APRA fight with CFMEU-linked super fund ‘unreasonable’
The CFMEU is a shareholder of United Super, which is trustee for the $92 billion Cbus fund. Photo: AAP
Australia’s financial regulator has been accused of unreasonably imposing stricter conditions on a super fund partially owned by the CFMEU after possible criminal links within the union were revealed.
The Australian Prudential Regulation Authority put extra licence conditions on United Super and BUSS (Queensland) on August 14 to address concerns about the fitness of board members, processes and how funds were being spent.
The move was prompted by allegations of corruption and bikie infiltration within the construction union.
The CFMEU is a shareholder of United Super, which is trustee for the $92 billion Cbus fund and has appointed three directors to its board.
A separate legal entity, CFMEU Queensland, is a shareholder of BUSSQ – which has $6.7 billion in funds under management – and has appointed four directors to the board, including three union officers.
Under the additional conditions, the super funds would have to engage an independent expert to examine their processes and practices and deliver a report to the financial watchdog before changes were made.
BUSSQ has challenged APRA’s decision in the Federal Court with parties convening for the first time for a brief hearing on Wednesday.
The super fund’s barrister, Margaret Allars SC, said the court would have to determine whether APRA had acted beyond its powers when imposing the stricter requirements.
“The power is not properly exercised,” she told Justice Roger Derrington.
Not only had APRA delegated powers to the independent expert when it was legally unable to do so, the regulator had also used the wrong section of the relevant act, Allars said.
“It’s gone through the back door,” she said.
APRA was also “unreasonable” in denying BUSSQ procedural fairness between sending a show-cause letter on July 26 and making its decision on August 14, Allars said.
A second decision by APRA deputy chair Margaret Cole to publicise the moves against BUSSQ on the regulator’s website and in a newsletter has also been challenged in the case.
Allars pressed for the matter to be heard soon, saying her client had received a spike in members either wanting to roll their money out of the super fund or inquiring about its stability or ongoing operations.
“There’s a reputational, ongoing damage and prejudice to the applicant,” she said.
While the lawsuit is on foot, APRA has provided an undertaking to the court to suspend the effect of the new licence conditions.
A two-day hearing will start on October 15.
Attorney-General Mark Dreyfus placed the CFMEU’s construction and general division into administration on August 23, alongside all of its state and territory branches.
More than 200 elected union officials have been terminated, while the administration could last for up to five years.
Laws giving the relevant minister powers to intervene and slap life bans on CFMEU officials passed the federal parliament in August.
The union filed a High Court challenge to those moves on Tuesday after saying members were denied due process and their democratic rights.
-AAP