APRA pressured over its 10-year tenure guidelines on Cbus directors

The Australian Prudential Regulation Authority (APRA) has been placed under pressure to explain why two of three CFMEU-appointed directors on the board of Cbus have had tenures which exceed the regulator’s 10-year guideline.

While the Federal Government in combination with the Australian Greens has managed to block the referral of the relationship between unions and industry superannuation funds to the Senate Economics References committee, Opposition Senators used the debate to press APRA for more action on the tenure of CFMEU directors.

NSW Liberal Senator, Andrew Bragg referred to directors nominated to the Cbus board by the Construction, Forestry and Maritime Employees Union (CFMEU) who he said had exceeded APRA’s own tenure limit guidelines.

“There are CFMEU directors, in some cases, who have been on the Cbus fund’s board for more than 10 years: Dave Noonan, 16 years—extraordinary; Rita Mallia, 13 years,” Bragg said.

“APRA’s own guidelines say no more than 10 years is appropriate on a board, so I don’t see how it can be the case that APRA can allow anyone, let alone anyone with the status of a CFMEU official, to be on the board for 10, 15, or 16 years in this case.”

“Of course, the chair of this fund is Mr Wayne Swan. He’s also the President of the Labor Party. And, again, I wonder whether or not these howling conflicts of interest are ever going to be matters of interest for the minister? Because the Minister for Financial Services and Superannuation, Mr Jones, who would have to be one of the worst ministers in the government—and that is really saying something—has said nothing about these issues, so it’s been left to the prudential regulator.”

Bragg said that members of the Federal Opposition were supporting a motion from One Nation leader, Senator Pauline Hanson, for reference of the issue to the Senate Economics Committee because the opposition believed more pressure should be placed on APRA to enforce its own guidelines.

“How can it be the case that the prudential regulator can say, ‘Our guideline is 10 years on the board,’ and sit there while people sit on the board for 16 years? I think it’s just extraordinary, so we look forward to there being more pressure on the enforcement of these guidelines. But this is not a new issue,” Bragg said.

“There have a been multiple reviews going back more than 14 years now into the question of the governance of the super fund boards and whether or not the idea of having all these people who work at the union on the board is an appropriate model,” he said.

“I would say, just as the employer groups make up half the board in these funds, they are part of the problem. They are part of the IR club who work together to rort workers. The employer groups and the unions, they love superannuation because they get lots of money from it.”

Bragg also used the Senate debate to reference payments made by Cbus and Fierst Super to unions.

“Of course, the other way that the money flows is through inflated, bogus and rubbish commercial agreements. In fact, in the case of the Cbus fund and the First Super fund, they have massive sponsorship and advertising agreements with the CFMEU, whereby the super fund pays enormous funds, $700,000 contracts, to sponsor the CFMEU. The amount of money going from the funds into the unions reached, in the last year, $40 million.

“So $40 million of Australian super fund members’ money is being siphoned off to the unions and all their associated lobby groups. Why is this happening? Because the law in relation to best financial interest duty, which was passed in the last parliament, has not been enforced as strongly as it could have been. I welcome that APRA has finally had something to say on this matter, in its statement on Cbus,” Bragg said.

“But it shouldn’t have taken for the crisis that we’ve seen in relation to the CFMEU for this to happen. I believe that over the last two years, as we have canvassed these issues endlessly at Senate estimates, APRA could have acted early to put a stop to these huge amounts of retirement savings being siphoned off to the unions. In the case of the Cbus fund, they have given over a million bucks in the last year to the CFMEU, and the First Super fund has given more to the CFMEU, even though it’s a tiny fraction of the size of Cbus.”