The Australian Financial Review’s Tony Boyd unveiled a credit card expenses scandal at HIP on 9 May after a tip-off from a whistleblower.
HIP chairman Anthony Wallace and chief executive Ross Bernays incurred a number of expenses on their private credit cards – and both men had the power to approve each other’s reimbursement.
Among the expenses were first-class flights to Europe and extensive stays in hotels before and after conferences, according to Mr Boyd.
Mr Wallace has since been removed from the board by fellow directors and Mr Bernays has been terminated. Both men were employer representatives of the fund.
Speaking to InvestorDaily, Mr Baird played up the fact $700 million HIP is merging into $2.3 billion Prime Super – rather than the other way around.
“All the policies that Prime Super has in place essentially remain in place,” he said.
“We have enough policies, procedures and controls to ensure some or all of those activities wouldn’t be replicated in Prime Super,” said Mr Baird.
As a result of the expenses rort at HIP a total of four board directors left the board, and Prime Super is now seeking to replace them.
“We need representation in the health and aged care industries, so we’re in the process of trying to find the right people to come and sit on the board [of the merged entity],” said Mr Baird.
He acknowledged he had spoken to a “small number of HIP members who have rung up about these issues” and reassured them it “won’t happen at Prime Super”.
“They’ve all been relatively comfortable after speaking with them, but obviously they still have those concerns,” said Mr Baird.
“From the date of the merger, all of that has stopped and going forward we’re a much cleaner and more open fund” he said.
Asked whether the scandal at HIP provides a good argument for independent directors in industry super funds, Mr Baird disagreed, saying “they are essentially very different issues”.
“This isn’t just related to industry super funds, it’s a bigger issue where you have a consolidation of power and collusion between two parties,” he said.
“It doesn’t matter what industry it’s in … things like this can happen, so from a regulatory point of view the framework is in place to manage this,” said Mr Baird.
“But when you have those issue there, it is a risk that goes forward. It’s up to the boards and the management teams to make sure that doesn’t happen.”
