The two independent directors currently on the board are Wayne Swan, who is a former Labor treasurer and current Labor president, and John Edwards, a former Reserve Bank of Australia board member. The Australian Council of Trade Unions no longer has a say on the appointment of the chair, who is currently Swan, following Samuel’s recommendations.
The remaining 11 positions on the board are split between employer organisation Master Builders Australia, and unions the Australian Manufacturing Workers’ Union, the Communications, Electrical and Plumbing Union, and the CFMEU.
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“The reviewers are not of the opinion Cbus would necessarily benefit from a majority of independent directors and would not be making that recommendation,” the review noted.
“However, the appointment of additional independent directors with the expertise and ability to properly present independent views to the board is seen to be of advantage in the future governance of Cbus both internally and in its dealings with external parties in relation to its ongoing business strategy.”
The Senate released the secret review on Monday following a push by Liberal MP Andrew Bragg last year to force the financial regulator to produce the report. The Australian Prudential Regulation Authority (APRA) baulked at the time, citing secrecy clauses.
“The [Samuel] report makes clear the governance standards at Cbus were as broken then as they are now,” Bragg said. “Samuel makes the case for independent directors and a stronger conflicts framework … It appears no progress has been made in a decade. The government seems uninterested at best and seems unwilling to make improvements for consumers.”
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Cbus has come under fire for its relationship with the CFMEU, which was placed into administration after this masthead revealed corruption and criminal infiltration in the union.
It was forced by APRA to engage an independent expert to examine its corporate governance, which found the fund had failed to sufficiently demonstrate that its controversial relationship with the disgraced union improved member outcomes.
While industry funds, which have union and employer representatives on their boards, make better returns and have lower fees compared with retail funds, the Liberal Party has been increasingly worried the sector will use its financial power against the Coalition.
Critics of the industry funds’ equal representation model have also raised concerns about the unions and employer organisations picking directors regardless of their investment, governance or risk experience.
Cbus has been contacted for comment.
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