If Storm Financial has dogged the reputations of financial planners, Mike Taylor writes that the findings of the Royal Commission into Trade Union Governance and Corruption may now dog the industry superannuation fund movement.
Let’s cut to the political chase. If the Federal Government is determined to pursue legislation forcing an alteration to the governance arrangements of industry superannuation funds then the Royal Commission into Trade Union Governance and Corruption has provided it with the means to do so.
If Storm Financial and the problems which have beset Commonwealth Financial Planning have been the betes noirs of the financial planning industry then it seems entirely likely that release by Cbus of confidential member information to the Construction, Forestry, Mining and Energy Union (CFMEU) represents a problem of the same magnitude for the industry funds.
Things were bad enough for Cbus when, some months ago, it was first revealed that it had inappropriately provided confidential member information to the union. Things became much worse, however, when an officer of Cbus, Lisa Zanatta, admitted to the Royal Commission that she had lied about being involved in providing that information and had done so to protect the fund and its chief executive, David Atkin.
Atkin, it must be said, has denied any involvement in what happened.
For its part, the Royal Commission has flagged that the relationship between unions and superannuation funds will be very much front and centre in its initial report, to be delivered in December, and very likely the subject of further work as it proceeds into next year.
The problem for the industry superannuation fund movement is that while what happened between Cbus and the CFMEU may prove to have been a single event involving a single industry fund, it will be capable of being used as an exemplar of what is wrong with the current governance arrangements.
Why? Because Cbus represents almost a blueprint. Its trustee board is made up of its chairman, former Victorian Labor Premier, Steve Bracks, while its one independent director is former Hawke Government minister, John Dawkins. Thereafter its trustee directors are either union officials, including the current president of the Australian Council of Trade Unions, or employer representatives.
No one is particularly questioning the competence of the people who make up the Cbus board but, on the other hand, the Royal Commission has not yet traversed the question of whether any member of the board was aware of the transmission of information between the fund and the union.
There will, of course, be arguments about whether the transmission of member information between a superannuation fund and a union deserves to be ranked alongside the losses inflicted on clients of Storm Financial or Commonwealth Financial Planning. After all, no member of Cbus actually lost money and, in fact, the transmission of member details related to recouping superannuation guarantee arrears owed by a particular building industry employer.
The superannuation fund therefore unquestionably had an interest in ensuring that its members received their appropriate superannuation guarantee contributions while the union undoubtedly had a right to pursue the interests of its members.
The problem, of course, arises because the union had a separate industrial relations agenda and because the necessary lines of governance demarcation between the union and the super fund became irretrievably blurred.
However a letter written by the Royal Commissioner, Dyson Heydon to the Attorney-General, Senator George Brandis, makes clear that the absence of monetary loss is not the issue – rather it is conduct of the officials involved.
To quote Heydon’s letter: “Some officials appear to regard their unions as having immunity not only from the norms and sanctions of the Australian legal system, but also from any social or community standard shared by other Australians”.
A number of commentators predicted that any Royal Commission into the trade union movement would impact industry funds. It is now clear that this has happened and a Government move to impose changes to fund governance appears to have become inevitable.
