How do you spell conflict of interest?

AustralianSuper head of property Jack McGougan is seeking damages of $491,000, plus end of term bonus.There is a very interesting story in the Fin this morning about the former head of property at AustralianSuper, the largest industry super fund, being forced out of his job.

And don’t you just love the excuse: not a team player?

Here it is:

A former executive at AustralianSuper has accused top officials at the country’s largest superannuation fund of pressuring him to funnel investment into a union-linked property trust despite conflicts of interest.

The fund’s former head of property Jack McGougan made the accusations in a multi-million-dollar Federal Court action launched this week against AustralianSuper.

Mr McGougan claims he was forced out of his $500,000 a year job for opposing moves by chief investment officer Mark Delaney and director Brian Daley to invest in industry-fund controlled developer ISPT.

He alleges that when he raised concerns over the fund’s poor management of conflicts of interest in relation to ISPT AustralianSuper chief executive Ian Silk told him “you have to drop this”.

ISPT is an unlisted property fund and developer set up in 1994 by former ACTU assistant secretary Garry Weaven and co-founded by AustralianSuper.

The allegations thrust the $140 billion industry super fund into the spotlight just as the Hayne royal commission called on more than 30 superannuation funds to appear in hearings next month to examine governance issues.

Mr McGougan was made head of property in 2011 and drove a strategy to invest members’ funds in property offshore. He was given authority to buy and sell assets up to $200 million.

However, he says that from 2012, Mr Delaney, the fund’s CIO and deputy chief executive, and Mr Daley, AustralianSuper director and the capital stewardship officer for the Australian Council of Trade Unions, “pressured” him to invest in ISPT.

ISPT is an unlisted property fund and developer set up in 1994 by former ACTU assistant secretary Garry Weaven and co-founded by AustralianSuper. Its board includes senior current and former Construction, Forestry, Mining and Energy officials.

Both Mr Daley and Mr Delaney were also directors of ISPT during Mr McGougan’s time at AustralianSuper, with Mr Delaney only recently stepping down from the board.

Mr McGougan alleges in the Federal Court action that when he raised concerns over the fund’s poor management of conflicts of interest in relation to ISPT AustralianSuper chief executive Ian Silk told him “you have to drop this”.

However, despite a “standing conflict of interest declaration”, neither Mr Delany nor Mr Daley absented themselves from AustralianSuper’s investment committee decisions involving ISPT, according to court documents.

‘Not a team player’

From 2015, Mr McGougan started raising concerns over governance issues at the investment committee, including conflicts over investing in ISPT and other industry fund-owned collective investment vehicles.

In November 2016, he told the committee he wanted AustralianSuper to turn off its distribution reinvestment plan for the ISPT core fund.

AustralianSuper head of property Jack McGougan is seeking damages of $491,000, plus end of term bonus.

But a week later, Mr Delaney allegedly accused him of not being a “team player” and that he was planning a restructure that would see Mr McGougan report to the head of mid-risk assets Jason Peasley.

Mr McGougan complained the “demotion” was intended to stop him going to investment committee meetings and making recommendations over ISPT.

In a meeting with Mr Silk over his concerns in January 2017, Mr McGougan alleged Mr Delaney and Mr Daley were engaged in a “deliberate and concerted effort” to force him out for persistently raising concerns over conflicts of interest.

Mr Silk allegedly responded that “we want you back at AustralianSuper but you have to drop this”.

‘Offer of separation’ refused

Mr McGougan said he also made his complaints heard in a meeting with fund chairman Heather Ridout in October, where he accused Mr Daley of criticising the performance of the fund’s international property assets because Mr McGougan had refused to universally direct money to the “union controlled collective vehicle, ISPT”.

By March, AustralianSuper allegedly decided it was best Mr McGougan “separate” from the fund because he wasn’t “a team player”.

It allegedly made him an offer of separation but Mr McGougan refused it and was subsequently terminated.

McDonald Murholme lawyers, representing Mr McGougan, has alleged adverse action and breach of contract, and is seeking damages of $2.17 million, based on $544,215 annual salary for his four years to retirement, as well as end of year bonus at 80 per cent of his salary and compensation for humiliation, pain and suffering. It also wants $491,000 for breach of termination notice.

Fund governance is expected to be a major theme in the royal commission, specifically the legal obligation for directors to act solely in the best interests of members, not unions, employer groups or shareholders.

An AustralianSuper spokesman said in a statement that it denies the allegations and will defend the claim, adding “AustralianSuper always invests in members’ best interests”.

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15 Responses to How do you spell conflict of interest?

  1. RobK

    Looks like a boggy swamp.

  2. MPH

    Where have I seen Heather Ridout pop up before? Don’t think it was on the union’s side of a matter? Boggy swamp indeed…

  3. Tim Neilson

    Who better to look after the members’ money than some of the maaaates?

    The maaaates have great financial expertise.

    You can tell they do, by how rich they all get during their careers as union officials and ALP politicians.

    You know it makes sense.

  4. H B Bear

    All the expected maaates make an appearance.

    Comrades

  5. Entropy

    MPH
    To generalise, if you work for an industry association the upward path often seems to be either politics or the board of a union controlled super fund. Industry association behaviour over the years makes more sense when you take those options into account.

  6. Entropy

    Also, see the holy triumph-erate of Big Business, Big Union and Big Government. You know, the swamp

  7. stackja

    With Garry, a Walter Scott quote comes to mind. Sinc might not like any more said on this, rules are rules.

  8. Tim Neilson

    stackja
    #2761500, posted on July 12, 2018 at 4:51 pm

    Garry’s been a- weavin’ ?

  9. Leigh Lowe

    This will buried faster than a Muslim who dies at afternoo teatime.
    The MSM will give da bruvvers a pass on this.

  10. John Constantine

    As we all well know, it is in the best interests of the member/wurka/bruvvers to have their cfmmeu in a position of overwhelming financial power, so the rights of the member/wurka/bruvvers can be represented by people in the same financial circles as the Tory Bosses.

  11. John Constantine

    Without our Crony Big Union/Crony Big State/ Crony Big Bosses colluding to create forced looting out of pay-packets before the wurkas ever see the money, the Australian working class would have never put such a huge chunk of their surplus discretionary cashflow into the capital city Ponzi property scheme or supported the sharemarket Ponzi with endless weekly buying of the index regardless of future prospects.

    Imagine letting the Proles choose to spend their own money on stuff they reckon is good value?.

    Their Australian elite Kleptonobility would have had to make a living on providing quality and service and value for money to consumers in a free market, instead of by scratching the crony backs of their:

    Comrade Maaaaaates.

  12. Leo G

    “AustralianSuper always invests in members’ best interests”.

    If true then AustralianSuper is an incompetent fund manager.
    “Best interests” in this context refers to a form of delegated authority. It confers a power to a delegatee where there is inadequate time or information to formulate specific directions or guidelines, usually when there is critical need for a quick response in the absence of resources needed to anticipate eventualities.
    It should certainly NOT be the obligatory approach to all investment by a superannuation fund manager.

  13. Habib

    They make the Gambinos look like rank amateurs.

  14. duncanm

    How about “The New Daily” – paid for by your admin fees.

    See here for the bullshit they spin when asked why they’re spending member’s money on this

  15. Mon

    Duncanm, thanks for the see here.
    Reads like a 21st century scheme of Gillard/Wilson, grabbing money from the Widows and Orphans Fund.
    The Unions have no scruples.

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