APRA’s case against IOOF claimed that its directors, executives and entities failed to act in the best interest of superannuation members.
The regulator was seeking to have five IOOF directors and executives disqualified for failing to act in best interests, including former managing director Chris Kelaher.
In closing statements made last Friday, Mr Kelaher’s lawyer, Robert Newlinds SC, said the regulator’s case was based on “legal fallacies” and was a regulatory overreach.
“While such a facile statement has a superficial attraction and makes for good headlines, it has no place in a court of law,” said Mr Newlinds.
APRA’s case against IOOF is centred on apparent misappropriation of the members’ reserve fund, claiming that IOOF attempted to fix an error by using millions of dollars from the fund’s reserve, rather than penalising the investment business for the error.
Mr Newlinds argued that the usage of the fund was for the very purpose that it was established for and accused the regulator of overreach.
“APRA’s case represents regulatory overreach of the most egregious kind. The very bringing of this case has trashed Mr Kelaher’s reputation in a very public manner and yet, upon proper analysis, the case proves no more than that APRA misunderstands the very legislation that it administers,” said Mr Newlinds.
IOOF’s closing submissions were delivered yesterday where it said APRA was clueless and had an empty observance of rituals.
“Notwithstanding the zeal with which APRA has interrogated IOOF’s business, it has identified four relatively minor issues occurring in a period of more than 10 years,” said lawyers for IOOF entities IIML and Questor.
APRA had claimed that IIML and Questor enacted member compensation plans that breached super laws, alleging that members were compensation for mistakes made by IOOF and third parties using money from operation and general reserve.
IIML and Questor’s lawyers denied the breach and said that even if the breach could be proved, there was no obligation for the entities to pay compensation to members.
“It follows that the payment of compensation, or the replenishment of the reserve, by IIML and Questor from their own funds was a voluntary act for the benefit of members, going well beyond the companies’ legal obligations,” the lawyers said.
Lawyers for former chairman George Venardos also pushed back against APRAs case to have him disqualified arguing that other non-executive directors were not facing the same legal action.
“Nothing that Mr Venardos did or did not do in relation to the matters [which are] the subject of the proceedings was any different to the conduct of those other non-executive directors,” said Mr Venardos’ lawyer Tony Bannon SC.
The hearing is still ongoing.
Finally a manager knows how an advisor feels, albeit the advisor rarely has the resources to engage legal counsel.
It appears that Kelaher is relying on the provisions of the trust deed/s, in which case he is likely on solid ground. I would assume equally that APRA would not have pursued a case if they had not also reviewed the powers under the trust deed/s. I wonder which will be seen to be the case?
Did the SC actually insult Apra or is it the media trying to portray IOOF as a belligerent juvenile.
Its a pity there are not more organisations out there willing to call out the regulators for not having a clue about the legisation they are supposed to regulate, nor having any idea how people and organisations who are operating businesses under that legislation are actually working. ASIC comes to mind as another regulator with very few ideas.
it will be interesting how the court sees this… with Socialist leanings coming out of the RC and our society generally leaning that way, truth or balance become irrelevant. Our regulators are becoming over zealous in their interpretations and actions IMO. Likewise desire for a scalp at all cost. Facts and strict view of legislation are two areas to be focused upon and not public/media/political opinion based around populism and emotion. not holding my breath.
I am so very glad to see someone taking on these highly paid bureaucrats and telling them the way it really is. They seem to rely on the sympathy of the ‘supposed’ clients to carry them on their way to punishing perfectly normal operators trying to do good for the Community.