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Resolve conflicts of interests say funds
Some of Australia’s largest companies conducted almost $6 billion in director-related business, prompting calls from major superannuation funds for company directors to better manage conflicts of interest.
The $6 billion figure emerged from research funded by six public sector superannuation funds, a spokesperson for which warned that even the perception of conflicts of interest could jeopardise investor confidence.
The research was funded by the Commonwealth Superannuation Scheme, the Public Sector Superannuation Scheme, the Northern Territory Government Public Authorities Superannuation Scheme, the Catholic Superannuation Scheme, VicSuper Emergency Services Superannuation Scheme
Speaking on behalf of the fund, the chief investment officer of Catholic Superannuation said members investing their superannuation savings with Australian companies depended on company directors’ independent judgement and business skills to help safeguard their retirement savings.
“It is not about prohibiting directors from having related interests,” he said. “It is about disclosing those interests to ensure that any transactions are clearly in the interests of shareowners and not directors.”
The research revealed that of 160 companies on the ASX200, many risked not meeting investors’ expectations on good governance.
It found that:
* Transactions with director-related entities by 48 companies were either insufficiently disclosed, not disclosed at all or of a size that would create suspicion that a conflict of interest had occurred
* Goods and services transactions between a company and a director-related entity when the director is a substantial shareholder of the listed company represented one-third of all related party transactions
* 168 of the 958 company directors included in the research served on two or more boards of the S&P/ASX200 companies.
The head of BT Financial Group’s Governance Advisory Service, Erik Mather said it was in the interest of every company to proactively manage conflicts, or run the risk of generating a regulatory response that would severely diminish the pool of available director talent.
AUTHOR
Mike Taylor
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