At Thursday’s Senate economics committee hearing, Cbus CEO Kristian Fok discussed the “huge benefit” the fund gained from its financial support to the Construction, Forestry and Maritime Employees Union (CFMEU), saying that while some of the funds were allocated to director fees, the majority was invested in partnership programs.
Fok said the spending provided substantial benefits, particularly in reaching out to the construction industry and raising awareness about the fund’s unique offerings.
“There is a huge benefit and a strong reason for us to reach out to people in the construction industry around the issues that are relevant in terms of our differentiated products,” he said.
In the 2023 financial year, super funds contributed some $4 million to the CFMEU, with Cbus accounting for the largest portion of that amount.
The fund has faced criticism in recent months over its close ties to the controversial CFMEU, which holds 21 per cent of the fund, with the Australian Prudential Regulation Authority (APRA) in August instructing the fund to undertake a review into the extent of its involvement in the union.
Reflecting on this, Fok said the independent review into Cbus’ governance and administration will help determine whether the fund should continue its partnerships with the union.
“We are subject to this independent review, once we get those findings, we will look at the circumstance in light of those findings,” he said.
“Cbus will make commercial agreements which we think are in members’ best financial interests. We will take into account any findings that come from the independent review. If that continues to be a value driver, then we would expect it would be something that we would continue to pursue.”
The CEO kicked off his Senate economics appearance by apologising for the fund’s failure to look after customers making death benefit or disability insurance claims.
Namely, earlier this week, the corporate regulator said it has filed civil penalty proceedings against United Super, the trustee of Cbus, for failing to process over 10,000 claims for death and total permanent disability benefits in a timely manner, impacting more than 6,500 members.
The regulator alleged that the delays, which spanned more than 12 months for some claimants, resulted in an estimated $20 million in financial losses for members, with the Australian Securities and Investments Commission accusing the trustee of inadequate response and misleading reports regarding the ongoing issues.
Moreover, in its statement, the regulator alleged that despite the issue being raised with the Cbus risk committee between November 2022 and February 2023, the trustee failed to report the matter to ASIC within the required 30-day period.
Speaking on Thursday, Fok said the fund is “sorry”.
“While we have been far from perfect, our board and our team did take action on delay,” Fok said.
