The Australian Prudential Regulation Authority (APRA) has commenced proceedings in the Federal Court of Australia seeking the disqualification of former Trio Capital Limited (Trio) director, David Millhouse. Trio collapsed in late 2009 with losses of around $176m.
APRA is seeking orders under section 126H of the Superannuation Industry (Supervision) Act 1993 (SIS Act) that Mr Millhouse be disqualified from acting as a trustee of any superannuation entity or a responsible officer of any body corporate that is a trustee, investment manager or custodian of a superannuation entity for a period to be determined by the Court.
Mr Millhouse was a director of Trio and member of the Trio Investment Committee from November 2003 to October 2005. He was also a director and owner of one of Trio’s investment managers, Millhouse IAG Limited (MIAG).
During his tenure on the board of Trio, Mr Millhouse approved around $85m of investments that now form the subject of the proceeding. APRA alleges, among other things, that:
- the investments were approved without adequate due diligence;
- the investments were not at arm’s length and were more favourable to the related parties than would reasonably be expected had they been at arm’s length;
- in approving the investments, Mr Millhouse contravened sections 52 and 55 of the SIS Act; and
- Trio contravened section 109 of the SIS Act while Mr Millhouse was on the Trio board.
APRA alleges that Mr Millhouse failed in his duties as a director of Trio and did not act in the best interests of members.
APRA Member Helen Rowell said ‘APRA has made it very clear it will take action against any former Trio directors who have failed to meet the high standards expected of them as superannuation trustee directors and have not acted in the best interests of members.’
A total of 11 former Trio directors have already provided enforceable undertakings to APRA, which effectively remove these individuals from operating in the superannuation industry for a specified period of time.
The Australian Prudential Regulation Authority (APRA) is the prudential regulator of the financial services industry. It oversees banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, friendly societies, and most members of the superannuation industry. APRA is funded largely by the industries that it supervises. It was established on 1 July 1998. APRA currently supervises institutions holding $4.2 trillion in assets for almost 23 million Australian depositors, policyholders and superannuation fund members.
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