The Cbus leak - a tale of "cultural corruption"
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The Cbus leak — a tale of “cultural corruption”
Scott Charaneka, Stanley Drummond and Sammia Rebecca Jensen THOMSON GEER
On 15 December 2014, the Interim Report of the A number of Cbus employees once worked for, or
Royal Commission into Trade Union Governance and had, a CFMEU background, and some CFMEU officers
Corruption (Commission) was handed to the Governor- were on the board of the Trustee. There was a “culture of
General. The Interim Report contained a chapter, “Cbus collaboration” between CFMEU and the Trustee, and
leak to the CFMEU”, dealing with the wrongful disclo- CFMEU exercised “considerable influence” over the
sure by the trustee of the Construction & Building Trustee.9
Unions Superannuation fund (Cbus) of personal infor-
mation of fund members to the Construction, Forestry, Lis-Con
Mining and Energy Union (CFMEU). Most of the Lis-Con Concrete Constructions Pty Ltd and Lis-Con
affected members were not members of the CFMEU.1
Services Pty Ltd (collectively, Lis-Con) are subcontrac-
The Interim Report noted that there was “no strong
tors in the construction industry operating across Aus-
and independent Cbus culture at all”, and that the
tralia, with a focus on formwork, concreting and steel
environment at the management and operational level of
fixing services.10
the trustee was “infected by the separate and private
From about 2003 to 2013, Cbus was the default
interests of the CFMEU, and a deep seated loyalty to
those interests”.2 The Interim Report referred to “cul- superannuation fund for Lis-Con.11
tural corruption” at the trustee3 (although the Commis-
sioner accepted a submission that no adverse finding The first Gaske leak
about cultural corruption should be made for the moment4). By June 2013, CFMEU officers had taken an interest
According to the Interim Report, the disclosure of in the timeliness of Lis-Con’s payments of its employ-
members’ personal information involved breaches by the ees’ superannuation contributions. CFMEU officers con-
trustee of the National Privacy Principles (NPPs), the sidered that Lis-Con was persistently late in paying
Cbus Privacy Policy and the terms of the trustee’s superannuation contributions to Cbus.12
contracts with individual members. The disclosure also Steve Gaske was a Cbus employee (the Interim
“probably” involved breaches of the Cbus Trust Deed.5 Report did not state his role) and the honorary President
of the Queensland Branch of the CFMEU. He sought
Background and obtained information from the Administrator, which
The facts and quotes set out in this section are included the aggregated contributions arrears position of
generally taken from the Interim Report.
Lis-Con and personal information of Lis-Con employ-
Cbus ees.13 Mr Gaske passed this information on to a CFMEU
Cbus is an industry superannuation fund. It was organiser.14
established for workers engaged in the building, con-
struction and allied industries. As at 30 June 2014, it The McWhinney leak
held $27 billion of members’ funds and had more than Also in June 2013, executives from CFMEU partici-
722,000 members.6 The trustee was United Super Pty pated in a Divisional Executive Meeting where it was
Ltd (Trustee). The administrator was Superpartners Pty
decided that CFMEU would engage in an aggressive
Ltd (Administrator).
national campaign against Lis-Con.15 Brian Parker, the
Cbus had close links to the trade union movement.7
Secretary of the NSW Branch of the CFMEU (the most
This was reflected, among other ways, by the composi-
senior position in that state), and Brian Fitzpatrick, a
tion of the Trustee’s board.
CFMEU organiser, were present at this meeting.16
CFMEU As part of this “war”, it was agreed that Mr Parker
The CFMEU is Australia’s main trade union in the would obtain personal information of Lis-Con employ-
construction, forestry, mining and energy industries. It ees, and that this information would be distributed
has more than 140,000 members.8 among CFMEU branches.17 The plan was to use the
2 australian superannuation law bulletin February 2015personal information obtained to contact Lis-Con employ- lated to remove columns.27 It also noted that the column
ees and “encourage them to stir up trouble with Lis-Con containing the telephone numbers of the Lis-Con employ-
over unpaid entitlements”.18 By revealing information ees had not been removed.28
about their overdue superannuation contributions, Mr Parker A few days later, Ms Zanatta emailed the Zanatta
aimed to upset Lis-Con employees and, in turn, push spreadsheets to Ms Butera. This email noted that the
them to harass Lis-Con.19 information in the Zanatta spreadsheets had been obtained
In July 2013, under Mr Parker’s direction, Mr Fitzpatrick at the request of Mr Parker. The Interim Report com-
contacted Bob McWhinney of Cbus (the Interim Report mented on the “stealthy nature” of this operation, in the
did not state his role) and requested information about following terms:29
Lis-Con.20 In response, Mr McWhinney sent schedules
to Mr Fitzpatrick that set out details of Lis-Con employ- … the communications demonstrate complicity between
Ms Zanatta and Ms Butera in relation to the covert nature
ees including, among other things, names and informa- of Mr Parker’s request and Cbus’ response to it. Secrecy
tion on superannuation contributions (the McWhinney was the order of the day, to the point where meetings were
table). The McWhinney table did not include the per- being organised between two senior Cbus employees to
sonal contact information of Lis-Con employees, which discuss how to “proceed with the information”. The disclo-
was what Mr Parker had sought.21 sure of arrears information would not be improper and
would not call for secrecy. The wrongful disclosure of
sensitive information would. The sensitive information held
The Butera/Zanatta leak by Ms Zanatta in this case was the personal contact details
This leak was the main focus of the Interim Report. of the Lis-Con workers.30
In a quest to obtain further information, in July 2013,
Mr Parker contacted David Atkin, the Chief Executive The “close cultural affinity” between the Trustee and
Officer of Cbus. Mr Atkin said that he would “see what CFMEU was further evidenced in the text messages that
Cbus could do to help the union where it could”. Ms Zanatta and Mr Parker sent to each other confirming
According to Mr Parker and Mr Atkin, there was details for the delivery of the Zanatta spreadsheets. They
“nothing improper” in Mr Parker’s request. However, called each other “comrade”.31
the Interim Report inferred that Mr Parker’s only pur- In July 2013, Ms Zanatta embarked on a “covert
pose would have been to obtain personal contact infor- exercise”, flying from Melbourne to Sydney for the sole
mation of Lis-Con employees.22 purpose of delivering the Zanatta spreadsheets to the
Mr Atkin reported his conversation with Mr Parker to CFMEU Sydney office.32 The Interim Report drew the
Maria Butera, the Executive Manager in Workplace inference that Ms Butera and Ms Zanatta chose to hand
Distributions of Cbus, who had been a member of the deliver the Zanatta spreadsheets to avoid leaving a paper
CFMEU since beginning her employment with the trail back to them, knowing that the exercise was
Trustee. Ms Butera retold this conversation to Lisa “improper”.33
Zanatta, the Senior Adviser in Member Relationships, Upon receipt, Mr Parker gave the Zanatta spread-
Workplace Distributions of Cbus. Ms Zanatta had also sheets to Mr Fitzpatrick. On Mr Parker’s instructions,
been a member of the CFMEU at all times.23 Mr Fitzpatrick called Lis-Con employees pretending to
Shortly later, Ms Zanatta spoke with Mr Parker and be a Cbus representative, telling them that Lis-Con had
put in a request with the Administrator to run a query for not paid their superannuation contributions on time.34
Lis-Con’s accounts for the previous 12 months.24 When
Mr McWhinney had put in his request for information The second Gaske leak
with the Administrator, he had been careful to set
Later in July 2013, Mr Gaske sought and obtained
particular limits on the information provided to him.25
further information from the Administrator in relation to
However, Ms Zanatta’s request had no such limit and,
Lis-Con arrears. The information he received did not
according to the Interim Report, she would have known
include any personal contact details of Lis-Con employ-
in her “vast experience” that such a query would result
ees. Mr Gaske sent this information to the construction
in the extraction of personal information of Lis-Con
manager at Civil, Mining and Construction Pty Ltd.35
employees.26
Soon after the request, Ms Zanatta received an email
from the Administrator containing two large spread- KPMG preliminary findings report
sheets as attachments (the Zanatta spreadsheets). These The Interim Report noted that a KPMG preliminary
contained personal contact information of Lis-Con employ- findings report had revealed that between 1 Janu-
ees, including email addresses and telephone numbers. ary 2013 and 12 May 2014, there had been 59 incidents
The Interim Report noted that the Zanatta spreadsheets in which Cbus members’ personal information had been
were Microsoft Excel documents, which can be manipu- emailed externally from the Trustee.36
australian superannuation law bulletin February 2015 3The Royal Commission member’s account with Cbus. On a narrower view, the
The Royal Commission into Trade Union Gover- primary purpose was to enable Cbus staff to contact the
nance and Corruption was established by Letters Patent member in relation to their superannuation account. That
issued on 13 March 2014 appointing the Hon John information was used or disclosed by the Trustee to
Dyson Heydon AC QC (a former Justice of the High Mr Parker for quite a different purpose. It was disclosed
Court) as Commissioner. The Commission’s Terms of in order to meet a request by Mr Parker for that
Reference are broad and include “the governance arrange- information so that CFMEU staff could use the infor-
ments of separate entities established by employee mation to ring those individuals directly and speak to
associations or their officers”.37 them about whether Lis-Con was in arrears in payment
Each of the six states has also established a Royal of superannuation contributions and, if so, by how
Commission with the same Terms of Reference and much.43
Commissioner.38 None of the exceptions in NPP 2.1 applied.44
On 30 October 2014, the date for the Commission to The Interim Report observed that:
submit its Final Report was extended from 31 Decem- On no sensible basis could it be said that members of a
ber 2014 to 31 December 2015.39 superannuation fund would reasonably have expected their
private telephone numbers to be handed out by the trustee
The Interim Report of their superannuation funds to a trade union so that trade
union officials could contact them directly, and out of the
The Interim Report concluded that the Trustee had blue, to discuss their superannuation position.45
breached the NPPs, as well as the Cbus Privacy Policy
and individual member contracts, and had “probably” The provision of members’ personal information to
breached the Cbus Trust Deed.40 Mr Parker (ie, the Butera/Zanatta leak) constituted
Each of these categories of misconduct is briefly breaches by the Trustee of NPPs 2.1 and 4.1. This, in
discussed below. turn, constituted a breach of s 16A of the Privacy Act.46
National Privacy Principles Cbus Privacy Policy
At the relevant time, s 16A of the Privacy Act 1988 At the time of the Butera/Zanatta leak, the Cbus
(Cth) provided that an “organisation” must not do an act, Privacy Policy referred to the disclosure of information
or engage in practice, that breached an approved privacy about superannuation contributions received to employ-
code that bound the organisation or, if the organisation ers in the following terms:
was not bound by an approved privacy code, the NPPs. Cbus believes it is important that employer contributions
(At that time, the handling of personal information was are paid regularly and any late or non-payments are
regulated by the NPPs. The Australian Privacy Prin- identified so steps can be taken to recover late contribu-
tions. As part of the process of monitoring contributions
ciples replaced the NPPs with effect from 12 March 2014.) Cbus, from time to time, supplies fund sponsors with
NPP 2.1 provided that, subject to various exceptions, information on contributions received for members who are
an organisation must only disclose “personal informa- working on sites where an award, industrial agreement or
tion” (a defined term) for the primary purpose of enterprise bargain agreement is in place. The Fund’s debt
collection. collection agency may also be provided with access to
information for the purposes of collecting outstanding
NPP 4.1 provided that an organisation holding per- contributions.
sonal information must take such steps as are reasonable …
in the circumstances to protect the information from Your personal information will not be used or disclosed for
misuse, unauthorised access or disclosure. any other purpose without your consent, except where
Here, as the Trustee was a body corporate with an required by law.47
annual turnover of over $3 million, it was an “organisa- The Interim Report noted that the only possible
tion” for the purposes of the Privacy Act. Further, as the disclosure of information to the CFMEU identified in
Trustee was not bound by an approved privacy code, the the Privacy Policy was of “information on contributions
NPPs applied in respect of personal information held by received” and only “as part of monitoring contribu-
it.41 tions”. The Privacy Policy had not contemplated the
The telephone numbers and other personal contact disclosure of personal contact information to the CFMEU,
details of employees of Lis-Con set out in the documents nor had the CFMEU used the personal contact details of
provided by the Trustee to Mr Parker were “personal the Lis-Con employees for the purpose of monitoring
information” for the purposes of the Privacy Act.42 contributions (as had occurred with the Butera/Zanatta
In relation to NPP 2.1, on a broad view, the primary leak).48
purpose of the personal information of each member The Interim Report also noted that the Privacy Policy
was for the proper administration by the Trustee of that had provided that in respect of collecting outstanding
4 australian superannuation law bulletin February 2015superannuation contributions, information may be pro- Misconduct of individuals
vided to the Trustee’s debt collection agency (which was In addition to the misconduct that was attributed to
not the CFMEU). The Privacy Policy also provided that the Trustee, the Interim Report mentioned that a number
information would not otherwise be disclosed without of the individuals concerned may have engaged in other
the member’s consent. No such consent was given in categories of misconduct — in particular, criminal
relation to the Butera/Zanatta leak.49 misconduct, breaches of the Corporations Act 2001
According to the Interim Report, the “reasonable (Cth), breaches of s 6H of the Royal Commissions
expectation” of Cbus members would be that if their Act 1902 (Cth) relating to perjury, and breaches of the
employer fell into arrears, the Trustee would pursue the CFMEU’s professional standards.57
employer, if necessary with the aid of its retained debt
collection agency.50 The real problem — no independent trustee
In other words, the Butera/Zanatta leak constituted a culture
breach of the Trustee Privacy Policy. As mentioned above, a number of Cbus employees
were former employees of the CFMEU or otherwise had
Cbus Trust Deed a CFMEU background. According to the Interim Report,
In relation to personal information of members, cl 6.4 this “led to [a] serious cultural problem within Cbus,
of the Cbus Trust Deed provided: under which the interests of the CFMEU are put before
those of Cbus and its members”.58
6.4 Privacy The Interim Report also noted the absence of a strong
In accordance with the Relevant Law [which was defined as
including the Privacy Act], the Trustee will hold, and treat and independent Cbus culture, in the following terms:
as confidential, all records and information it may hold, Indeed the real problem is that there is no strong and
receive or become aware of in its capacity as Trustee in independent Cbus culture at all. The environment at
relation to Employers, Members or Beneficiaries and shall management and operational level is infected by the
not disclose or make known any such records or informa- separate private interests of the CFMEU, and a deep seated
tion to any third party except as may be required in relation loyalty to those interests. Those interests and loyalties are
to the administration of the Fund or to facilitate the all pervasive, and prevent the development of a true Cbus
provision of services or Benefits to Members or as may be culture, where Cbus and its members come first, at the
required by the Relevant Law or as it may otherwise be expense of the CFMEU.59
lawfully required to do except that a Member may authorise
the Trustee to release information pertaining to that Mem- The Interim Report also said:
ber to a third party.51 The scale of the cultural corruption is evident from the fact
that the relevant misconduct was carried out at the upper
Regarding the McWhinney leak, Mr McWhinney had echelons of management.60
sent details of Lis-Con employees to Mr Fitzpatrick of
It noted:
CFMEU. Although the McWhinney table was radically
different from the Zanatta spreadsheets, the provision of Ultimately, the root cause of this cultural failure is the
symbiotic relationship between the CFMEU and Cbus.61
this information was “probably” a breach of cl 6.4 of the
Cbus Trust Deed.52 However, the Commission accepted a submission
Similarly, regarding the second Gaske leak, Mr Gaske’s that no adverse finding should be made about “cultural
disclosure of financial information to the construction corruption” — but “only for the moment”.62
manager at Civil, Mining and Construction Pty Ltd was On the topic of how the culture within the Trustee
“probably” in breach of cl 6.4 of the Cbus Trust Deed.53 could be reversed, the Interim Report commented:
If Cbus is to recruit from the ranks of the CFMEU, much
Trustee’s contracts with individual members more will need to be done by it to ensure that these workers
receive a strong and continuous injection of an independent
The Interim Report noted that the member declara- and law abiding Cbus culture through training, perfor-
tion in the Cbus product disclosure statement dated mance reviews, and substantive exposure to employer
1 July 2013 formed “part of the suite of contractual representatives and non-union members of Cbus so that
documents executed when a person [became] a member they can develop a more balanced perspective. Those
injections will need to be administered by senior managers
of the Cbus fund”.54 It said that the Trustee would only who are (and who are seen to be) sufficiently divorced from
disclose personal information “for the specific purpose the CFMEU.63
of administering” the member’s account. Further, mem-
bers only consented to the use of their personal infor- Responses
mation “for the establishment and ongoing administration” The Trustee
of their accounts.55 Ms Zanatta’s employment was terminated as a result
The Trustee’s conduct constituted breaches of its of the role she had played in the matters investigated by
contracts with individual members.56 the Commission.64
australian superannuation law bulletin February 2015 5In October 2014, the Trustee took a number of further • The trustee has a fiduciary duty of undivided
remedial steps, as set out below. loyalty to the interests of the members and other
First, Ms Butera was suspended from her position.65 beneficiaries of the fund, to the exclusion of the
Second, the Trustee wrote letters to more than 400 trustee’s and other parties’ interests (subject to any
members apologising for its breaches.66 exceptions permitted by superannuation law and
Third, Mr Atkin gave an interview in which he said the governing rules).
that the evidence of Cbus leaks showed a “significant • Failing to protect and otherwise deal with mem-
problem for Cbus”, and indicated that the Cbus Privacy bers’ personal information in accordance with
Policy would be altered to prevent Cbus members’ privacy law can lead to significant adverse public-
personal information being passed on to third parties ity and, potentially, penalties. This also means that
such as unions in the future.67 Shortly thereafter, the the trustee and its directors and officers must put to
Cbus Privacy Policy was updated.68 one side their personal views, no matter how
Finally, the Trustee engaged Graeme Samuel, the well-intentioned.74
former chairman of the Australian Competition and • An investigation can reveal even covert activity. In
Consumer Commission, to conduct a broad review of the case of Cbus, the Commission’s investigations
the Trustee’s governance standards — in particular, disclosed material from a number of sources —
those relating to privacy.69 including text messages and GPS information
from a taxi. No stone was left unturned.
CFMEU • When the board becomes aware of misconduct,
The CFMEU published a response to the Interim the board must be seen to act by implementing
Report on its website.70 appropriate remedial steps.
Lis-Con
Scott Charaneka
As a result of the matters the subject of ch 8.3 of the Head of Superannuation and Wealth Man-
Interim Report, Lis-Con employees voted to abolish agement
Cbus as its default superannuation fund.71 Thomson Geer
scharaneka@tglaw.com.au
The Final Report www.tglaw.com.au
As mentioned above, the Commission’s Final Report Stanley Drummond
is now due by 31 December 2015. The Interim Report Adjunct Head of Superannuation and
foreshadowed that the Final Report may make recom- Wealth Management
mendations or findings in relation to the following Thomson Geer
matters: sdrummond@tglaw.com.au
www.tglaw.com.au
• any criminal misconduct;
Sammia Rebecca Jensen
• offences of perjury under s 6H of the Royal Graduate Lawyer
Commissions Act; Thomson Geer
• breaches of the Corporations Act; srjensen@tglaw.com.au
• breach of the CFMEU’s professional standards; www.tglaw.com.au
• “cultural corruption” within the Trustee; and
• the extent to which Mr Atkin may have been
involved in any leaks.72
Footnotes
1. Royal Commission into Trade and Union Governance and
Key points
Corruption Interim Report 2014 ch 8.3: “Cbus Leak to the
The Commission’s investigation into the Cbus leak CFMEU” at [20].
and the Interim Report serve as an important reminder to 2. Above, n 1, at [297].
superannuation trustees of the following key points:
3. Above, n 1, at [298].
• The composition of the board is crucial, as the 4. Above, n 1, at [306].
“culture” of the trustee must not be influenced by 5. Above, n 1, at [283] and [286].
the personal interests or loyalties of the direc- 6. Cbus “Who we are”, available at www.cbussuper.com.au
tors.73 (accessed 2 February 2015).
6 australian superannuation law bulletin February 20157. Above, n 1, at [7]. 52. Above, n 1, at [56].
8. CFMEU “Who’s who”, available at www.cfmeu.asn.au (accessed 53. Above, n 1, at [131]–[132].
2 February 2015). 54. Above, n 1, at [264].
9. Above, n 1, at [4(a)] and [12]. 55. Above, n 1, at [264].
10. Above, n 1, at [19]. 56. Above, n 1, at [286].
11. Above, n 1, at [22]. 57. Above, n 1, at [4], [288] and [289]. The Interim Report also
12. Above, n 1, at [4(b)] and [23]. referred to a great many instances of perjury before the
13. Above, n 1, at [25]. Commission. Mr Parker, Ms Zanatta and Ms Butera each gave
14. Above, n 1, at [26]. false evidence to the Commission about their involvement and
15. Above, n 1, at [4(b)]. put the Commission and third parties to “great inconvenience
16. Above, n 1, at [49] and [52]. and expense”: at [4(g)]. The Commission said that “the scale of
17. Above, n 1, at [52]. dishonesty in relation to this Cbus matter was exceptional and
18. Above, n 1, at [54]. staggering”. Of particular note was Ms Zanatta’s “entrancing
19. Above, n 1, at [4(c)]. tale” of her trip to Sydney during which she delivered the
20. Above, n 1, at [55]. Zanatta spreadsheets to the CFMEU office. Her evidence, a
21. Above, n 1, at [56]–[57]. “scandalous lie”, was where she said she had flown from
22. Above, n 1, at [59]. Melbourne to Sydney only to discover that her meeting had
23. Above, n 1, at [12], [15] and [60]. been cancelled without notice (“a wild goose chase”): at [147]
24. Above, n 1, at [61]–[64]. and [163]–[165].
25. Above, n 1, at [61]–[64]. 58. Above, n 1, at [4(a)].
26. Above, n 1, at [61]–[64]. 59. Above, n 1, at [297] (emphasis added).
27. Above, n 1, at [69] and [70]. 60. Above, n 1, at [298].
28. Above, n 1, at [71]. 61. Above, n 1, at [302].
29. Above, n 1, at [67] and [69]. 62. Above, n 1, at [306].
30. Above, n 1, at [85] (emphasis added). 63. Above, n 1, at [303].
31. Above, n 1, at [44] and [101]–[102]. 64. Above, n 1, at [18].
32. Above, n 1, at [115]–[117]. 65. J Mather and S Patten “Corrupt culture in super fund”
33. Above, n 1, at [4(d)]–[4(e)] and [87]. Australian Financial Review 3 November 2014.
34. Above, n 1, at [4(f)] and [124]–[129]. 66. J Mather “Cbus director breaks silence” Australian Financial
35. Above, n 1, at [131] and [132]. Review 23 October 2014.
36. Above, n 1, at [241]. 67. Above, n 66.
37. Royal Commission into Trade Union Governance and Corrup- 68. Cbus “Privacy statement”, available at www.cbussuper.com.au
tion “About the Commission”, available at www.tradeunionroyalcom- (accessed 2 February 2015).
mission.gov.au (accessed 2 February 2015). 69. Cbus “Cbus board backs independent privacy governance
38. Above, n 37. review, privacy reform” media release, 29 October 2014,
39. Above, n 37. available at www.cbussuper.com.au (accessed 6 Febru-
40. Above, n 1, at [56] and [131]. ary 2015).
41. Above, n 1, at [252]. 70. CFMEU “Statement from the CFMEU in relation to report
42. Above, n 1, at [270]. from Royal Commission” 19 December 2014, available at
43. Above, n 1, at [271]–[272]. www.cfmeu.asn.au (accessed 2 February 2015).
44. Above, n 1, at [271]–[272] and [274]. 71. Above, n 1, at [22].
45. Above, n 1, at [281]. 72. Above, n 1, at [4], [202], [288] and [289].
46. Above, n 1, at [283]. 73. For discussion and recommendations regarding board compo-
47. Above, n 1, at [265] (emphasis added). sition of trustees of public offer superannuation funds, see
48. Above, n 1, at [276]. Treasury Financial System Inquiry Final Report Novem-
49. Above, n 1, at [277]. ber 2014 ch 2: “Superannuation and retirement incomes”, pp
50. Above, n 1, at [280]. 133–6.
51. Above, n 1, at [262]. 74. Cowan v Scargill [1985] Ch 270 at 287; [1984] 2 All ER 750.
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