In proceedings instituted by the Australian Prudential Regulation Authority (APRA), the Federal Court has today imposed a penalty of $100,000 on a former trustee of the Tunstall Bond Superannuation Fund. APRA has separately recovered the money owed to the beneficiaries of the Fund.

Sarkis Derstepanian was the sole director of jewellery manufacturer Tunstall Bond Pty Ltd, the employer sponsor of the superannuation fund.

Mr Derstebanian and his wife Margaret Derstepanian, the former trustees of Tunstall Bond Superannuation Fund, agreed on its behalf that Tunstall Bond Pty Ltd transfer ownership of some of the company’s jewellery dies to the fund, instead of making cash Superannuation Guarantee payments for its employees. The dies were transferred into the fund for substantially more than their market value. As at 30 June 1999, the Fund’s sole assets were jewellery dies with a book value of $285,960 but a real value of about $10,000.

The effect of the arrangement was to allow Tunstall Bond Pty Ltd to keep and use for its own purposes money that should have been for the benefit of the Fund members.

Following APRA’s application to the Federal Court, seeking civil penalties for the above conduct, Sarkis and Margaret Derstepanian agreed to pay compensation to fund members of over $225,000, and a further $70,000 to the Tax Office on behalf of the Fund, for breaching the arms length dealing rules and the sole purpose test of the Superannuation Industry (Supervision) Act 1993 (the SIS Act). In addition, Sarkis Derstepanian has been ordered to pay a $100,000 fine.

APRA’s Deputy Chairman, Ross Jones said, “APRA is acting vigorously to protect the interests of members of superannuation funds. Employers and trustees need to understand that superannuation is meant to provide a retirement benefit for fund members, and should never be used for financing the employer’s business enterprises.”

In imposing the penalty, His Honour said, in part, that Sarkis Derstepanian “. . .cannot avoid responsibility for his actions by attributing blame to others, including those who provided legal services, and proffered accounting advice to the Fund.”

Background
APRA removed Sarkis and Margaret Derstepanian as Trustees of the fund in 2001 and disqualified them from being Trustees of superannuation entities in 2003.

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 approximately $2.0 trillion in assets for 20 million Australian depositors, policyholders and superannuation fund members.