Tony Boyd, writer of the Chanticleer column in the Australian Financial Review, this weekend (Dec 15-16) delivered retirees and those approaching retirement with more cause for concern.
Until now Australians have had no reason to doubt the integrity of the industry that manages its superannuation savings, under the supervision of the Australian Prudential Regulation Authority (APRA).
This article is alarming. It is a story of irresponsible management of the Bookmakers Superannuation Fund that since 1974 had provided Union Members (initially the NSW Bookmakers Cooperative) with a safe vehicle for their retirement savings.
It has never been a large fund. Even after merging with City Tattersalls Super Fund, and becoming a public offer fund in 2004, it held only about $237 million. But consistent double figure returns were proof of the wisdom of its simple investment strategy.
The fund’s assets are now frozen. They are predominantly fixed interest investments with a large percentage illiquid in mortgage funds, and in direct property loans mostly in Queensland. In the year to June 2012 this component registered a negative return of 29%. Behind this decline from best to worst are issues of self-interest, if not of incompetent and fraudulent behaviour. The timeline of events appears to me to be:
- In 2003, four trustees incorporated themselves as a company “Super Promoters” for their collective advantage in managing and promoting the fund.
- In July 2004, a deed of replacement of trustee was then executed resulting in the fund becoming a public offer fund with a new corporate trustee, Equity Trustee. Under the agreement Super Promoters received a trailing fee of 0.615%. The Bookmakers Cooperative challenged this arrangement unsuccessfully.
- In March 2009, Super Promoters was able to execute another profitable and convenient sale. This time they sold themselves to an ASX listed company, Diversa for $6.95 million and pocketed the proceeds. This was after the onset of the global financial crisis but before it had fully impacted on fund performance.
- The Bookmakers Cooperative tried to intervene on behalf of its members, because of the poor fund performance but for 2 years Equity Trustees and Super Promoters failed to comply with legal requests from SMK lawyers, acting on their part for information on the trust deed and the precise terms of this arrangement. Their argument was that they had no fiduciary responsibility to the Bookmakers Cooperative, who had sponsored the original fund. By default, the Bookmakers Cooperative lost control of its own fund without recompense.
- APRA has reacted with inertia to repeated requests from members, one of whom has lost $244,000. Furthermore the Superannuation Complaints Tribunal is not likely to be able to conduct a hearing into the matter for twelve months.
- One of the Bookmakers Super Fund investments is the Summit Mortgage Fund, which has gone into administration by Bentley’s Corporate Recovery allegedly charging $425,000 monthly from the assets of the Bookmakers Super Fund. Since 2008 it has incurred $11.7 million in fees.
This horror story is far from complete but it is likely that once again retirees will lose out, and little will change. If so expect further erosion of confidence in the superannuation industry.
Hello Mr. Robson; I just read you article (I found the link while trying to find the Bookmakers super fund phone number) .
I could not agree with you more with what you wrote in your article .Myself and countless others were swindled by this so called Fund .. Personally I lost close to $400.000.00 . I still have funds frozen in the fund and they have dwindled from $180.000.00 to just $95.000.00 the last time I checked .
One reads about this things happening to other people and feel sorry for them .Now it happended to me.
..Personally I dont think I’ll ever see a cent of what is left of my funds .
I’m most grateful for your comment. So many investors have lost so much in retirement savings that I fear such stories have lost their impact on the public and our regulatory authorities. Although in all fairness I think they are slowly working through many difficulty issues, and may re-dress some wrongs.
I’m not sure what steps you have taken, and I’m in no position to advise, but I would encourage you to pursue all possible avenues, possibly including contacting Tony Boyd of the AFR. The public deserves to know what progress has been made since he last wrote.
I understand that there are still unsettled issues relating to the Bookmakers’ Super Fund. If you read this comment, you may care to make contact with me again.
I have just read your article. For the past 3 or 4 years I have tried to obtain a copy of the financial report provided by Cameron Brokers in 2004, which is believed to contained advice for the Bookmakers Superannuation Fund to desist from the line of investment that they were following and indeed to pullback on some of the investments.
It seems that they were replaced as Financial Advisers as a result.
The Trustee has denied my request on the basis that it is confidential.
I have asked the Trustee, APRA and ASIC how, if Trustees who remained Administrators of a Fund were entitled to set up a parallel company Super Promoters which records show they gained substantial financial gain, when they were supposed to be promoting the fund. It seems they gained fee revenue in excess of $5 million of which about 90 thousand was used to promote and about $5 million went into their family trusts. This occurred while they were still Administrators of the Fund. I also asked for Profit and Loss accounts for the years 2004 to 2008 to see if they also obtained fees from the Fund as Administrators.
Suffice to say that no help was forthcoming from them and not even a reply from APRA the overseeing body of Super Funds. The response from the Trustee was “they could not comment as it had nothing to do with them”, a load of nonsense.
No doubt the Administrators/Super Promoters intention was to make the Fund look good for the purposes of making a windfall when it was sold to Diversa, Hence it seems that Cameron Brokers fell victim to the greed of the Administrators who owned Super Promoters.
The legal advice given by SMK Lawyers was that the Bookmakers Co-operative had no rights as they were not a member of the Fund. However, it did say that they believed the individual members had a right of action.
Have you kept a record of your correspondence with the regulatory authorities about Super Promoters? I believe this issue is an important one to be considered. i.e. the right of superannuation members to be able to question at an AGM, the direction of fund investment. They should also be able to veto decisions contrary to the interest of all stakeholders. It may be possible even at this late stage to have a proper enquiry into the propriety of Super Promoters “take-over” of the Bookmakers Superannuation Fund.
Has there been any recent developments wit this ? What options exist for the many poor fund members who have been screwed over and ignored by the regulator ?
I apologize for the delay in replying to your comment because of our move to Brisbane from South Australia. I have not read anything further about the remaining assets of the former Bookmakers Union, and assume that its remaining assets have now been inextricably folded into the products of Equity Trustees. To my knowledge no action has been taken against those who misappropriated the Union’s assets. As the organization responsible for the administration of super funds, your inquiries should be directed to APRA. It is election time when parliamentarians are likely to be more attentive to the needs of their constituents, so do seek the opinion of your local member as well. There is strength in united effort. Perhaps a number of disenfranchised former fund members could launch a legal class action. Certainly an opinion could be worth seeking.