APRA seeks disqualification of First Super co-chair with CFMEU links
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The news: The prudential regulator is seeking to disqualify First Super director and co-chair Michael O’Connor for alleged breaches of the director covenants regarding a contract between the superannuation fund and the embattled Construction Forestry and Maritime Employees Union (CFMEU) which he is the manufacturing division's national secretary.
The context: The Australian Prudential Regulation Authority (APRA) has commenced proceedings in the Federal Court of Australia and is also seeking civil penalties.
APRA has been investigating a contract between First Super and the CFMEU for member and employer services contract (MESC contract) which concluded in 2023.
CFMEU was placed under administration for up to five years last month.
APRA alleges that O’Connor breached a number of the director covenants contained in the Superannuation Industry (Supervision) Act (SIS Act) including the covenants to act honestly, exercise the same degree of care, skill and diligence as a prudent superannuation entity director would exercise, act in the best financial interests of beneficiaries, and to prioritise the interests of beneficiaries when in a position of conflict.
It is alleged that O’Connor approved the appointment of a CFMEU employee to perform a full-time role under the MESC contract, and:
- Was aware that the employee continued to undertake a significant portion of work for the CFMEU;
- Directed or approved the employee carrying out the work for the CFMEU;
- Was aware that First Super was paying fees under the MESC contract, which included an amount covering the full-time wage of the employee; and
- 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.
O’Connor was also 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.
APRA is seeking declarations and penalties against O’Connor in relation to the alleged contraventions.
APRA is also seeking orders disqualifying O’Connor from acting as a responsible officer of any corporate trustee or superannuation entity for a period determined by the court.
The source: APRA media release
