COVID-19 FOI Request: Definition of a 'Beneficiary" or "Concerned Person"

Phillip Sweeney made this Freedom of Information request to Australian Securities and Investments Commission

Response to this request is delayed. By law, Australian Securities and Investments Commission should normally have responded promptly and by (details)

From: Phillip Sweeney

Delivered

Dear Australian Securities and Investments Commission,

Prior to 1 July 2019 ASIC staff were subject to the Public Service Act 1999.
Subsection 13(9) provides:

(9) An APS employee must not provide false or misleading information in response to a request for information that is made for official purposes in connection with the employee's APS employment.

Subsection 52(2)(j) of the Superannuation Industry (Supervision) Act 1993 {SIS Act} provides that a trustee of a regulated superannuation fund is:
(j) to allow a beneficiary of the entity access to any prescribed information or any prescribed documents.

Section 10 of the SIS Act defines a “beneficiary” as follows:

""beneficiary" , in relation to a fund, scheme or trust, means a person (whether described in the governing rules as a member, a depositor or otherwise) who has a beneficial interest in the fund, scheme or trust and includes, in relation to a superannuation fund, a member of the fund despite the express references in this Act to members of such funds."

This raises an important question:

“Does a person who has been paid a benefit by a trustee or a purported trustee still have a beneficial interest in the fund, scheme or trust?”

If the lawful benefit is a pension benefit, then that person will receive ongoing periodic benefit payments.

But what if the lawful benefit is a “lump sum” benefit whose quantum could either be a collectedly determined amount or an underpayment?

Logic would dictate that a person who has been paid a lump sum benefit is still a “beneficiary” of the fund, scheme or trust so that the person would still have access to any prescribed information or any prescribed documents of the fund, scheme or trust.

If this was not the case then a trustee or an employee of the trustee would be able to commit the “perfect crime” when the fund is a Defined Benefit fund where payments are made from a common asset pool.

For example, when a member retired, the lawful lump sum benefit might be {say} $500,000 and an amount of $500,000 is recorded in the accounts as being withdrawn from the common asset pool of the fund by the fund accountant.

The fund accountant then pockets $100,000 and then sends a cheque for $400,000 to the retired fund member.

If the retired fund member seeks to check if the benefit was correctly determined, the dishonest accountant then says:

“You have received a ‘payout’ from the fund. You are no longer a member or a beneficiary of this fund. You are not a ‘concerned person’ and so have no right of access to the fund documents. Please go away and do not trouble the trustee again”.

The logic of a person who has received a lump sum benefit payment as being a “beneficiary” has been confirmed by the Supreme Court of NSW in Re HIH Superannuation Pty Ltd [2003] NSWSC 65.

This has also been confirmed in the Supreme Court of Victoria in Invensys Australia Superannuation Fund Pty Limited v Austrac Investments Limited [2006] VSC 112.

Another authority is Privy Council Appeal No. 73 of 2002 Bank of New Zealand v.
Board of Management of the Bank of New Zealand Officers' Provident Association [2003] PC 58

On 6 January 2014 the office of former Senator John Williams made a request for information from ASIC related to the death benefit entitlements of a wife of a member of an occupational pension scheme established by a Trust Deed made on 23 December 1913 in the State of South Australia.

The name of this Defined Benefit pension scheme in 2014 was the "AusBev Superannuation Fund" {R1004830).

In response to this request for information, ASIC Officer, Belinda Taneski, Senior Manager, Misconduct & Breach Reporting contravened subsection 13(9) of the Public Service Act 1999 by providing false and misleading information to Senator Williams.

Ms Taneski states:

“More recently,[name redacted] has contacted ASIC with concerns about her own dealings with the Trustee about the Fund. [name redacted] claims that she is a beneficiary of the Fund due to her husband’s previous membership of the Fund. [name redacted claims that she is entitled to a survivorship pension from the Fund.

Ms Taneski then states:

“Based on information available to ASIC, we determine that [name redacted] is not a beneficiary of the Fund and therefore does not meet the ‘concerned person’ definition.
ASIC’s position is that, as [name redacted] is not a concerned person, there has not been a breach of the law by the Trustee declining to provide Fund documents.”

Now, what was this “information available to ASIC”?

If Ms Taneski had bothered to obtain copies of the Deeds of this particular Defined Benefit superannuation scheme before responding to Senator Williams she would have been able to confirm that the wives of qualifying male fund members are entitled to a very valuable survivorship pension pursuant to covenant Rule 30A.

Royal Commission Recommendation 3.7 has also increased the penalties for trustees who fail to disclose the original Trust Deed and any amending Deed to fund members and beneficiaries and who contravene covenants contained in the governing rules of the fund, such as covenant Rule 30A.

Refer to Section 54B of the Superannuation Industry (Supervision) Act 1993.

Trustee directors now face a maximum prison sentence of 5-years imprisonment if they wilfully conceal the Deeds of a superannuation fund, scheme or trust so as to conceal a fraudulent breach of trust against the beneficiaries of that superannuation fund, scheme or trust.

Attached to a letter dated 7 January 2019 addressed to Daniel Crennan, ASIC Deputy Chairman and Chief Prosecutor {received 10 January 2019} was a copy of a Deed of Variation dated 20 November 1974 that added covenant Rule 30A to the provisions of a Trust Deed of a Defined Benefit superannuation scheme established on 23 December 1913 in the State of South Australia.

The name of the sponsoring employer in 1974 was Elder Smith Goldsbrough Mort Ltd.
This Defined Benefit superannuation scheme was closed to NEW members on 30 November 1997.

Covenant Rule 30A provides a death benefit in the form of a survivorship pension to the widows of male members who joined this fund on or before 30 November 1997.

This important legal document has added significance given that COVID-19 is especially lethal to males over the age of 60.

ASIC may have misplaced such an important COVID-19 document.

The documents I seek are:

(i) a copy of the duty stamped Deed of Variation dated 20 November 1974 that added covenant Rule 30A to the provisions of this particular superannuation scheme; and
(ii) A copy of any later dated duty stamped Deed of Variation that purports to delete or abrogate covenant Rule 30A in the possession of ASIC.

These documents will confirm that Ms Tenaski was wrong to claim to former Senator Williams that:

“ASIC’s position is that, as [name redacted] is not a concerned person, there has not been a breach of the law by the Trustee declining to provide Fund documents.”

That is confirmation that Ms Tensaki contravened subsection 13(9) of the Public Service Act 1999.

Yours faithfully,

Phillip Sweeney

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