by Chris Griffith
Published 23 October 1994 in The Sunday Mail
And it appears the fund's unhealthy state was not simply the result of McDonnell and East's financial woes, nor the result of the fund already having shelled out benefits to 123 exiting employees.
Nor, according to documents, was is unhealthy because McDonnell and East had been exempted for several years from paying employer contributions into the fund due to its earlier surplus - a so-called "contribution holiday".
According to Senator Woodley, 65 per cent of the money owing to those 35 employees (c $500,000) was lost simply because "the superannuation safety net for them was missing".
Senator Woodley told the Senate many parties were responsible for the fund's well being - the company which owned McDonnell and East, North Quay Ltd; the fund's Trustee - initially Burns Philp, then Permanent Trustee Company Limited; the fund manager Northern Securities Pty Ltd; and board members individually.
He said the 35 former employees were still waiting for their payouts because "those who were supposed to be minding the shop were not doing their job properly".
So how did the superannuation monies hit rocky waters?
Around June 1990, $2.1 million of McDonnell and Easts superannuation cash assets was transferred to accounts operated by the fund manager, Northern Securities, and 34 per cent of that amount was placed into two unlisted property trusts.
According to Mr Greg Meek, the managing director of Peregrine Investments who later took control of the funds, in June 1990 the unlisted property trusts enjoyed only a four per cent liquidity - a figure which suggested they were strapped for cash.
Worse, documents indicate that the fund manager was aware of the trusts' unsatisfactory state - as in August 1990, two months after McDonnell and Easts' money was invested, Northern Securities placed a freeze on repurchase requests "pending the fund meeting certain prudential liquidity requirements".
Why then, Senator Woodley asked, did the fund manager transfer another $457,000 of secure superannuation monies into these high-risk property trusts between June 1990 and June 1991?
Senator Woodley also named a high profile Queensland businessman, a person who could further unravel the mystery, a man who was both a director of the company which owned McDonnell and East, and a director of the company that gained its superannuation business.
Senator Woodley said the man, Mr Barry Maranta held the "common directorship" from June 1990 to November 1992.
Mr Maranta, who is well-known because of his role as founding chairman of the Broncos, declined to comment.
However the 35 employees who still wait, and wait for their superannuation payouts are not so silent.
One former employee, Miss Gabriel Hurt, said she began working for the retailer in 1954, and that life had been a struggle since she lost her job - she was currently depending on part-time work to survive.
A solicitor attempting to recover the entitlements, Mr Sean Reidy, said he was worried for his clients, as they stood to lose more money "through the costs associated with what is an extremely complex issue because of its legal and accounting aspects."
"We will certainly be entering into discussions with the management and Trustee in the near future to bring some resolution to it," he said.
Currently around $180 billion of Australia's assets are invested in superannuation, an amount which is estimated will grow to between $400-$600 billion early next century.