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A new driver at MTAA Super needs to lead industry funds to better accountability

After reigning supreme for 22 years as founding CEO, Michael Delaney will pack up his desk and shut the door on the MTAA Super's Canberra headquarters for the last time tomorrow, resigning his role in a myriad of senior executive and director-related positions.

After reigning supreme for 22 years as founding CEO, Michael Delaney will pack up his desk and shut the door on the MTAA Super's Canberra headquarters for the last time tomorrow, resigning his role in a myriad of senior executive and director-related positions.

His departure - which was flagged in early August - heralds a new era for one of the country's biggest and most controversial super funds.

His replacement is the subject of intense speculation. The board is yet to make an announcement. A spokesman said: "My understanding is that the recruitment process is still under way - as you would expect, it is a very thorough process."

The board, which is itself in the process of a clean-out, will need to decide whether to appoint an internal or external candidate. The final decision will send a strong message about how serious the fund is about bringing change.

MTAA Super has been the subject of a full-blown investigation by the Australian Prudential Regulation Authority for a while. It has also been embroiled in a payroll tax inquiry into the Motor Trades Association of Australia, which previously administered the super fund, and which Delaney headed until last year.

This column revealed last July that, in August last year, Delaney had written a letter to trustee directors saying the fund trustee had been "bedevilled by APRA" for years, had been subject to "lurid" allegations by the authority and had been issued with a show-cause notice.

And, in the case of the payroll tax investigation, a letter, written in March by the ACT Treasury Department's revenue office, reveals the office was having trouble reconciling two sets of accounts that exist in relation to the amount the association paid to MTAA Super directors.

For instance, the directors' fees the MTAA declared in its payroll tax returns between 2005 and 2010 totalled $1.17 million, compared with a total of $2.9 million stated in its profit and loss accounts filed with the Australian Securities and Investments Commission.

The goings-on at MTAA Super and the MTAA have made it the poster child for change in the country's $1300 billion super fund industry. Some of these changes, including a new governance model and bringing its asset allocation into line by getting its target return portfolio down to 40 per cent, are believed to have been at the direction of APRA.

MTAA Super's chairman, John Brumby, told members in August he would introduce changes aimed at improving its "transparency, accountability and governance".

These included publicly releasing its annual accounts, as well as the remuneration of directors and the top five executives by bands, and making available biographies so members could see the faceless men and women who were overseeing or running their $6 billion in retirement savings.

Unfortunately, some of this is yet to materialise. The MTAA Super website is yet to post the biographies of directors, including Brumby.

While the financial accounts are now available online, transparency in remuneration has a long way to go. The fund has lumped directors' fees and executive salaries together and disclosed them in wage bands of $75,000.

Given the revolving door of three chairmen in the past year, providing information that four directors or executives received between zero and $75,000 and another seven received between $75,000 and $150,000 is confusing, and is not a good indication of who is getting paid what.

Most super funds do not bother telling members who directors are or how much they are paid. Members do not get to know who is looking after their retirement funds, how often directors attend meetings or how long they have been on the board.

For MTAA Super members, it has been a wild ride. It went from being the top-performing fund four years ago to the worst in 2009. To put it into perspective, in June 2008 members' funds totalled $6.1 billion, compared with $6.01 billion three years later, yet over the same period almost $3 billion came into the fund in contributions.

The fund is desperately trying to claw its way back up the performance charts, but it has a long way to go. Its latest financial accounts show the fund's net cash inflow from operating activities has fallen 68 per cent in the past two years, from $540 million to $173 million.

They show it has been busy selling assets including its stake in the Australia Post building in Bourke Street, Melbourne, for $120 million, 50 per cent in a land holding in Queensland for $45 million and its stake in Adelaide Airport and Thames Water.

MTAA Super has a long way to go to restore credibility. Let's hope next year marks a new beginning, not just for this fund but for other industry fund governance laggards.


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