Calls for so-called ‘independent’ directors on industry superannuation funds are flawed by the vested interests of the proposers, according to the peak industry super body.
Australian Institute of Superannuation Trustees (AIST) vice-president Gerard Noonan said the debate turned on “what’s meant by independent, and independent of whom or what”.
He was countering the draft policy of the Financial Services Council (FSC) on superannuation governance policy.
“The FSC’s draft policy – itself quite a good document in many ways – allowed for the big banks and insurance companies to have the same ‘independent’ on the board of the parent company as on the board of the super fund they owned,” he said.
He pointed to the core definition of the Australian Securities Exchange of an independent on the board of a listed company – such as BHP Billiton, Wesfarmers, ANZ – was that the director was not an executive of the company they governed.
“So the FSC definition works okay, but it doesn’t look like true independence to me,” he said.
In the not-for-profit industry fund sector, the trustee boards of funds were all independent, he said.
“Of the 600-plus members of the AIST, none that I know of is an executive of any fund which they govern,” he said.
While the boards of the not-for-profit funds typically had equal representation of employer and employee trustees, about 60 trustees were appointed by the boards from outside the employer and union ranks.
“These so-called ‘independents’ are chosen to fill an occasional skill gap on a board,” Noonan, who is chair of industry fund Media Super, said.
But overwhelmingly, the trustee boards of industry funds had equal representation of employers and unions. This included industry funds such as AustralianSuper, Cbus, Hesta and Media Super.
Noonan said there were “all sorts of ways of governing companies and financial institutions and those that claim there is a perfect model are kidding themselves, or fibbing. Take listed companies in Australia”.
“How do you imagine an ‘independent’ gets elected to a board, and why do you think the boards of companies all seem to look pretty similar – older-aged men from the legal, accounting, actuarial and professional director class?
“Theoretically, shareholders vote them in, and vote them off the island if they turn out to be duds,” he said.
