Swan hits back at Bragg: 'That's wrong of you'

Cbus chair Wayne Swan faced the Senate Economics Committee today to answer questions around the super fund's claim handling delays, governance and payments made to the CFMEU.

Cbus is facing legal action from the Australian Securities and Investments Commission (ASIC) over claims handling delays that saw some members wait for up to 12 months before receiving their payments.

Swan apologised to Cbus members and said the fund takes "full responsibility" for its failures.

"I want to apologise to all those who've been affected. When we first became aware of the magnitude of this problem, [the board] set out to rectify this problem, and something like 80% of unresolved cases have now been dealt with," Swan said.

"But we are also engaged in a very substantial uplift in our fund across the whole area of risk management, and part of the restructuring of the executives in our fund, in recent times, has been a new chief risk officer. So, we have comprehensive frameworks, and we are working with the regulators to ensure that they are the best possible frameworks."

Swan reinforced that the delays in claims handling was primarily due to issues with a third-party provider, to which committee chair Senator Andrew Bragg sought to remind him of trustees' obligations.

"We are not the only fund that has a challenge with a third-party provider and has delays in the processing of insurance claims," Swan said.

"So, this is also an issue elsewhere in the industry, but in saying that we accept complete accountability for the outcomes, and that's why we have worked very hard with both the regulators and our fund to uplift our practices in this area, and that's what we're doing right now."

Bragg pushed the point, saying: "To remind you of your legal obligation, you cannot abrogate responsibility, so you cannot blame third parties."

Swan replied: "I'm not abrogating responsibility. We accept complete responsibility, complete accountability. I've said that on numerous occasions."

Swan was also questioned over payments amounting to around $2.3 million to unions, implying that the fund was paying the union or its members.

Swan disagreed with that statement, saying the fund only makes payments under partnership agreements, or to directors who are also union members.

"We haven't given money to anybody. We've entered into partnership agreements where services are provided, which enhance the membership of the fund and enhance our member returns," he said.

"I believe that it will be demonstrated that they are successful programs which deliver good value for the fund, rather than spending that amount of money in other areas, such as advertising. What we are getting here is very good bang for our buck, which, if it were a retail fund, they would be spending on advertising and other forms of promotion.

"It's wrong of you to mischaracterise partnership agreements, which are commercial, as being a grant to a particular organisation."

Bragg also questioned Swan over board governance, primarily questioning whether the fund has taken all necessary steps to ensure the members of the board have satisfied the 'fit and proper persons test'.

This comes after Cbus announced three new directors has been confirmed onto the board. One of which was former Maritime Super chair Paddy Crumlin.

APRA took issue with the appointments and requested a copy of a report put together by Deloitte looking into the issue.

"He [Crumlin] was the chair of the worst performing superannuation fund in the country, according to APRA's data," Bragg said.

"You have said he has extensive experience and oversight in contemporary investment. I'm just wondering, how does that comply with the fit and proper test, which requires directors to have competence, knowledge, and skills?"

Swan defended the appointment, saying: "Crumlin does have extensive experience in running super funds and to characterise the experiences of the Maritime fund as reflecting on his competence is not a fair thing to do."

"And if you look at the evaluations that we looked at, and I assume the evaluations that Deloitte went through, they concluded that as well."