Merged: AFAP and the Mutual Benefit Fund

[paul makin]

Bolter.

Thankyou for your questions and comments, as it is only through dialogue that we can all get a true appreciation of all that is before us. Openness and transparency should be the cornerstone of our existence.

Before you, you have a ballot paper and documentation requiring you to place one mark for all that the accompanying literature brings to you. That is the proposal. You may vote YES or NO to ALL that is proposed, but you cannot vote for one part and against another.

The proposal consists of four distinct elements.

There is the part about postal voting. This is a motherhood issue that requires no argument, and if presented on it’s own, would in all probability be passed unanimously. I would, however, point out that the proposed rule makes no provision for potential candidates to avail themselves of the offices of the AAPMBF to circularise the membership on matters pertinent to their election. From personal experience I can assure you that the current administration of the fund will not allow access to the facilities of the fund, to raise with members, matters of concern.

There is the part about the dual role of Trustees/Board Members vis a vis AFAP Principal Office. This has precedents in both directions, but more importantly this is a personal spat between Board Members/Trustees. It demeans the proposers to have included it in this ballot process.

The third part is about restricting the number of Trustee from any one company. As an attempt to limit the possibility of biased directions and outcomes the proposal has some merit. However past experience has shown that because of the lack of volunteers willing to devote adequate time to the oversight of the Fund, such restriction could result in a the appointment of an incomplete Board.

The fourth and most important part relates to the structure of the AAPMBF, going forward.
In 2000/2001 the then Trustees, faced with changes to the Financial Services regulatory requirements came to the conclusion that the governance of the Fund must be changed. They did their due diligence and from the various alternatives, chose in the best interest of the members, that the AFAP should be approached with a view to becoming the Trustee of the AAPMBF. This move was initiated by the then Trustees of the AAPMBF, not by the AFAP. The question was subsequently put to the members and the proposal adopted.
The proposed amendments to rule 14 undo that which was put in place in 2007, and in effect places the AAPMBF back to the point they were at when on March 9 2006 the Fund’s legal advisers indicated a necessity to change the governance of the fund.
My concern is, that despite several letters on the matter, the Board has failed to inform the members what lies ahead. If we are to vote on a change of structure, we should be informed of what effects will ensue from that change. Will the Fund recommend the appointment of an alternative Trustee or will we seek licensing under the Financial Services legislation? What will the alternatives cost us and what will be the benefits or pitfalls of each alternative?
The one fact you can be assured of is that this vote is not the end of the matter. Other moves must be taken in order to comply with the regulatory requirements.
What I seek, is to have the membership fully informed of the consequences and implications of the vote currently before them.

I have consulted extensively with the AFAP over this matter, and have no doubt that they do not seek to “control” the Fund or to manipulate the assets of the Fund. Any contention to the contrary, in my view does not stand up to scrutiny.
In appointing a Trustee (as we the AAPMBF membership did), we entrust that Trustee to hold our assets/ funds and to act to protect those assets and funds. Enshrined in the 2007 rule change was the facility for the AAPMBF Board to do all their normal things with the funds/assets and to date they have dicharged that responsibility admirably.
The AFAP as Trustee is legally responsible for, and bound to hold, title. This in no way inhibits the Board from functioning as in the past but does give the AFAP the responsibility to act if they feel that the Board is not acting in the best interests of the members. This has not occurred. The AFAP has merely requested that the process of transfer of Trusteeship, which we voted for, be completed. To leave the title to the assets in the hands of non-trustees, would leave the fund open to argument that the arrangement between the AFAP and the AAPMBF was a sham designed to circumvent statutory requirements and therefore, unlawful.
The Trustee Laws of Victoria, to which our funds are subject, are very specific about how those funds/assets may be dealt with, and the standards of behaviour of the Trustee(s). Even if they were inclined, the AFAP in holding the funds/assets cannot divert them to their own benefit.
The assets of the Fund are held by Austair Nominees. Austair Nominees has nine shares each of which is held by each of the Trustees. On becoming a Trustee and accepting that one share, each of the Trustees signs an undated transfer of that share to be actioned at the time of ceasing to be a Trustee. The 2007 Trustees failed to execute that transfer when they assigned the Trusteeship to the AFAP.
That is the root cause of the current situation. This is a legal issue not an ideological one.
The AGM traditionally is held in conjunction with the AFAP Annual convention. Capt Seedsman in his address to the membership stated

A NO vote to this proposal will allow it to be discussed at the MBF AGM to be held at the Melbourne Hilton, East Melbourne on September 14.As an MBF member it is important that your mutual benefit fund and its benefits are not changed without proper consultation and process

So while your statement regards the AGM may be technically correct, it is a reasonable assumption that unless the Board chooses to evade the issues at hand, a meeting will be held as stated.

Regards
Paul Makin