On Friday, the Australian Prudential Regulation Authority (APRA) announced that, following an investigation into a contract between First Super and the Construction, Forestry and Maritime Employees Union (CFMEU), it has commenced proceedings in the Federal Court of Australia against First Super director and co-chair, Michael O’Connor.
The prudential regulator alleged that O’Connor, also national secretary of the CFMEU’s manufacturing division, breached several director covenants in the Superannuation Industry (Supervision) Act, including acting honestly, exercising prudent care and diligence, prioritising beneficiaries’ interests, and managing conflicts of interest.
Reacting to the news, after previously putting pressure on Labor over CFMEU’s links with Cbus, senior members of the opposition issued a statement calling for “rigorous” consumer protections in the super industry, alongside better governance, to ensure consumers are in charge of how their money is spent.
“Revelations today of APRA investigations into allegations union-appointed super fund directors breached their director duties should raise alarm bells for all Australians,” said shadow treasurer Angus Taylor, Senator Michaelia Cash, and shadow assistant treasurer Luke Howarth in a joint statement.
“Allegations of directors using their position to direct contracts to the CFMEU highlight the need for rigorous consumer protections in the super industry, as well as better governance,” they noted.
“Superannuation is Australians’ money – not the fund managers’, not the government’s, and certainly not the union movements’.”
Liberal senators have issued several statements over recent weeks in relation to CFMEU’s links with Cbus. Just last week, it was revealed that CFMEU-appointed directors were cleaned out from the Cbus board after APRA issued a directive calling on the fund to undergo an independent review to determine whether CFMEU-affiliated directors are fit for their roles.
“It is important that members’ funds be subject to the most stringent protections and governance that put consumers in charge of how their money is spent,” Taylor, Cash and Howarth said.
The trio added that recent allegations, including APRA’s actions against First Super, highlight the need for the government to retain the Your Future, Your Super reforms.
The opposition claims the reforms strengthened safeguards for Australia’s $3.7 trillion in retirement savings, but Labor is reviewing them to improve efficiency.
“Any changes to these reforms would require substantial improvements in superannuation governance,” the Coalition members said.
“Labor must reveal what action they plan to take to ensure this behaviour is not systemic.
“Rather than focusing on these issues, Assistant Treasurer Stephen Jones’ first action in government was to attempt to roll back super fund disclosure rules which would have left consumers in the dark about super fund donations, marketing and sponsorship expenditure,” Taylor, Cash and Howarth added.
The trio also accused Labor of “protecting their union affiliated, industry super funds and donors with ideologically driven reforms”.
Moreover, they called on the Albanese government to back Peter Dutton’s legislation to re-establish the ABCC and ensure that individuals with criminal records are permanently banned from construction sites.
“Labor cannot continue to turn a blind eye to union lawlessness by some of their biggest donors.”
APRA’s allegations against First Super
On Friday, APRA alleged that First Super director O’Connor approved the appointment of a CFMEU employee to perform a full-time role under the contract while being aware that the employee continued to undertake a significant portion of work for the CFMEU.
Moreover, the regulator said that he directed or approved the employee carrying out the work for the CFMEU, and was aware that First Super was paying fees under the MESC contract, which included an amount covering the full-time wage of the employee.
APRA also alleged that O’Connor 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.
Additionally, according to the regulator, O’Connor was allegedly 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.
