APRA investigates Cbus’ CFMEU spending

The financial regulator has launched another investigation into embattled superannuation giant Cbus over its expenses bill, putting further heat on the $100 billion construction industry fund that has lurched from one crisis to another over the past six months.

The Australian Prudential Regulation Authority (APRA) on Tuesday morning also announced it had accepted a court-enforceable undertaking from Cbus to address its risk management and fix its governance failures.

Cbus, which has close ties to the disgraced construction union CFMEU, has been under intense pressure since the middle of last year after an investigation by this masthead uncovered criminal infiltration and corruption in the construction union.

Since then, APRA ordered Cbus to engage an independent expert to review its links to the CFMEU, while the Australian Securities and Investments Commission has pursued the super fund for failing to process insurance claims of thousands of disabled bereaved members in a timely manner.

The independent report by Deloitte found that Cbus failed to demonstrate sufficiently that its controversial relationship with the CFMEU was in the best financial interests of members when it splashed more than $1 million on the union, including for picnic days and Christmas parties.

Loading

“APRA expects trustees to have robust governance, compliance and risk management frameworks in place to prevent, detect and/or mitigate potential adverse outcomes such as operational risk incidents. Where an entity’s practices are found wanting, APRA will not hesitate to take action to protect members’ interests,” APRA deputy chair Margaret Cole said.

In a statement, Cbus noted APRA’s intention to review its expenses bill, including partnership payments made to unions and employer groups.

“Our priority is to ensure Cbus meets the highest standards, [which are] rightfully expected of us by our members as one of Australia’s leading superannuation funds,” chief executive Kristian Fok said.