11 hours Ago By Sumeyya Ilanbey
A Senate committee will order Cbus chair Wayne Swan to explain why there are “discrepancies” in his testimony following the damning findings of an independent inquiry examining corporate governance failures at the super fund. Swan’s claims last week that an independent report by Deloitte would “demonstrate” Cbus’ controversial relationship with the construction union CFMEU was in the best financial interest of members has been thrown into question after the release of the report on Tuesday afternoon. Beleaguered Cbus chairman Wayne Swan has defended the fund while also apologising to members.
Credit: Louise Kennerley Deloitte’s report found the $94 billion superannuation giant did not rigorously test its payments to unions and that it had failed to sufficiently demonstrate that its relationship with the CFMEU was in the best financial interest of members. Committee chair and noted critic of industry super funds Andrew Bragg said the committee would write to Swan asking him to explain a range of “gaping holes” in his testimony last week. “There are clear rules on contempt of the Senate,” Bragg said.
“A witness cannot mislead or give false evidence. I am concerned that Mr Swan could now be in contempt. The discrepancies in Mr Swan’s testimony and the Deloitte report are truly shocking.
The Senate will be forced to seek explanations for these gaping holes in his testimony.” If Swan’s responses fail to satisfy the committee, he could be referred to the privileges’ committee, which would decide whether he has been in contempt of the Senate. Although there is a rigorous process ahead of any referral, which is not certain to occur in this case, the opposition is ramping up its pressure on Cbus, Swan and industry super funds more broadly.
While industry funds, which have union and employer representatives on their boards, make better returns and have lower fees compared to retail funds, the Liberal Party has been increasingly worried the sector will use its financial power against the Coalition. Critics of the industry funds’ equal representation model have also raised concerns about the unions and employer organisations picking directors regardless of their investment, governance or risk experience. Cbus has come under fire for its relationship with the CFMEU, which was placed into administration after this masthead revealed corruption and criminal infiltration in the union.
The financial regulator ordered Cbus to engage an independent expert to examine its corporate governance. While Deloitte cleared all directors – including the newly appointed CFMEU representatives Paddy Crumlin, Jason O’Mara and Lucy Weber – as fit and proper directors, its probe found Cbus had “deficiencies in governance and in operationalising” the Best Financial Interests Duty [BFID]. The report also found Cbus did not have clear metrics to determine whether that expenditure improved members’ financial outcomes or publish statements showing the expense was within the approved budget.
Swan, who appeared before the Senate committee last week, was grilled over the payments to the CFMEU. He said at the time that Cbus had entered into partnership agreements with the union to provide services that benefit member returns, and that the super fund measured the value of those deals. “Those agreements are audited, supervised and made under a BFID framework,” Swan said.
“They are the subject of review in a number of inquiries at the moment. I believe they will be demonstrated to be successful programs which deliver good value for the fund, rather than spending that amount of money in other areas such as advertising.” Deloitte noted the current version of the partnership agreements policy “does not identify the trustee had a specific BFID framework in place”, and “despite this emphasis on partnership benefit and calculation method, there are no metrics outlined in the partnership proposal as to how to assess what member outcomes will be achieved for each specific expenditure”.
Cbus declined to comment on the Senate committee writing to Swan over his testimony, and referred to the statement it published on Tuesday. “Cbus acknowledges the seriousness and importance of the work required to strengthen the Fund’s systems design, frameworks, policies, processes, governance and reporting as identified in the independent review to become a better, stronger fund for our members,” a spokesman said. “Cbus has already begun this important work, including to develop improvements in the way the fund documents the value that industry partnership arrangements generate for the fund and our members.
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