The reason that Superannuation Fraud is so widespread is that many people who are placed in positions of control or influence of Government Regulated Superannuation Funds are ignorant of some of the most basic concepts of the law of trusts and the principles of Equity.
Furthermore most Members of Government Regulated Superannuation Funds are also ignorant of the very laws that are meant to protect their superannuation entitlements.
There are no qualifications required to become a Director of a corporate Trustee of a Government Regulated Superannuation Fund. This is especially problematic when some Directors have clear Conflicts of Interests, such as the case of Employer-Sponsored Superannuation Funds.
Trustees of Government Regulated Superannuation Funds are typically in control of $100 millions and even $ billions, yet no qualifications are required for those nominated or elected to the position on the Board of the Trustee!
There are no mandatory training courses to attend once a person has been nominated or elected to the Board of the corporate Trustee.
Directors face personal liability in the event of a dishonest or negligent Breach of Trust under Section 57 of the Superannuation Industry (Supervision) Act 1993, yet most Directors are likely to be unaware of this personal liability.
It is quite common for the Head of the Employer’s Human Resources Department to be an Employer nominated Director on the Board of the corporate Trustee, if not the Chairman of the Board of the Trustee.
Without appropriate legal training the head of the HR Department might easily believe that he or she has the same legal powers as a Trustee Director that they are used to as a senior Company executive, however this is not the case.
The common Superannuation Salary Fraud is a classic “gatekeeper” fraud, where the HR Manager is a “gatekeeper” for the Employer as well as a “gatekeeper” for the Superannuation Fund.
In the case of final salary Defined Benefit Funds the Trustee (or an Agent of the Trustee) is reliant on the Employer’s HR Department to provide “salary” information to the Trustee in order to determine the Member’s final salary Defined Benefit.
The Head of any HR Department is always under pressure to control labour costs and superannuation costs are a significant component of labour costs.
An easy strategy then is for the HR Manager to introduce a “policy” of under-reporting to the Trustee, the Employee’s real remunerations as reported to the Australian Tax Office.
Some “creative accounting” is used to mislead Employees into believing that there is some substance to “Superannuation Salary” when “salary packaging” arrangements means that there can be multiple components to an Employee’s “quid pro quo” for services rendered to the Employer.
Now the staff of Trustee or Fund Administrator may initially not even be aware of this under-reporting until such time as an alert Member who has actually obtained a copy of the Trust Deed and Rules finds that the amounts of remuneration being deducted from his benefit do not appear on the “Exclusions List” contained within the Governing Rules of the Fund.
Once the Trustee becomes aware of the provision of bogus salary information, the Trustee is duty bound to seek a direction and order from the Supreme Court of the State where the Fund was established to compel the Employer to provide correct salary information and details of any lawful deductions as prescribed in the Governing Rules.
A Trustee is always duty bound to seek a Direction or Order from the Court if the Trustee is being forced into the position of committing a Breach of Trust, to the detriment of the beneficiaries of the trust (fund).
However if the Head of the HR Department is a Director or Chairman of the corporate Trustee how likely is this to happen, especially if the Head of the HR Department is ignorant of his or her legal obligations as a Trustee to begin with?
If the occasional Member asks for a copy of the Trust Deed and Rules in order to check his or her entitlements and to seek their own legal advice, the Trustee will simply refuse to provide copies of this Fund Document even though it is a criminal offence to do so.
The Trustee knows that the Regulators will simply turn a blind-eye to a criminal contravention of Section 1017C under Schedule 3 of the Corporations Act 2001 and a contravention of the Trustee’s RSE Licence issued by the Prudential Regulator – APRA under the Superannuation Industry (Supervision) Act 1993.
The first thing anyone who is a Member of a Government Regulated Superannuation Fund should do to protect their hard earned superannuation entitlement is to obtain a basic understanding of the law of trusts and the legal obligation of Trustees.
Fraudulent Trustees exploit the ignorance of the Members they have a duty to protect.
If you have been or are likely to become a victim of Superannuation Fraud then you own ignorance can be your biggest enemy in allowing others to steal your money
There is a well known legal maxim: “Ignorance of the law is no excuse“.
The mission of Australian Guardians and this web site is to help educate 12 million unique Members of Government Regulated Superannuation Funds so that they can protect themselves from becoming victims of Superannuation Fraud.
With nearly $1 Trillion in the hands of Trustees (rising to $2 Trillion by the end of the decade) only a fool would believe that Superannuation Fraud is virtually non-existent, especially when ignorance of the law is so pervasive.
Many of these frauds have persisted for years and in some cases decades, so large amounts of money are at stake. This makes it extremely difficult for an individual Member to obtain justice, since large sums are available to bribe Public Servants who are supposed to enforce Superannuation Laws.
These Public Servant prevent Members from obtaining copies of Fund Documents that they are lawfully entitled to have. It is these Fund Documents that are essential to confirm whether the Member has been a victim of Superannuation Fraud.
If a Trustee underpays a superannuation benefit, in the absence of dishonesty, this is only a civil offence, however if Responsible Officers of the Trustee seek to conceal the Fund Documents that will disclose the cause of action, this is a more serious criminal offence.
Instead of upholding Superannuation Law and ensuring Trustee’s comply with their disclosure obligations, the Industry Regulators allow Trustees to engage in dishonest and criminal conduct so that Members are denied access to these important Fund Documents.
By sharing information the actions of these corrupt Public Servants can be exposed and fraudulent Trustees identified.
Australian Guardians – Protecting your wealth when no one else will®