Cbus insurance payment failings made me ‘sick in the guts’, says chair and former treasurer Wayne Swan

Former Federal treasurer and Cbus chair Wayne Swan has told a Senate committee probing the retirement system he was “sick in the guts” when he discovered death and disability payments for members had been delayed for extended periods.

”I was sick in the guts when I heard that we had this accumulated list of people whose claims had been delayed,” Mr Swan said.

”I want to apologise to all of those who’ve been affected in our fund, and we as a board first became aware of the magnitude of this problem set out to rectify this problem. Something like 80 per cent of the unresolved cases have now been dealt with.”

The Australian Securities and Investments Commission this month fined Cbus $20 million for delays in processing death and total permanent disability claims for more than 10,000 members. More than 6000 members’ claims remained unresolved for more than a year

Under questioning by Liberal senator Andrew Bragg, Mr Swan was asked if he was attempting to shift responsibility for customer service failures to the outsourced fund administrator, Link.

”Do you think it’s a good look for you as the chair to be blaming Link?” Mr Bragg asked.

”I think there is a challenge with Link. It’s a subject of public discussion, not just for Cbus, but a number of other funds beyond that,” Mr Swan replied.

”I remind you of your legal obligation, you cannot abrogate responsibility, you cannot blame third parties,” Mr Bragg countered.

”I’m not. I’m not abrogating responsibility. We accept complete responsibility, complete accountability,” Mr Swan said.

Mr Swan and Cbus risk committee chair John Edwards were compelled to front the committee over the insurance fiasco as well as concerns raised by the Australian Prudential Regulation Authority about the appointment to the Cbus board members of the controversial Construction, Forestry and Maritime Employees Union.

The CFMEU was placed in the hands of independent administrators in August following allegations of corruption and infiltration by organised crime.

APRA compelled Cbus to engage an independent expert to conduct a review into whether the appointments violated the fund’s duty to act in the best financial interests of members.

According to a now-removed media statement on the Cbus website that review, conducted by Deloitte, cleared the appointment of CFMEU representatives to the board.

One of the appointed directors is Maritime Union national secretary and CFMEU heavyweight Paddy Crumlin. Mr Crumlin was the former chair of Maritime Super, a fund that was the worst-performing industry super fund in the country in 2021. Maritime Super was compelled to close and subsequently merged with Host Plus in September 2023.

“Mr Crumlin was chair of the worst-performing superannuation fund in the country, and I see you have said he has extensive experience oversighting contemporary investment,” Mr Bragg said.

“I’m just wondering, how does that comply with the fit and proper test, which requires directors to have competence, knowledge and skills?”

“Mr Crumlin does have extensive experience in running super funds, and to characterise the experiences of the Maritime fund as reflecting on his competence is not a fair thing to do,” Mr Swan replied.

Mr Bragg also asked about the suitability of Jason O’Mara, the former ACT President of the CFMEU, questioning his governance skills.

“I would differ with your definition of governance skills,” Mr Swan said.

“He has a lot of real life experience in the construction industry, and he has real life experience in administration, and he has academic qualifications and certifications. It’s quite an impressive list,”

Asked about his own independence and experience to be chair - a job which pays $210,000 a year - Mr Swan declared he was “uniquely qualified” for the role and rejected the assertion that his background in politics should exclude him from the role.

“I don’t think anyone would recommend that you would ban someone or forbid someone to be an independent director because they were a member of a political party,” he said. “Given my experience, I’m uniquely qualified to be an independent director of a fund such as this.”

Mr Swan was also asked whether Dr Edwards, a former Reserve Bank of Australia board member, was qualified to oversee Cbus’ risk committee.

“To suggest that he is not capable, or should not be able, to be the chair of this committee in an insurance fund is preposterous,” Mr Swan said.