If challenging the joy of Brisbane’s Riverfire isn’t bad enough, one steps gingerly into challenging the sponsorship of the latest Oprah tour of Australia.
This week’s holiday edition of the Australian Financial Review has a story on the decision by industry fund Sunsuper to spend around $1 million in sponsoring a speaking tour by American chat show host Oprah Winfrey. Sunsuper is also the major sponsor of Brisbane’s annual Riverfire fireworks spectacular.
This spending by a supposedly non-profit industry fund raises some serious questions about the decision-making processes of its board, and their transparency to members.
The stated justification for sponsoring the Oprah event, faithfully reported by a media guest of Sunsuper, was to support the firm’s ‘Equality Project’, which promotes the topping up of low fund balances by women whose parenting roles have kept them out of the workforce.
Truly a noble intent, to increase the super balances of women whose family commitments have reduced their retirement saving opportunities – and one I support.
But does one of the richest women in the world really need the help of struggling Queensland workers with her retirement fund? And since when does serving their fund members’ retirement interests include the sponsorship of razzle dazzle events like the fireworks and the Oprah tour?
I suspect the spending on these projects more about self-promoting the interests of management, by raising the firm’s profile in new markets.
If Sunsuper’s (mostly) low income members were asked, they would most likely prefer the money be added to their meagre superannuation balances. So why is it the trustees’ right to spend members’ hard earned savings on fund promotion and social programs like this?
Sunsuper is to be commended among their industry fund peers, for having the courage to appoint three independent directors. They have set a model for better governance in this sector, breaking ranks with their peers.
The industry super fund sector recently nobbled the crossbench senators, thereby managing to kill off reforms that offered the protection of having independent directors on superannuation fund boards. This means that these self-interested industry superannuation fund boards can continue to ignore good practice governance.
The Sunsuper board has made a good start. Its next challenge is to look at its decision-making processes, and at its accountability to members.
The concept of ‘fiduciary duty’ seems simple and obvious to me. But in their discussion on spending around a million dollars of their members’ funds, I wonder whether the board’s fiduciary duty to act in the best interests of members earned sufficient discussion? What consideration of members’ interests was there, in using their meagre savings to spend funds on promoting a social improvement agenda, when it was largely for the information of non-members? In reality, it was spent on a massive self-promotion of the fund in new markets. It is not a sound use of members’ funds, to use them to recruit other members.
Furthermore, we need to ask how the Sunsuper board accounts to its members. Do the independent directors face election by their members? Is there an accountability to members for the decisions of the trustees, including on such promotional activities unrelated to the interests of members?
The real contribution that an independent director can make to industry super funds is the injection of ‘independence of mind’.
Such independent thinking is designed to avoid capture of the fund by management or other stakeholder interests – and ensure that the board’s fiduciary duty, to act in the best interests of fund holders, is upheld. It is also a necessary part of ensuring the board is genuinely accountable to members, not just to the two lobby groups that control it – an employer peak industrial body and the trade unions (which represent only fifteen per cent of the workforce).
Having taken a courageous step to have independent directors, let’s hope the Sunsuper Board demonstrates more independence of mind. This would be demonstrated in decisions made in members’ interests and less so in the interests of management or other stakeholders – as these marketing expenditures appear to be.
And let’s hope that we see more accountability to members for the use of their funds?
It would be terrific to see Sunsuper set the standard for other industry funds to follow.
NOTE: The author has a superannuation account managed by Sunsuper.
 Rose, S, 2015, ‘Why non-profit superannuation fund Sunsuper sponsored Oprah’, Australian Financial Review, 23 December, www.afr.com/business/why-nonprofit-superannuation-fund-sunsuper-sponsored-oprah-20151221-glsahm