed additional licence conditions on the fund trustees, instructing them to engage an independent expert to determine whether seven CFMEU-appointed directors to the trustee boards were “fit and proper” persons under prudential standards

The review will also investigate whether the trustees were complying with their duty to act in the best financial interests of fund beneficiaries when making expenditure decisions.

The Cbus board has six employer directors and six union-­appointed directors, including former CFMEU construction nat­ional secretary Dave Noonan, the union’s NSW president Rita Mallia, the CFMEU’s former ACT branch secretary Jason O’Mara, Master Builders chief executive Denita Wawn and MBA president Hedley Davis.

The eight-member BUSSQ board, which oversees $6.7bn in funds, has three CFMEU officers including the union’s Queensland secretary, Michael Ravbar.

APRA said while recent allegations against the union were yet to be tested or proven through a court or tribunal process, it was concerned about the potential impact on trustees.

APRA deputy chair Margaret Cole said trustees were in a privileged position of managing billions of dollars of assets on behalf of their members. “APRA is prepared to take strong action to give members confidence that trustees are making decisions in their best financial interests,” she said.

“Fulfilment of the requirements under the additional licence conditions will support improved outcomes for members and ensure there is an appropriate level of independence, rigour and transparency in relation to United Super and BUSSQ’s compliance with the law.”

Cbus Super chief executive Kristian Fok said the fund supported APRA’s decision to order an independent review of its board governance and expenditure arrangements to ensure they remained appropriate and in the best financial interests of members. “We note the allegations of criminal activity in the building and construction sector, and we condemn such activity.

“We support efforts by governments, regulators and union organisations to eradicate such criminal behaviour.”

Meanwhile, negotiations are continuing between Labor and the Coalition over amendments to the CFMEU administration bill, with the government seeking to reach agreement on Thursday despite losing a motion to fast track passage of proposed laws.

Opposition employment spokeswoman Michaelia Cash proposed 20 amendments, highlighting two changes as crucial: the removal of the minister’s power to end the administration and ensuring the administration lasted a minimum of three years.

“Minister (Murray) Watt has given himself as the minister, the unfettered power to bring the administration to an end at any time, and he merely has to table the instrument … In other words, what minister Watt says goes – you’ve got to be kidding me,” she said. “For minister Watt to now give himself the power and himself alone (with) no recourse for the parliament to bring the administration to an end is un­acceptable.”

Senator Cash said it was also important the administrator “openly and transparently report to parliament every three months as to the status of administration”.

“But also … the bill only provides the administrator with the ability to bar officials for up to five years. They will just wait this government out. You need to be able to clearly expel people for life.”