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The Australian financial services regulator has stepped into the controversy surrounding allegations of corruption within the Construction, Forestry and Maritime Employees Union (CFMEU) by tightening the licencing rules on two union-backed industry funds, including building sector giant Cbus Super.
The Australian Prudential Regulation Authority (APRA) says the new licence conditions have been placed on United Super, as trustee for the Cbus (Construction and Building Unions Superannuation Fund), and BUSS (Queensland) Pty Ltd, which is trustee for the Building Unions Superannuation Scheme and the BUSS (Queensland) Pooled Superannuation Trust.
Together, these funds manage the super contributions of about one million Australians comprising funds under management of almost $100 billion.
APRA now requires both United Super and BUSSQ to engage an independent expert to conduct a review covering their responsibilities under prudential standard requirements covering the “fitness and propriety of individuals to hold positions of responsibility”.
The provision, prescribed by APRA’s Prudential Standard SPS 520 Fit and Proper, is designed to ensure trustees comply with the duty “to act in the best financial interests of beneficiaries of the funds in making expenditure decisions”.
APRA says its action is in response to the widely publicised issues concerning the CFMEU, Australia’s largest union, that include allegations of corruption and links to organised crime figures.
The regulator notes that the CFMEU is a shareholder of United Super and has appointed three directors to its 14-member board.
The Construction, Forestry, Mining and Energy Industrial Union of Employees, Queensland (CFMEU-Q), a separate legal entity to the CFMEU, is a shareholder of BUSSQ and has appointed four directors to its eight-member board, three of whom are also CFMEU officers.
APRA’s deputy chair Margaret Cole says as trustees are in a privileged position that manages billions in assets on behalf of super fund members, these additional measures provide the opportunity for both Cbus and BUSSQ to “provide third-party assurance to their members”.
“APRA is prepared to take strong action to give members confidence that trustees are making decisions in their best financial interests,” says Cole.
“Fulfilment of the requirements under the additional licence conditions will support improved outcomes for members and ensure that there is an appropriate level of independence, rigour and transparency in relation to United Super and BUSSQ’s compliance with the law.
“APRA expects trustees to have robust processes, policies and procedures in place to ensure they are upholding strong governance practices and complying with the best financial interests duty and fit and proper obligations, as set out in APRA’s prudential standards.”
Cbus Super, which employs a workforce of 740 people, has voiced its support for APRA’s new measures, declaring today that an independent review will “build on work that Cbus has previously commenced”.
“We note the allegations of criminal activity in the building and construction sector, and we condemn such activity,” says the super fund.
“We support efforts by governments, regulators, and union organisations to eradicate such criminal behaviour.?
“Cbus continues to work constructively with the regulator and will fully cooperate with the independent reviewer. Cbus is committed to continuously improving our governance practices, policies, and procedures.”
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