return to Hot Off the Press list

Saturday’s Age and Australian contain considerable material confirming the extensive existence of what have come to be known as union “slush funds”. Most remarkably, The Age has run the story on its front page (below) with a sub-title “THE ALP’S SECRET CASH” and it has a longer version in INSIGHT.

It is not exactly clear why this story has emerged right now but it may reflect leakages from intra-union differences over the (illegal) use of union funds for the election of competing union officials. As with the Health Services Union, the reports also raise a question as to whether one union official mentioned, said to have been the sole “manager” of a fund which he has recently “closed”, might also have drawn on it for personal expenditure.

The Coalition has already introduced a bill to “improve the governance and financial transparency of registered organisations” and to establish an organisation “with a high degree of independence” from the Fair Work Commission to monitor the legislation. However, it must be doubted whether this on its own will reduce the ability of unions to extract funds from companies faced with threats of disruption to activity. The basic problem here is the unwarranted extent of protective regulation of workplace relations under the existing legislation and the administration thereof by the one-sided  authority established by Labor. The Government has rightly moved to re-establish the cop-on-the-beat authority dealing with the building and construction industry – so why not use the now extensive evidence of union corruption to extend that across all industries?

We have recently heard from incoming ministers that they found their policy areas in a “shambles”. It does not require a Productivity Commission inquiry to reach the same conclusion in regard to workplace relations. Yet the Coalition’s policy seems to envisage a continuation of union power through to 2016, which could effect a lot of damage to the economy – and employment.

I should mention here that a paper on “Problems with Existing Regulation of Workplace Relations” will be presented at the annual general meeting of the HR Nicholls Society on Thursday 5 December. That meeting commences at 5.30 pm  at Morgans at 401 Collins St and is open to non-members.

I also include an article from today’s Australian by Michael Smith on the Gillard-Wilson slush fund, which is still being investigated by Victorian police. Smith, who has closely followed this since his resignation (sic) as a radio commentator, deals mainly with the failure of the ABC to give this incident publicity. But Smith’s analysis suggests that it now seems likely that Wilson will be shown as having been closely involved in using union power, under inadequate legislation and administration, to extract funds from companies – and that Gillard benefited from that. As I have argued before, if this is the case it opens up the possibility that Abbott could justify changes in some of his policies on the basis that his previous policies were framed in different political circumstances and that the revealed extent of union power derived from Fair Work regulations and administration has created a major political and economic problem for Australia that must be overcome asap.

Des Moore

Millions in union slush funds

Article by Royce Millar and Ben Schneiders published in The Age, November 30, 2013

Millions of dollars in secretive union slush funds, training schemes, members' dues and MPs' resources are propping up Labor's dwindling union base and bankrolling damaging factional battles for delegates to the ALP.

A Fairfax investigation has unearthed cashed-up but little-known funds used to bankroll union elections and factional fights across the country.

It points to possibly unlawful misuse of union funds and union and parliamentary staff, including in the Health Services Union elections in Victoria in 2009 and 2012, and the Transport Workers Union's $500,000 takeover of its own Queensland branch in 2010 with the backing of disgraced former Health Services Union leader Michael Williamson.

In Victoria, the plumbers' union is under investigation by the Fair Work Commission over the spending of members' dues on the bitter 2012 HSU elections.

It is unlawful to use union resources in internal or intra-union battles. Slush funds are legal but unregulated.

On Friday, the TWU referred concerns raised by the Fairfax investigation to the Fair Work Commission.

Pressure is now growing in the ALP to scale back the influence over the party of unions and their leaders, who represent only a fraction of the workforce.

Frustration overflowed this week when Fairfax Media revealed how a handful of union chiefs played a key role in fast-tracking preselections for seats before the 2014 state election, bypassing member ballots.

The Fairfax investigation found that in 2010 the TWU orchestrated a covert campaign against its own Queensland branch then led by veteran left-wing leader Hughie Williams.

The Queensland push resulted in the transfer of the TWU's factional support in the ALP from the Left to Bill Shorten's AWU-dominated Right faction.

Insiders have detailed how the campaign was orchestrated by the office of national secretary and ALP deputy president Tony Sheldon, and the union's NSW branch, with the support of then HSU leader Michael Williamson.

The campaign was overseen in Brisbane by a team - described as a ''hit squad'' by a senior Labor MP - of interstate union and Labor operatives, including from the offices of Labor MPs, among them federal opposition frontbencher David Feeney.

Key players included former Feeney staffer and now Victorian ALP assistant secretary Stephen Donnelly and rising Labor star Xavier Williams, now an adviser to Opposition Leader Daniel Andrews.

The group oversaw an elaborate campaign against Mr Williams, including the use of call centres, focus groups, bulk SMS messaging and repeated mailouts to members.

An HSU insider has confirmed the union covered the travel costs and wages of communications specialist Angela Humphries and the costs of some campaign material.

Documents also show direct and questionable TWU involvement in last year's flight attendants' union elections where it backed its preferred candidates.

TWU national secretary Tony Sheldon refused to be interviewed and did not directly respond to a series of written questions.

In a written statement, his office denied paying for some Queensland campaign expenses but failed to respond to questions about payment of staff and other costs .

NSW secretary Wayne Forno also failed to respond directly to questions.

In December 2012, Fairfax revealed details of an employer-bankrolled slush fund, Industry 2020, run by former AWU state secretary Cesar Melhem, its sole director. Mr Melhem wound up the fund in May after he took up a safe seat in the Victorian Parliament.

Fairfax has since identified a string of other major funds, including the TWU's McLean Forum which had assets of more than $400,000 in 2010 (the most recent figure available), the National Union of Workers' IR21 Ltd (more than $900,000 in assets in 2012) and the CFMEU's (Victorian construction division) Building Industry 2000 ($750,000 in 2009).

Some funds appear to be genuine re-election accounts for incumbent officials. Others are used for sub-factional empire-building. Mr Melhem has confirmed using Industry2020 funds to back factional friends in the bitter 2009 HSU election in Victoria.

Mr Sheldon has acknowledged spending McLean Forum funds on elections, including the HSU election in 2012.

Ms Humphries has not responded to repeated calls while Mr Donnelly and Mr Williams declined to comment.

David Feeney failed to respond to queries.

TWU used slush fund to oust its state boss

Article by Ewin Hannan published in The Australian, November 30, 2013

ALP vice-president and Transport Workers Union boss Tony Sheldon has admitted that money from a political slush fund controlled by the union's leadership was used to help defeat its own Queensland secretary and support candidates in elections in two other unions.

Mr Sheldon told The Weekend Australian that money from the fund, the McLean Forum Ltd, was used to finance the successful campaign by Peter Biagini to oust the union's veteran Queensland state secretary, Hughie Williams, in 2010.

Mr Sheldon, a director of the McLean Forum, also confirmed money from the fund contributed to internal elections in the Flight Attendants Association of Australia last year and the Health Services Union's NSW branch.

He defended the contentious decision to have funds poured in to Mr Biagini's campaign, and has denied that any TWU funds were used in the internal elections.

"It did so because it is a political action committee and that's its function," Mr Sheldon said.

The revelations are likely to be seized on by the Abbott government as evidence to support its proposed registered organisations commission, in the wake of the HSU scandal.

Senior union sources said yesterday that an HSU employee, while on leave, worked in support of Mr Biagini's campaign. The woman had worked at the TWU before her time at the HSU.

Mr Sheldon denied that the McLean Forum had received funds from the HSU or any HSU-related entity.

"The HSU did not contribute any money to the McLean Forum for the TWU elections," he said.

"The McLean Forum did contribute to the Queensland TWU election. It contributed to the FAAA and it did contribute to the HSU election."

The Fair Work Commission is examining the financial contributions made by the TWU to the internal election for the Flight Attendants Association.

Mr Sheldon has previously said that funds for the McLean Forum came from weekly contributions by union officers and employers.

Mr Sheldon last night denied that employers had recently donated to the fund.

"They probably did years ago, as a consequence of attending fundraisers held in the 2000s but not at any time recently," the union leader said.

A commission spokeswoman reiterated yesterday that no formal investigation had begun, but said the commission was seeking to clarify the circumstances surrounding the contributions.

The registered organisation commission bill proposes that union office-holders be held to the same standard as company directors, with officials potentially subject to criminal penalties including personal fines of up to $200,000 and up to five years' jail.

Under new disclosure requirements, unions will be required to name the five highest-paid officials in their organisation, along with their individual salaries.

Employment Minister Eric Abetz has said the bill was necessary to "stamp out the rip-offs, rorts and corruption that have flourished inside some unions".

A spokesman for the TWU denied any misuse of union funds.

Supporters of Mr Sheldon have blamed former employees of the union for highlighting the use of the funds in the union election.

His critics accused him of "hypocrisy", given his call in August for the ALP to impose tougher conditions on companies making political donations.

return to Hot Off the Press list