The Australian Prudential Regulation Authority (APRA) has referred to a recent decision by the Administrative Appeals Tribunal (AAT) to reinforce the need for superannuation fund trustees to understand the relevant legislation and the requirements of managing a fund.
APRA pointed to a recent AAT decision upholding the disqualification of a trustee, Jurgen Preuss, on the basis that he had failed in his fiduciary duty to the superannuation fund members.
Commenting on the decision, APRA’s deputy chairman Ross Jones said the Tribunal had upheld APRA’s view that there is a personal duty upon directors of a trustee company to understand the relevant legislation and the requirements of managing a fund.
Preuss was one of two directors of Broadway Fiduciary Pty Ltd, the trustee of the Australian Independent Superannuation Fund (AISF), which had approximately 200 members. He was also a director of Fairfax Holding Pty ltd which acted as the investment management adviser to AISF.
In June 2000, a co-director of Broadway Fiduciary Pty Ltd confessed to police that he had stolen about $400,000 of AISF’s $900,000 assets over a period of years and was later convicted and jailed.
In August 2000, APRA replaced Broadway Fiduciary Pty Ltd with an acting trustee which has since wound up the fund and in December 2002, APRA decided to disqualify Preuss from being a trustee, investment manager or custodian of a regulated superannuation fund on the basis that he was not a fit and proper person.
Preuss appeal the decision to the AAT which upheld APRA’s finding that the structure of the AISF and its relationship with Broadway Fiduciary Pty Ltd and Fairfax was fundamentally flawed, and that Preuss failed to put in place internal management arrangements and failed to be sufficiently involved in Broadway’s performance of its role as trustee.
