Despite allegations of misconduct against KKR, the private equity firm who acquired 55% of Colonial First State (CFS) from the Commonwealth Bank (CBA), the bank believes the partnership with KKR will bring significant benefits to its superannuation members.
Answering a question on notice, CBA said it considered KKR as a future shareholder and the benefits KKR could offer CFS and its members were significant investments.
The question from Labor’s Andrew Leigh pointed to:
- The alleged misconduct relating to breach of fiduciary duties in its dealings with the public pension fund Kentucky Retirement System, currently before the courts in the United States;
- Being charged by the US Securities and Exchange Commission with ‘misallocating more than US$17 million ($21.93 million) in so-called “broken-deal” expenses to its flagship private equity funds in breach of its fiduciary duty’ in 2015; and
- Allegations of misconduct against KKR and a number of other large private equity firms, raised in an anti-trust lawsuit, settled in 2014.
The answer from CBA said: “CBA believes the KKR partnership will bring significant member benefits through a commitment to invest in a range of transformation initiatives including:
- A simplified product offering with competitive pricing and choice for members;
- An improved service experience across multiple channels, including accelerated investment in digital channels;
- Modernised technology system to deliver a market leading superannuation service to members; and
- Better access to member education, support and self-service tools, to help Australians navigate the complexities of the superannuation and pension system”.
CBA also said it undertook its standard “buyer due diligence procedures” prior to the transaction including Anti-Bribery and Corruption, Know Your Customer/Anti-Money Laundering and Economic Trade and Sanctions checks.
“The superannuation funds within Colonial First State are managed by a trustee with a majority independent board whose primary duty is to members of its fund. All super funds in Australia are strictly regulated under the Superannuation Industry (Supervision) Act.”
