Un­der pres­sure

IOOF bosses face ban

The West Australian - - INSIDE COVER - Jeff Whal­ley

In­vestors have sav­aged wealth man­ager IOOF, strip­ping more than $900 mil­lion from its mar­ket value af­ter the bank­ing watch­dog moved to dis­qual­ify its se­nior lead­er­ship team from run­ning su­per­an­nu­a­tion funds.

Shares in the group plunged al­most 36 per cent yesterday on the bomb­shell rev­e­la­tion that the reg­u­la­tor had launched le­gal ac­tion against five of IOOF’s se­nior lead­ers: its chair­man, man­ag­ing di­rec­tor and three other ex­ec­u­tives.

It stems from claims aired at the fi­nan­cial ser­vices royal com­mis­sion that IOOF used su­per­an­nu­a­tion fund mem­bers’ own money to com­pen­sate them af­ter an in­vest­ment bungle. The Aus­tralian Pru­den­tial and Reg­u­la­tion Au­thor­ity has be­gun Fed­eral Court pro­ceed­ings seek­ing to have the five banned from be­ing pen­sion fund trustees.

It claims the chair and four ex­ec­u­tives failed to act in the best in­ter­ests of fund mem­bers.

IOOF shares plum­meted 35.8 per cent yesterday — wip­ing $902 mil­lion from the group’s mar­ket value — to end the ses­sion at $4.60, down 57 per cent from the $10.72 they were fetch­ing at the end of last year.

The wealth ad­viser said it was “dis­ap­pointed” with APRA’s ac­tion.

“IOOF be­lieves that these al­le­ga­tions are mis­con­ceived, and it and its ex­ec­u­tives in­tend to vig­or­ously de­fend the pro­ceed­ings,” it said.

Fac­ing dis­qual­i­fi­ca­tion pro­ceed­ings are man­ag­ing di­rec­tor Christo­pher Ke­la­her, chair Ge­orge Ve­nar­dos, chief fi­nan­cial of­fi­cer David Coul­ter, gen­eral man­ager of le­gal, risk and com­pli­ance Paul Vine and gen­eral coun­sel Gary Rior­dan.

Also yesterday, ANZ ac­knowl­edged the le­gal ac­tion clouded the planned sale of the bank’s su­per­an­nu­a­tion busi­ness, OnePath, to IOOF for about $1 bil­lion — a deal it struck in Oc­to­ber last year.

In Au­gust, coun­sel as­sist­ing the fi­nan­cial ser­vices royal com­mis­sion Michael Hodge ex­plored the case of IOOF sub­sidiary Questor.

Mr Hodge re­vealed that, in 2009, a Questor-owned cash man­age­ment fund ac­ci­den­tally paid $6.1 mil­lion too much into a su­per fund also over­seen by Questor. The prob­lem was de­tected in 2011.

To re­turn the cash, Questor de­cided to re­duce pay­ments to the su­per fund over three years, but none of the 9000 su­per fund mem­bers was told.

A whistle­blower then cast light on problems with the strat­egy of re­duc­ing dis­tri­bu­tions to the su­per fund. As a re­sult, the IOOF board had to com­pen­sate some su­per fund mem­bers who were dis­ad­van­taged.

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