The $8 billion WA Government Employees Superannuation Board (GESB) has now terminated five staff after last year’s super switching controversy, and reprimanded four more.

Paul Edmondson, who was chief investment officer of GESB, is understood to be among those asked for their resignation, although chief executive of GESB, Michelle Dolin, would not comment on indivduals. Sharon Hicks continues to act in the CIO role. Four GESB staff remain subject to an investigation by a private detective, while a further two have been cleared of deliberate wrongdoing. GESB will also recruit the new role of head of the middle office, as it separates its risk management and IT functions from its investment strategy function. Dolin said the separation would allow the investment team to focus on strategy. “;Mercer reviewed our fund in 2005 and indicated at the time that what we are now moving to is a best practice structure,”; according to Dolin, who has run GESB since 2003. GESB members have just received their statements to December 31, 2006, which record the compensation they have received following the 2006 switching scandal, in which 171 members including 15 staff improperly gained $6.3 million. The rorters took advantage of the fact that GESB strikes its unit prices on a daily historic basis, and previously promised to fulfil switching requests within two working days. Dolin said with the use of published indices data, the rorters could “;with reasonable certainty”; time a switching request and be almost guaranteed a financial gain. The fulfillment of switching requests has since been extended to five days, which actuaries had advised “;delivered a sufficient lack of correlation with published indice data”;, Dolin said. In compensating members, Dolin said GESB’s board took a “;principled decision”; to set no minimum limit, such that some members have been compensated a few cents, while the maximum adjustment was around $2500. Dolin added the fund would also recruit new investment staff, although she would not comment on to what extent these would replace staff who had resigned. She said the recruitment was in preparation for an expected surge in GESB’s growth once choice of fund legislation for WA public servants was passed, possibly this year. According to Dolin, 58 per cent of GESB’s members are no longer with the public service, which under current rules precludes them from making further contributions to GESB. The fund has just this month received an AFSL which will allow it to advise members on its own products. Dolin said currently 60 per cent of members retiring from the WA public service rolled their accounts into a GESB post-retirement product, a figure she expected to drastically increase with the introduction of choice and the gaining of the AFSL.

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