“But she cannot think that she can come into the boardroom of AustralianSuper and expect those issues to be raised. And she shouldn’t raise them in that way because she is a trustee of the fund.”
The potential conflict of interest arising from Ms O’Neil’s concurrent roles prompted Treasurer Josh Frydenberg to write to the prudential regulator to ask whether it needs more powers to deal with such matters.
A row has opened up between Labor and unions, which are aligned with industry funds, and business leaders, who back the Coalition.
Conflicts policy
Shadow treasurer Chris Bowen weighed in on Wednesday, accusing Mr Frydenberg of continuing “warfare against industry funds after a royal commission which found no problem with the funds”.
Half of the directors on industry fund boards are appointed by unions and the other half by employer groups. This “equal representation” model offends the Coalition because it confers on their union enemies an element of power over very large sums of money.
“She would have to recuse herself. Of course she would. And so should she,” Ms Ridout said when asked whether Ms O’Neil should abstain from decisions on BHP.
“But one of the great strengths of our fund has been people there representing unions.
“We have a very live conflicts policy. We invest a lot of money, we have people involved in a whole lot of other boards and activities. And that is managed very actively; people have to recuse themselves from discussions quite often.”
Ms Ridout said AustralianSuper was in regular contact with BHP on a range of matters.
“We’re not telling them how to run their company. And the trustees of funds like ours understand, when they come through the door of that boardroom, they have to take off their union hat or their employer hat and they have to behave as Kenneth Hayne has described trustees.”
Hunting for new investment opportunities, the $145 billion AustralianSuper lodged joint bids with private equity firm BHG Capital to buy hospital operator Healthscope and international education business Navitas.
New activities
But because joint venture activity was such a new prospect for AustralianSuper the fund would review governance policies for joint bids, Ms Ridout said.
“The fund will be doing a review of both of these and what we’ve learned from them because it is very new activities for the fund.
“We don’t go into Healthscope and Navitas because we have smart guys and want to do deals. We go in there because we can get very good returns for members. But we will always do it ethically. We are developing a range of principals to actually support that.”
The Healthscope play became contentious because AustralianSuper threatened to use its power as the company’s major shareholder to thwart a rival bid.
The upshot was to potentially deny AustralianSuper members a better deal because its commitment to the BHG partnership.
“I think we have to be as transparent as we possibly can about these issues and I think the members deserve that, the community deserves it,” Ms Ridout said.
“But you cannot stop a big fund like ours, any more than you can stop the Dutch funds, the Canadian funds, all these funds in the world that we are starting to get to the size of, getting involved in these deals.”
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