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The questions which preceded APRA’s First Super action

Mike Taylor9 September 2024
Stick figure with question mark

ANALYSIS

The Australian Prudential Regulation Authority (APRA) was being asked questions about payments made between First Super Pty Ltd and the Construction, Forestry and Maritime Employees Union (CFMEU) as far back as May this year.

Further, during a June Budget Estimates hearing by the Senate Economics Committee, NSW Liberal Senator, Andrew Bragg, specifically asked APRA for an explanation of moneys paid by First Super to the CFMEU.

APRA deputy chair, Margaret Cole took on notice the following question from Bragg: “There is a fund called First Super, which is a $4 billion fund, which has made three payments of over $700,000 each in the last reporting period, over $2 million in total, for coordinator costs to the CFMEU”.

At the time, Cole declined to comment on “entity-specific matters” but said in a formal answer that “payment passing from trustees to unions may not, in and of themselves, breach requirements of Best Financial Interests Duty”.

At that same hearing, Cole was reminded that in response to questions at a May committee hearing she had indicated that APRA had an “ongoing investigation in relation of payments of a superannuation fund to another party”.

The issues raised during Senate Estimates appeared to have their corollary when, last Friday, APRA announced it had commenced proceedings in the Federal Court seeking civil penalties and the disqualification of First Super director and co-chair Michael O’Connor who is also the national secretary of the Manufacturing Division of the CFMEU.

It said the Federal Court action followed an investigation by APRA into a contract between First Super and the CFMEU for member and employer services with the contract concluding in 2023.

APRA said it would be alleging that  O’Connor breached a number of the director covenants contained in the Superannuation Industry (Supervision) Act (SIS Act) including the covenants to act honestly, exercise the same degree of care, skill and diligence as a prudent superannuation entity director would exercise, act in the best financial interests of beneficiaries, and to prioritise the interests of beneficiaries when in a position of conflict. It is alleged that:

  1. Mr O’Connor approved the appointment of a CFMEU employee to perform a full-time role under the MESC contract and:
    1. was aware that the employee continued to undertake a significant portion of work for the CFMEU;
    2. directed or approved the employee carrying out the work for the CFMEU;
    3. was aware that First Super was paying fees under the MESC contract, which included an amount covering the full-time wage of the employee; and
    4. did not inform or seek approval from First Super for the employee to carry out work for the CFMEU or seek to reduce the fees payable by First Super under the MESC contract.
  2. Mr O’Connor was involved in the negotiation of the extension of the MESC contract on behalf of the CFMEU in circumstances where he was in a position of conflict.

APRA is seeking declarations and penalties against Mr O’Connor in relation to the alleged contraventions. APRA is also seeking orders disqualifying Mr O’Connor from acting as a responsible officer of any corporate trustee or superannuation entity for a period determined by the court.

Mike Taylor

Mike Taylor

Managing Editor/Publisher, Financial Newswire

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Wildcat
29 days ago

Now the truth comes out.

APRA only acts when questioned in a parliamentary enquiry. Ie they had now choice.

It’s distressing that this is in now way surprising.

REGULATORY CAPTURE CORRUPTION
29 days ago

REGULATORY CAPTURE CORRUPTION
APRA and ASIC have proven time and again they will do nothing to Industry Super best buddies until they are exposed for their REGULATORY CAPTURE CORRUPTION and forced to act to do their jobs.
What a disgusting mess is Corrupt Canberra.

The Stench of Industry Funds
29 days ago

What????
An Industry Fund with suspect payments and contracts with a Union!!!
This is shocking (NOT)
Who would have thought such a thing would happen – Obviously not APRA or ASIC

Terry G
29 days ago

Time for a full enquiry. Surely $1.1 trillion of members retirement savings is a big enough public interest matter.