In what represents one of the biggest single actions undertaken by the Australian Prudential Regulation Authority (APRA), 13 individuals associated with the Victorian-based Wall and Ceiling Superannuation Fund have been disqualified from being trustees or responsible officers under the Superannuation (Supervision) Act 1993.
What is more, future action is possible against some of the parties in other jurisdictions.
APRA’s head of enforcement, Darryl Roberts, is making no bones about the fact that APRA is seeking to make an example of the Walling and Ceiling Superannuation case because it represents a text-book example of failing to meet the in-house assets test.
He says that while not all trustees of the fund were closely involved with the breaches or necessarily had knowledge of them, all had been disqualified because of their failure to keep themselves fully and appropriately informed.
As well as 10 trustees being disqualified, three accountants and auditors to the fund also found themselves disqualified.
According to APRA deputy chairman Ross Jones, the Wall and Ceiling Superannuation Fund was a multi-employer fund managing some $3.2 million of assets on behalf of 133 members employed by around 16 firms operating in the building supplies industry.
APRA says it became concerned when inquiries as part of a standard on-site review revealed the fund’s investment portfolio appeared to lack a prudent degree of diversification and liquidity and to involve significant conflicts of interest.
The resultant investigation revealed the fund’s assets were invested in a unit trust controlled by one of the trustee directors and that, in turn, that unit trust then funnelled members’ money into other unit trusts controlled by the same individual, which then developed factories, some of which were leased back to employer sponsors of the fund.
Jones says APRA accepted an enforceable undertaking from the trustee that resulted in the sale of the property and certain measures to protect members’ entitlements.
He says that APRA’s action has succeeded in ensuring members of the fund ended up in a break-even position.
