Part 2: The legal landscape
69. Part 2 sets the legal landscape by providing an overview in respect of the duties of officers of registered organisations, the use of union resources in elections, and financial reporting obligations on registered organisations.
Part 3: Generic slush funds
70. Part 3 considers funds with variety of purposes. The most notorious fund, the Australian Workers’ Union – Workplace Reform Association, is considered in Chapter 3.2.
71. Funds of this kind pose significant governance issues. The officials who operate those funds owe statutory and general duties to the union. On the other hand, the officials deploy their energy and sometimes their employer’s resources for the benefit of the fund. This gives rise to actual or potential conflicts of interest. Often these funds have no or no adequate record keeping. Management decisions are made informally or without due process. Directors’ or shareholders’ meetings are not held. If they are held, minutes are not kept. Transactions are often effected by cash. When records are maintained, they are often maintained in a haphazard fashion.
72. The Australian Workers’ Union – Workplace Reform Association case study concerned allegations of fraudulent and other misconduct by Bruce Wilson and Ralph Blewitt, former officials of the AWU. A recommendation is made that this Interim Report be referred to the relevant prosecuting authorities in Western Australia and Victoria to consider whether Bruce Wilson and Ralph Blewitt may have committed criminal offences. Findings are made that Julia Gillard did not commit any crime and was not aware of any criminality on the part of these union officials.
73. Industry 2020 is another generic fund. It was associated with Cesar Melhem, the former State Secretary of the Victorian branch of the Australian Workers’ Union (AWU). Industry 2020 organised lucrative fundraisers by using the name, influence and resources of the AWU. The AWU or its members received no recompense or benefit from Industry 2020’s activities. The funds raised were deployed to support political causes associated with Mr Melhem, including members of the Labour Unity faction of the Australian Labor Party (to which Mr Melhem belonged) and the Asmar campaign for the HSU.
74. Other generic funds examined in Part 3 are Building Industry 2000, IR 21 and TLATA. The issues arising for consideration in relation to these funds include the fiduciary duties of union officials, conflicts of interest and corporate governance.
Part 4: Fighting funds
75. These are the most common type of relevant fund considered by the Commission so far. Commonly an election fund is maintained by a union through amounts deducted automatically from the salaries of members and paid into a designated bank account. On its face there is nothing objectionable about such a fund. A member who decides voluntarily to contribute to an election fund is free to do so.
76. However, a number of problems with such funds in practice have emerged. Often there is no or insufficient disclosure to contributors or union members as to the activities of the fund. Record keeping is commonly very limited. The voluntariness of members’ decisions to contribute to a number of funds is questionable. A fund may give rise to a lopsided election or no election at all. An incumbent may have a disproportionate benefit if he or she has significant resources which are not available to his or her opponent. Candidates for election can close their eyes to the sources, propriety and legality of funding received for their campaigns and disclaim responsibility for that funding on the basis of ignorance.
Part 5: Income protection and redundancy funds
77. Funds of this kind are significant sources of union revenue. The two funds considered in Part 5, the BERT Fund (Chapter 5.2) and the Protect scheme (Chapter 5.3), both illustrate the problems that arise when unions are too closely connected with the governance of important income protection and redundancy funds.
Part 6: Superannuation
78. The two case studies considered by the Commission in this Part vividly illustrate the difficulties which employees face in light of the current lack of choice of superannuation fund available to workers under an enterprise agreement.
79. Chapter 6.2 concerns Paul Bracegirdle’s Herculean attempts to choose his own superannuation fund, rather than having his superannuation contributions made to TWUSUPER. TWUSUPER is a fund associated with the Transport Workers’ Union (TWU): approximately $2 million has flowed from TWUSUPER to the TWU over the last two financial years.
80. Chapter 6.3 concerns Katherine Cole’s similar struggle. She was required to join the Labour Union Co-operative Retirement Fund (LUCRF), an industry superannuation fund associated with the National Union of Workers (NUW). Her attempts to get out of the fund were rebuffed. Ultimately, Katherine Cole she took the drastic step of resigning her position, rather than continuing in LUCRF.
Part 7: Training funds
81. The only fund examined in this Part of the report is TEACHO, a fund associated with the TWU. Issues arising in connection with other funds, such as METL, a fund associated with the Maritime Union of Australia, will be considered in more detail next year.
82. As with many of the other funds already mentioned, the relevant arrangements in respect of TEACHO came into existence as part of the enterprise agreement bargaining process. In part the problem with TEACHO derives from a lack of clarity as to the appropriateness or efficacy of its functions. Another problem involves the fact that Toll agreed in a side deal, negotiated at the same time as its EBA with the TWU, to make payments to TEACHO provided that the TWU in return supplied reports to Toll concerning the activities of competitors. The information required for the purposes of the reports would be obtained by the TWU in pursuit of its statutory functions as a trade union. Toll sought to keep this information suppressed at the hearings of the Commission, an application which was refused. In his evidence Damian Sloan of Toll, a very impressive witness, accepted that Toll had agreed to provisions in the EBA relating to TEACHO in order to achieve industrial peace.
Part 8: CFMEU
83. Part 8 is the largest part of the Interim Report. It contains a number of case studies associated with the CFMEU. Together they raise fundamental issues about the regulation of the building and construction industry, and the culture of wilful defiance of the law which appears to lie at the core of the CFMEU.
84. Chapter 8.2 concerns Boral Ltd. Boral is a multinational company listed on the ASX. It was the victim of a ‘black ban’ imposed by the CFMEU. The evidence of the conduct of the CFMEU and its officers towards Boral and its customers has led to findings that blackmail and contraventions of the Competition and Consumer Act may have been committed.
85. Chapter 8.3 concerns Cbus, which manages employees’ superannuation. Senior executives at Cbus, namely Ms Butera and Ms Zanatta, covertly provided contact information for Cbus members employed by the Lis-Con companies to Mr Brian Parker, the NSW State Secretary of the CFMEU. This was done at the request of Mr Parker, who wanted the information to cause employees of Lis-Con to be personally contacted to make trouble with their employer.
86. Chapter 8.4 deals with the question of whether, on 27 March 2013, Mr Darren Greenfield, a CFMEU official, made a death threat to Brian Fitzpatrick, another CFMEU official. The finding is that the conversation was as Mr Fitzpatrick described in his evidence.
87. Chapter 8.5 deals with the unsavoury views held and expressed by Mr Parker about another member of the Branch Committee of Management who had been compelled to give evidence to the Commission and who, when called, gave truthful evidence.
88. Chapter 8.6 addresses two case studies relating to the unacceptable way in which the CFMEU has dealt with its records, including those which may have been relevant to the Terms of Reference.
89. Chapter 8.7 is devoted to the Universal Cranes case study. It raises similar issues to those in respect of Boral, and thus involves issues of extortion, unlawful threats and breaches of the Competition and Consumer Act 2010 (Cth). Officials at the CFMEU in Queensland embarked on a campaign against it by banning it from sites, and threatening to continue the ban unless Universal Cranes signed the CFMEU’s form of enterprise bargaining agreement.
90. The Hindmarsh case study is dealt with briefly in Chapter 8.8. There are two reasons for brevity at this stage. The first concerns the fact that there are Federal Circuit Court proceedings due to be heard shortly which raise some of the issues raised in the Commission hearings. The second is that, in relation to the remaining discrete issues, it is desirable to afford the CFMEU and its officers a further opportunity to provide submissions which they have so far chosen not to provide.
91. Chapter 8.9 concerns the treatment of FWBC Inspectors by CFMEU officers. There was evidence of intimidating, abusive and verbally violent treatment towards FWBC inspectors by members of the CFMEU. In one case the verbal violence was captured on video. It involved a CFMEU official standing in close proximity to an FWBC inspector and screaming abuse of a particularly insulting and violent kind. Other evidence, equally insulting although not captured on video, related to the treatment of FWBC inspectors at the Barangaroo site.
92. Chapter 8.10 concerns the Pentridge Prison site and activity by the Victorian branch of the CFMEU. The activity in question included the making of abusive and threatening calls by union officials, and the application of improper pressure on subcontractors to sign the CFMEU’s form of enterprise bargaining agreement and on workers to become CFMEU members.
93. Chapter 8.11, which is extremely brief, relates to allegations made by Andrew Zaf. As those allegations remain under investigation, no findings are made at this stage.
94. The final chapter in Part 8 is Chapter 8.12. It concerns relations between the Lis-Con companies and the CFMEU in Queensland.
Part 9: HSU
95. The only issue relating to the HSU considered in this Interim Report concerns the activities of the HSU Victorian No 1 Branch (now named the Health Workers’ Union). A number of officials at this branch have alleged that their Right Entry Permit tests were undertaken by others on their behalf. This issue is considered and resolved in Chapter 9. As noted above, other issues concerning the HSU which have also been the subject of evidence before the Commission to date will be addressed in a future report.
Part 10: TWU
96. A number of funds associated with the TWU or its officials – namely the McLean Forum, the New Transport Workers’ Team, TWUSUPER and TEACHO – are dealt with in the Parts summarised above.
97. This Part also considers questions relating to the NSW Branch of the TWU’s electoral roll. For a number of years the NSW Branch of the TWU provided documents to the ALP which overstated the number of members of the NSW Branch eligible to vote in a ballot for an office in the union. The significance of this matter is that the TWU was exercising voting rights at ALP conferences based on an inflated number of members.
Part 11: SDA
98. This case study involves the then Secretary-Treasurer of the Queensland Branch of the Shop, Distributive, Allied and Employees’ Association terminating the employment of an organiser because – on the evidence, although this was not the stated reason – the organiser had decided to run against him at a forthcoming election. Confidential Report
99. There is a recommendation that one volume of this Interim Report be kept confidential. On 12 December 2014 an order was made directing that any information in the Confidential Report that might enable a person named in that report who has given evidence before the Commission to be identified not be published. That recommendation and that order were made because the confidential volume deals with threats to witnesses. It is necessary for that volume to be confidential in order to protect the physical well-being of those witnesses and their families. This is unfortunate, because the confidential volume reveals grave threats to the power and authority of the Australian state.
Recommendations for referral
100. It is recommended that this Interim Report and any other relevant materials be referred, pursuant to s 6P of the Royal Commissions Act 1902 (Cth) and every other enabling power, to the:
(a) Commonwealth Director of Public Prosecutions in order that consideration may be given to whether:
(i) the CFMEU should be charged with and prosecuted for cartel conduct contrary to ss 44ZZRF and 44ZZRG of the Competition Policy Reform (Victoria) Act 1995 (Vic) (Chapter 8.2); (ii) Darren Greenfield should be charged with and prosecuted for using a carriage service to make a threat and/or to menace, harass or cause offence contrary to ss 474.15 and 474.17 of the Criminal Code (Cth) (Chapter 8.4); and (iii) each of John Perkovic, Luke Collier, Rob Kera, Brian Parker and Michael Greenfield should be charged with and prosecuted for obstruction of a Commonwealth public official contrary to s 149.1 of the Criminal Code (Cth) (Chapter 8.9); (iv) each of Diana Asmar, David Eden, Darryn Rowe, Nick Katsis, Saso Trajcevski-Uzunov and Lee Atkinson should be charged with and prosecuted for making a false statement in an application or recklessly making a false statement contrary to ss 136 and 137 of the Criminal Code (Cth) (Chapter 9); and (v) Kimberly Kitching should be charged with and prosecuted for aiding and abetting the contraventions of each of Diana Asmar, David Eden, Darryn Rowe, Nick Katsis, Saso Trajcevski-Uzunov and Lee Atkinson (Chapter 9);
(b) Australian Securities and Investments Commission in order that consideration may be given to whether:
(i) Michael Ravbar should be charged with and prosecuted for breaches of his duty as an officer contrary to s 184 of the Corporations Act 2001 (Cth), and whether a civil penalty proceeding should be commenced and carried on against Michael Ravbar for contraventions of ss 180, 181 and 182 of the Corporations Act 2001 (Cth) (Chapter 5.2); and (ii) the exemptions granted to employee redundancy funds by ASIC Class Order CO 02/314 remain appropriate (Chapter 5.2);
(c) Fair Work Building Inspectorate in order that consideration may be given to whether proceedings should be commenced and carried on against:
(i) each of Michael Ravbar and Peter Close for coercion to the existence, exercise or refusal to exercise a workplace right contrary to s 343 of the Fair Work Act 2009 (Cth) (Chapter 8.7); (ii) each of Michael Ravbar, Peter Close and Andrew Sutherland for taking adverse action against another person as a result of the existence, exercise or refusal to exercise a workplace right contrary to s 340 of the Fair Work Act 2009 (Cth) (Chapter 8.7); (iii) each of Anton Sucic and Ivan Dadic for taking adverse action against a person because they were not a member of an industrial association contrary to s 346 of the Fair Work Act 2009 (Cth) (Chapter 8.10); and (iv) each of John Setka and Gerard Benstead for coercion by allocating duties to a particular person contrary to s 355 of the Fair Work Act 2009 (Cth) (Chapter 8.10);
(d) Australian Competition and Consumer Commission in order that consideration may be given to whether proceedings should be commenced and carried on against:
(i) the CFMEU for conspiring with others to contravene s 45E of the Competition and Consumer Act 2010 (Cth) contrary to ss 45E and 76(1)(e) of that Act (Chapter 8.7); and (ii) each of Michael Ravbar, Peter Close, Andrew Sutherland, Ben Loakes and the CFMEU for a secondary boycott for the purpose of causing substantial loss or damage contrary to s 45D of the Competition and Consumer Act 2010 (Cth) (Chapter 8.7);
(e) General Manager of the Fair Work Commission, or a delegate of the General Manager, in order that consideration may be given to whether a proceeding should be commenced and carried on against the TWU for a pecuniary penalty order for failing to hold records for 7 years contrary to s 231 of the Fair Work (Registered Organisations) Act 2009 (Cth) (Chapter 10.2);
(f) Australian Information Commissioner in order that consideration may be given to whether the Queensland Branch of the Shop, Distributive, Allied and Employees’ Association contravened National Privacy Principle 10.1 or any provision of the Privacy Act 1988 (Cth) (Chapter 12);
(g) New South Wales Director of Public Prosecutions in order that consideration may be given to whether Darren Greenfield should be charged with and prosecuted for common assault contrary to s 61 of the Crimes Act 1900 (NSW) (Chapter 8.4);
(h) South Australian Director of Public Prosecutions in order that consideration may be given to whether:
(i) John Perkovic should be charged with and prosecuted for assault contrary to s 20(1) of the Criminal Law Consolidation Act 1935 (SA) (Chapter 8.9); (ii) John Perkovic should be charged with and prosecuted for accosting or impeding another in a threatening manner contrary to s 20(1)(e) of the Criminal Law Consolidation Act 1935 (SA) (Chapter 8.9); and (iii) John Perkovic should be charged with and prosecuted for the common law offence of assault (Chapter 8.9);
(i) Queensland Director of Public Prosecutions in order that consideration may be given to whether:
(i) each of Michael Ravbar and Peter Close be charged with and prosecuted for extortion contrary to s 415 of the Criminal Code 1899 (Qld) (Chapter 8.7); and (ii) each of Michael Ravbar and Peter Close be charged with and prosecuted for threats to cause detriment to another person contrary to s 359 of the Criminal Code 1899 (Qld) (Chapter 8.7);
(j) Victorian Director of Public Prosecutions in order that consideration may be given to whether:
(i) each of Ralph Blewitt and Bruce Wilson should be charged with and prosecuted for obtaining financial advantage by deception and conspiracy to commit an offence contrary to ss 82 and 321 of the Crimes Act 1958 (Vic) (Chapter 3.2); (ii) John Setka and Shaun Reardon should be charged with and prosecuted for blackmail contrary to s 87 of the Crimes Act 1958 (Vic) (Chapter 8.2); and (iii) Shaun Reardon should be charged with and prosecuted for being an accessory to blackmail contrary to s 323 of the Crimes Act 1958 (Vic) (Chapter 8.2);
(k) Western Australian Director of Public Prosecutions in order that consideration may be given to whether each of Ralph Blewitt and Bruce Wilson should be charged with and prosecuted for:
(i) fraudulent conduct contrary to s 409(1) of the Criminal Code (WA); and (ii) conspiracy to commit an indictable offence contrary to s 558 of the Criminal Code (WA) (Chapter 3.2); and
(l) Divisional Branch Management Committee of the New South Wales branch of the Construction and General Division of the CFMEU in order that consideration may be given to whether any action should be taken against Brian Parker under r 51 of the Rules for the Construction and General Division of the CFMEU to investigate whether Mr Parker:
(i) has engaged in gross misbehaviour; (ii) has grossly neglected his duty; (iii) has conversed in an abusive or derogatory manner towards any person; (iv) has made statements which impugn the character and integrity of fellow officials; or (v) should be removed from office (Chapter 8.4 and 8.5).