Cbus whacks illegal phoenixing

The $48 billion industry super fund is backing the introduction of director identification numbers (DINs) to stop company directors from fraudulently escaping superannuation obligations to workers.

The construction industry is the "highest represented" sector in illegal phoenxing activity, according to ASIC. The regulator defines illegal phoenixing as activity where directors of a company deliberately try to dodge its creditors.

As an example, directors could transfer their debt-ridden company's assets to another company with a similar name, before handing over the original one to a liquidator.

Cbus has made a submission to Treasury consultations on draft legislation around the introduction of director identification numbers (DINs) in a bid to protect its members' employments from dodgy company directors, Cbus group executive Robbie Campo said.

"The impact of illegal phoenixing activities on Cbus members has been significant. It is recognised that the construction and building industry in Australia has a significant problem with phoenix activity," Campo said.

Cbus has recovered more than $31 million in members' superannuation entitlements from insolvency actions in the last 10 years, working with Industry Funds Credit Control (IFCC) which has already backed the introduction of DINs.

"In the past five years Cbus has recovered around $330m in unpaid superannuation owed to members and more than $600m over the past 15 years," Campo said.

The Cbus submission says that the DINs structures could substantially improve the capacity to detect those directors who had previously been involved in illegal potential phoenix activity early on and create a framework for identifying how Cbus deals with these companies.

Read more: CbusRobbie CampoASICIndustry Funds Credit ControlTreasury
Link to something mDV5par2