The Australian Prudential Regulation Authority (APRA) has received a draft report from an independent accounting firm appointed to review the Corrections Corporation Staff Superannuation Fund (CCA) at APRAs expense. While the fund has sustained losses as a result of a winding-up process, there appears to be no evidence of impropriety or fraud. Toward the end of 2000, the Corrections Corporation lost a significant part of its contracts to provide security and administrative support services to state-run prisons. As a result, the employer-sponsored superannuation fund had to liquidate most of its assets to pay out staff who were leaving the fund.

The liquidation resulted in one of the assets of the fund, a commercial property in Brisbane, being sold at a discount to its book value. Since this property represented a large portion of the funds assets, the realisation of the asset meant the fund posted a negative return of 23 per cent for the year to December 2000.

The fund has been wound up and all member benefits paid out or transferred to other funds. As part of this process, the trustee declared a positive crediting rate of 8.3 per cent for the period from 1 January 2001 to the date when the member benefits were distributed. One of the important jobs of a superannuation funds trustees is to develop an investment strategy for the fund and to disclose the strategy to members. In an employer-sponsored fund, these decisions are made by trustees that comprise an equal number of employee and employer representatives.

If there is no finding of impropriety and the investment strategy has been disclosed to fund members, there is no ground under the SIS Act for APRA to take action against the trustee.

For further information contact:

Gloria Peterson Public Affairs Manager 02 9210 3385