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APRA accepts enforceable undertaking from former Trio director

30 Oct 2013
13.34

The Australian Prudential Regulation Authority (APRA) today announced it has accepted an enforceable undertaking from former Trio Capital Limited director David Guy Millhouse. Trio was formerly the licensed trustee of registered superannuation entities and the responsible entity of various managed investment schemes.

Mr Millhouse was a director of Trio from 5 November 2003 to 12 October 2005 and a member of the investment committee of Trio from 29 January 2004 to 12 October 2005, prior to Trio’s collapse in 2009.

APRA is concerned that Mr Millhouse may have contravened the Superannuation Industry (Supervision) Act 1993 (SIS Act) by failing to carry out his duties properly as a director of a superannuation trustee. 

Mr Millhouse has acknowledged APRA’s concerns. Mr Millhouse has expressed regret at the consequences of the matters that are the subject of APRA’s concerns and the losses caused to members of the superannuation entities from the failure of investments in related parties (see below).

Mr Millhouse has undertaken not to act as a trustee or as a responsible officer of a body corporate that is a trustee, investment manager or custodian of an APRA-regulated superannuation entity for a period of ten (10) years, and to enter into an enforceable undertaking to that effect.

In August 2013, APRA commenced legal proceedings against Mr Millhouse in the Federal Court seeking orders under section 126H of the 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. APRA has accepted Mr Millhouse’s enforceable undertaking in lieu of further pursuing these Federal Court proceedings.

APRA’s concerns in relation to Mr Millhouse include that during his tenure as a board member of Trio, Mr Millhouse approved around $85m of investments and that:
  • the investments were approved without adequate due diligence and in the absence of independent recommendations;
  • the investments were not at arm’s length and were more favourable to 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;
  • Trio contravened section 109 of the SIS Act while Mr Millhouse was on the Trio board; and
  • Mr Millhouse failed in his duties as a director of Trio and did not act in the best interests of members.

The superannuation entities’ investments in related-party investments have not been able to be redeemed. The Acting Trustee appointed to the Trio superannuation entities — ACT Super Management Pty Limited — does not expect that the investments will be recovered.

APRA Member Helen Rowell said that the acceptance of an enforceable undertaking was an appropriate resolution of the matters between Mr Millhouse and APRA.

A copy of the enforceable undertaking is available on APRA’s website at: www.apra.gov.au/CrossIndustry/Pages/EnforceableUndertakings.aspx.

This brings to a conclusion APRA’s planned enforcement action in relation to former Trio directors. A total of 13 former Trio directors have now each provided an enforceable undertaking to APRA, which effectively removes these individuals from operating in the superannuation industry for a specified period of time. APRA has previously accepted enforceable undertakings from the following former Trio directors: 

  • Natasha Beck — announced on 4 July 2011 for a period of four years;
  • Rex Phillpott — announced on 8 September 2011 for a period of 15 years;
  • David Andrews — announced on 8 September 2011 for a period of 10 years;
  • Keith Finkelde — announced on 19 September 2011 for a period of six years;
  • David O’Bryen — announced on 3 November 2011 for a period of five and a half years;
  • John Godfrey – announced on 7 March 2012 with no expiry date;
  • Cameron Anderson – announced on 4 July 2013 for a period of 12 years;
  • Michael Anderson – announced on 4 July 2013 for a period of four years;
  • Terrence Hallinan – announced on 4 July 2013 for a period of eight years;
  • Lorenzo Macolino – announced on 4 July 2013 for a period of eight years;
  • John Harte – announced on 4 July 2013 for a period of four years; and
  • Kurt Groeneveld – announced on 17 October 2013 for a period of three and a half years.

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.

Media and industry enquiries only:

Andrew McCutcheon
APRA Media Unit
Telephone: 02 9210 3636 
 
All other enquiries:

APRAinfo: 1300 558 849