While a probe into a super fund which paid $511,000 to the CFMEU was dropped, media reports of alleged criminal infiltration within the union prompted Australia's financial watchdog to take another look, a judge has heard.
The Australian Prudential Regulation Authority put extra licence conditions on United Super and BUSS (Queensland) on August 14 to address concerns about the fitness of board members, processes and how funds were being spent.
The CFMEU is a shareholder of United Super, which is trustee for the $92 billion Cbus fund and has appointed three directors to its board.
A separate legal entity, CFMEU Queensland, is a shareholder of BUSSQ - which has $6.7 billion in funds under management - and has appointed four directors to the board, including three union officers.
Under the additional conditions, the super funds would have to engage an independent expert to examine their processes and practices, and deliver a report to the financial watchdog before changes were made.
BUSSQ is challenging APRA's stricter conditions in the Federal Court and sought to overturn them during a hearing on Tuesday.
The fund's barrister Margaret Allars SC said the regulator's reason for the additional requirements was media reports about alleged corruption and criminal associations within the CFMEU.
Justice Roger Derrington heard the regulator had launched an investigation into BUSSQ, including into a payment of $511,000 to the CFMEU, but said in December 2023 that it would take no further action.
Ms Allars said that amount was paid to the union in the 2023 financial year under a contract that required the CFMEU to ensure employers properly paid their staff superannuation.
BUSSQ's offer to replace the union-nominated board members was rejected as unsatisfactory, she said
The three CFMEU directors at the time APRA imposed its conditions were Michael Ravbar - who is secretary of the union's Queensland and Northern Territory branch - as well as Jacqui Collie and Emma Eaves.
Mr Ravbar and Ms Collie are no longer sitting on the board.
Internal APRA emails sent during the initial probe describe the fund as "vague, ambiguous and evasive" as well as "combative, obstructive and unhelpful," the court was told.
Two teams of lawyers packed the Sydney courtroom on Tuesday, including legal representatives who had flown in from Queensland.
BUSSQ contends the regulator acted in excess of power by imposing the stricter conditions, that the restrictions were uncertain, and that it was denied procedural fairness in responding to any claimed concerns.
It has also targeted a decision by APRA to publicly disclose it had taken steps against the super fund.
The financial authority was not allowed to shame licencees and damage their commercial and reputational interests, Ms Allars told the court.
APRA's barrister Luke Livingston SC said any orders the court could make regarding this public statement were futile given the information was already out there in the public domain.
"The horse has bolted," he said.
The hearing continues on Wednesday.
