Trio victims: Shorten response ineffective
Victims of the Trio Capital collapse have publicly condemned the Government’s newly-released response to combating superannuation investment fraud, deeming it “ineffective and unfair”.
The group called Victims of Financial Fraud (VOFF) - which was formed in response to the Trio collapse - was particularly critical of the Government’s move to reject the recommendation made by the Parliamentary Joint Committee (PJC) to compensate Astarra Strategic Fund investors for their $176 million loss.
US-based Astarra Strategic Fund was under the control of its responsible entity Trio Capital, and under regulatory supervision of the Australian Securities and Investments Commission (ASIC), when the funds were stolen from it.
Late last week, the Government released its response to the PJC report and the report by Richard St. John on compensation arrangements for consumers of financial services.
Minister for Financial Services and Superannuation Bill Shorten said the Government had accepted most recommendations made by the PJC, including legislative changes to strengthen the professional indemnity insurance requirements of providers of financial services, changes to improve the communication of risks to retail investors and ensuring ASIC has adequate powers in enforcing the law.
However, the Government rejected the recommendation made by the PJC to provide compensation assistance to self-managed super funds (SMSFs) who invested in Astarra.
The Government explained that Part 23 of the Superannuation Industry Supervision Act excluded SMSFs from compensation as they are not regulated by the Australian Prudential Regulation Authority (APRA). This exclusion applied regardless of whether they invested in the Professional Pensions Pooled Superannuation Trust, it stated.
“Minister Shorten’s decision to deny even the minimal compensation recommended by the Joint Parliamentary inquiry is appalling and indicates a complete lack of understanding by the Minister of the threat that this crime poses to the integrity of the Australian superannuation system,” said VOFF spokesperson, Paul Matters.
“Not only did APRA and ASIC fail to prevent this crime through structural and operational inadequacy, they also failed to prosecute a swift and robust investigation,” he added.
“To this day only one person, the Australian-based CEO of the Astarra Strategic Fund [Shawn Richard] has faced criminal court in this country.”
The victims, Matters said, demand full compensation.
The Federal Opposition has also criticised the Government for the “lack of urgency” in its response to the PJC report, saying Richard was “merely the local foot soldier, while the involvement of international people - particularly Jack Flader - has not been fully investigated”.
Shadow Minister for Financial Services Mathias Cormann and Member for Bradfield Paul Fletcher have released a joint statement, saying Shorten’s response was “disappointing”.
“He [Shorten] awarded compensation to some investors with losses totalling $55 million, but criticised the other investors in Trio - who lost over $120 million - for swimming outside the flags,” the statement read.
“It is completely unacceptable that Bill Shorten has taken nearly a year to consider this report by a key parliamentary committee, and even now only just provided a preliminary response.
“The Trio case demonstrates that Australia’s $1.5 trillion superannuation savings pool is exposed to international criminal activity targeted at defrauding Australian investors, as the unanimous cross-party Parliamentary Committee report highlighted.”
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