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Gillard continues to claim that she was “not involved in any wrongdoing” in regard to the operations of a union slush fund in the mid 1990s. Yet according to Oxford a wrongdoing includes “action or misbehaviour contrary to morality or law”. As more and more of her connections with those operations are revealed it seems increasingly likely that one or more wrongdoing may have been by her. A question which also arises is whether, if one is closely associated with/advising others who were committing wrong doings, can one also be regarded as having committed a wrong doing?

Yet, following yesterday’s report that one 1995 whistle blower had now changed his mind (or possibly been forced to do so), Attorney General Roxon has weighed in with "We see smear after smear. The Prime Minister's made perfectly clear that she has no inappropriate or improper conduct to answer for”. She is supported by two other Minister.

Today’s reports include one suggesting Gillard’s boyfriend Wilson had drawn on her advice to establish another slush fund, this time in Victoria. This also suggests that, in addition to this fund (ie as well as the WA one), Wilson operated a number of secret accounts and that the fund was used in 1995 to finance so-called “redundancy payments” for the three AWU members who were to be expelled for their wrongdoings while working at the AWU. Presumably this allowed one of the three (Blewitt) to move to Malaysia and one (Telikostoglou ) to Greece. Wilson is still in Australia but is not saying anything.

Note too that some of the money extracted from companies by Wilson was repaid and that the now Cabinet Minister Joe Ludwig (then an AWU member) was involved at the time. It appears that the extractions had been (wrongly) described as paying the union membership subscriptions of workers at the companies. Even so, this suggests that a major source of (normal) funding for unions does come from “membership” payments by major companies to avert or minimise disruption. An AFR article below illustrates.

Yesterday I referred to Gillard’s sudden change of mind to favouring an announcement of a Royal Commission on sexual abuse of children. Today Dennis Shanahan (below) contrasts this “quick” RC announcement with the failure to announce a RC into the misappropriation and misuse of union funds. Indeed, he refers also to the lack of any inquiry into numerous problem areas in regard to the (mis)behaviour of unions and the (associated) reason for corporate contributions to unions, as well as the major reduction in powers of the Australian Building and Construction Commission which was established to provide an institutional response to alleged industrial blackmail and to defend workers' safety.

Des Moore

Rushed cheques and a quiet exit: how the AWU 'covered up' fraud

Hedley Thomas, The Australian, November 16, 2012

SENIOR union figures effectively covered up a fraud scandal revolving around the AWU and Bruce Wilson, then Julia Gillard's boyfriend and legal client, according to the diaries of the union's then national leader.

In a September 15, 1995, diary entry, Australian Workers Union head Ian Cambridge described the concealment to a union official as "a bit like the Watergate scandal whereby the attempt to cover up the original crime was now far worse perhaps than the original crime, although given some recent revelations the original crimes were taking on an entirely new dimension as well".

His diary described how the cover-up was helped by a majority vote by the union's national executive to pay large redundancy cheques of AWU members' money to three men - Mr Wilson, his bagman Ralph Blewitt and their friend, Bill "the Greek" Telikostoglou - despite fresh and compelling evidence of their involvement in serious fraud.

Law firm Slater & Gordon was involved in negotiating more than $100,000 in redundancy for the men. Ms Gillard worked at Slater & Gordon and acted for the AWU prior to her departure in September 1995 after she admitted helping to set up a "slush fund" for Mr Wilson. There is no evidence Ms Gillard had any knowledge of the redundancy payments. The Prime Minister has repeatedly and vehemently denied any wrongdoing, saying she knew nothing of the operations of the fund, which were used by Mr Wilson and Mr Blewitt to misappropriate union funds.

The Cambridge diary discloses a senior official telling Mr Cambridge "the whole thing was causing the union significant damage and that we would be best advised to try and sort it out by way of an executive meeting and try and deal with it, as he put it, 'behind closed doors' ".

The diary highlights the last-minute attempts made by the AWU's then national president, Bill Ludwig, and Mr Cambridge, to bring court proceedings to stop the redundancy payouts. Mr Ludwig and Mr Cambridge argued against the payments at the national executive but were outvoted.

The redundancy payouts on August 17, 1995, came a fortnight after the discovery of secret accounts and another slush fund controlled by Mr Wilson in Victoria, and a fiery union meeting in which Mr Wilson was told by fellow official Bob Smith that he faced imprisonment. Documents show the payouts - $55,204 for Mr Wilson, $30,249 for Mr Blewitt and $16,218 for Mr Telikostoglou - occurred with cheques flown from Sydney to Melbourne to ensure the men could be quickly ushered out of the union. This stymied Mr Cambridge's investigations into a sprawling AWU fraud, which grew on discovery in April 1996 of the other slush fund that Ms Gillard had helped set up for Mr Wilson.

Mr Blewitt, who has admitted he was involved in fraud, said from Malaysia last night Mr Wilson told him to exit quickly with a redundancy payout. "He told me, 'We are all out, we are gone, the game's up - the best deal you can do is a redundancy package because they are going to try to get you if you stay'," he said.

But the sudden allocation of redundancy to the men being ousted because of their suspected fraud meant the AWU could not afford to look after the families of deceased members who were supposed to receive "7 to 8 Bereavement Grants" cheques.

The diary reveals Mr Cambridge's anger that the redundancies meant "the Bereavement Grants would simply have to wait for six months or so".

The diary discloses how a fortnight before the payouts, Mr Wilson had been in a weak position with Mr Smith, then an official in Victoria who uncovered a number of secret bank accounts, warning that "unless he received Wilson's resignation by 5pm the following day he was going to lay charges and take the matter to the police and the industrial commission".

Commonwealth Bank documents show that at the same time of the payouts, almost $80,000 Mr Wilson had secretly siphoned off from large companies, including Thiess and Woodside, was being returned to the companies.

The companies, which paid the money into a separate slush fund that Mr Wilson controlled, the AWU Members Welfare Account No.1, were surprised they were being repaid. They believed they had made legitimate payments.

The diary discloses a bank officer told Mr Cambridge the cheques to repay the companies were drawn at a meeting at the bank attended by union officials, as well as solicitors from Slater & Gordon and Maurice Blackburn.

It discloses how Mr Cambridge's investigations led him to conclude it was an attempt by Mr Wilson to return some of the money he had fraudulently obtained from companies.

The diary discloses that Joseph Ludwig, then an AWU employee (now a cabinet minister in the Gillard government) became involved after being contacted by a company, Fluor Daniel, that had paid $29,000 into the slush fund.

The diary states that the company said it paid in the genuine belief it was for "membership contributions for workers on the job", and that one of Mr Wilson's cronies wanted to know if the company "would be prepared to say that the $29,000 that had been paid was a donation". The company refused to adopt the plan to make it a "donation".

The company representative called Joseph Ludwig for advice, asking "what he should do in the event that he did receive a cheque for the $29,000 back".

The diary discloses: "Joseph's advice . . . was to photocopy the cheque and provide Bill Ludwig and Ian Cambridge with a copy of the cheque and of any correspondence which may be attached to it and then take that to the police.

"Joseph said to me that often in construction jobs employers did pay for the union contributions but in all instances of which he was aware, there was always an issuing of tickets and the money being processed through the union's records and accounts."

Mr Cambridge sought a royal commission into the corruption in the AWU. By late 1996, however, he was appointed to the Industrial Relations Court in NSW.

Hundreds of thousands of dollars that went through a different slush fund, the AWU Workplace Reform Association, set up in Western Australia after legal advice from Ms Gillard, went undetected by Victoria police, and it was unknown to WA police until late 1996 because neither Ms Gillard nor the law firm disclosed it.

The Australian has asked Ms Gillard why neither she nor the firm alerted anyone in the AWU to the existence of the association there, which bore the name of the union.

A spokesman for Ms Gillard said: "As The Australian is well aware, the Prime Minister has made clear on numerous occasions that she was not involved in any wrongdoing. I also note that, despite being repeatedly asked to do so, The Australian has been unable to substantiate any allegations of wrongdoing."

Tale of two royal commissions

Dennis Shanahan, Political Editor, The Australian, November 16, 2012

LATE on Monday federal cabinet gathered for its scheduled meeting to discuss the business of government. But the regular meeting did not go according to schedule.

Julia Gillard immediately set aside the agenda ministers were expecting. Instead, the Prime Minister proposed a discussion on the establishment of a royal commission into child sexual abuse, a decision she had already taken.

There was no written submission, no option from Prime Minister and Cabinet and no prior consultation with the Attorney-General, Nicola Roxon. Nor was there any detail on the terms of reference for the royal commission or what form it would take.

Obviously aware of the mounting public and political pressure to call a royal commission - in the face of increasingly shameful evidence of the conduct of Catholic priests and how allegations of sexual abuse were handled by the Catholic Church arising from two state inquiries and a spate of police investigations - some federal cabinet ministers were wary of rushing to establish another inquiry.

Indeed, Gillard and her office had shared the same sentiments about a royal commission that was ill-defined, could build false expectations and would always have the ability to damage innocent people under privilege.

On the Friday before, while the Prime Minister was in Bali, the Prime Minister's office specifically advised Employment Minister Bill Shorten that there wasn't going to be a royal commission. Shorten dutifully went on radio arguing why it wasn't necessary.

Shorten, who was made to look ridiculous in April after having to retract public concern about the sexual harassment claims against then Speaker Peter Slipper had tried to avoid a similar problem.

Shorten is highly supportive of the idea of a royal commission but expressed his bewilderment to cabinet more than once. Other ministers had similar positions; in principle they agreed but were alarmed at the speed in the change of direction and the lack of preparation.

In a period of just 48 hours - between flying out of Bali and walking into the cabinet room - Gillard's position had changed from opposition to a royal commission to walking out of the cabinet room and announcing an inquiry into "institutional responses to instances and allegations of child abuse in Australia".

Gillard was right to announce a national response to an ongoing and growing evil, which all people of good faith want stopped and preventive measures reinforced. The Prime Minister, speaking of the evil of child sexual abuse, reached out to everyone and deserves political and popular support.

The speed of the change of direction could be explained by the speed of the political momentum. Tony Abbott, as Opposition Leader, had put out a statement offering support for Gillard should she suggest a royal commission. Kevin Rudd had set out a detailed and careful proposal. Joel Fitzgibbon, as the member for the Hunter in NSW, the epicentre of shameful behaviour and continuing distress, said there should be an inquiry; and independent MPs, including former Labor MP Craig Thomson and former Speaker Peter Slipper, indicated they would support a royal commission.

There were sound moral and legal reasons to hold a considered royal commission and, of course, there were political reasons as well. As "Captain Catholic", Abbott has been in Labor's misogyny frame for some time as being anti-woman because he was anti-abortion and did not want to release the abortion drug RU486 when he was health minister.

Both these issues were cited by Gillard in her speech attacking him and have been used repeatedly to portray Abbott as old-fashioned and a hardliner out of touch with modern Australia.

While the Prime Minister was careful to describe the royal commission as an inquiry into all institutions who care for children, it was clear the trigger was the allegations against the Catholic Church and that Abbott as a Catholic would be pressed to provide a political position.

So, the tale of the first calls for a royal commission ended with a fast, decisive and unilateral action from Gillard where policy and politics coincided.

Yet the tale of the second calls for a royal commission - into misappropriation and misuse of union funds and questionable practices that may have put workers' health and safety at risk - is one of slow prevarication where policy outcomes do not suit Labor's political agenda.

Calls for royal commissions - from union leaders mostly - into the alleged misuse of Health Services Union funds and alleged fraudulent misappropriation of more than $600,000 from an Australian Workers Union slush fund have fallen on deaf ears.

The alleged institutional union protection from officials "averting their eyes", lack of police investigations, members and officials' outrage, overlong Fair Work Australia investigations and missing documents have not attracted swift - or any - decision on an inquiry. There is no moral equivalence with child sexual abuse but the two don't have to be equal to demand the same solution.

Former Labor leader Mark Latham has criticised the media investigating the fraud at the AWU and the use of a slush fund Gillard set up as a partner at Slater & Gordon for not looking at the corporate "donations" which went into the slush fund.

Latham is right; there should be a close look at those donations which, unlike the HSU funds, were not union members' dues but appear to me to be payments made to buy industrial peace.

As The Australian revealed this week in diary extracts and sworn evidence from an AWU official campaigning against corruption in the 1990s, suspicions were raised about the cheques paid into the slush fund "because building disputes which had been a problem would suddenly disappear with little explanation".

Claims of occupational health and safety, notably to do with contaminated sites and soil, were either concocted to extract payments for industrial peace or swept under the carpet to the detriment of workers' health in return for payments.

It's also the sort of thing that was investigated by the royal commission into the construction industry. That ultimately led to the establishment of the Australian Building and Construction Commission, which was designed to ensure an institutional response to alleged industrial blackmail and to defend workers' safety.

In June the Gillard government demolished the ABCC after Shorten told parliament: "The government has consistently stated that anyone who breaks a law should feel the full force of the law. The government will not tolerate an environment in which people choose which laws to obey and which ones to ignore. This goes for all industry participants."

McClelland stands by FWA commissioner's integrity

Joe Kelly, The Australian, November 16, 2012

DUMPED attorney-general Robert McClelland has vouched for the integrity of Fair Work commissioner Ian Cambridge, who kept a detailed diary of his investigations into alleged union fraud in the 1990s involving the former boyfriend of Julia Gillard, ex-Australian Workers Union official Bruce Wilson.

"He (Cambridge) was one of the most competent and decent trade union officials that I have had the honour of working for.

He was incredibly thorough and diligent in everything he did," Mr McClelland told The Australian yesterday.

Mr Cambridge, a former AWU national secretary, kept the diary while investigating fraud in the union in the mid-1990s and was advised by Mr McClelland as a solicitor at Turner Freeman lawyers on how to recover missing funds and combat future loss of money.

A spokesman for Workplace Relations Minister Bill Shorten also confirmed the minister stood by Mr Cambridge's integrity as an FWA commissioner. Mr Cambridge was appointed to the role by Ms Gillard in December 2009.

The endorsements came as Deputy Opposition Leader Julie Bishop questioned the absence of a number of files connected to a union slush fund Ms Gillard helped establish for Mr Wilson in 1992, raising the possibility of the deliberate destruction of "evidentiary documents".

The Australian has obtained more than 150 pages of Mr Cambridge's diary, which have been verified by him. The diary details a disclosure to Mr Cambridge by a union employee, Wayne Hem, in June 1996 that the previous year he deposited about $5000 cash into Ms Gillard's bank account at the request of Mr Wilson.

It is not known where Mr Wilson got the funds and there is no evidence Ms Gillard asked for the payment or knew of its origins.

The AWU official Helmut Gries, who first brought allegations that union funds had been spent on renovations to Ms Gillard's house, yesterday cast doubt over whether he made the disclosure to Mr Cambridge on September 25, 1995 as recorded in the diary.

Labor MPs seized on the admission, reported in The Australian, to dismiss the basis of the claims against the Prime Minister over her conduct as a salaried partner at law firm Slater & Gordon.

"We see smear after smear," Attorney-General Nicola Roxon said. "The Prime Minister's made perfectly clear that she has no inappropriate or improper conduct to answer for."

Trade Minister Craig Emerson said the latest report undermined the claims made in the past about Ms Gillard's conduct 17 years ago. "I just think it's a lot of column inches devoted to a story which has involved no substantial allegation against the Prime Minister," Dr Emerson said.

Regional Development Minister Simon Crean said Ms Gillard should not have to answer further questions about the matter when "the integrity source can't remember" what he was alleged to have said nearly 20 years ago.

But Ms Bishop yesterday questioned why a number of files relating to the establishment of the union slush fund known as the AWU Workplace Reform Association had disappeared.

"There are a disturbing number of significant documents that could incriminate people that have now disappeared," Ms Bishop says. "This raises concerns about . . . the deliberate destruction of evidentiary documents."

Administrator starts move to recoup lost HSU funds

Ean Higgins, The Australian , November 16, 2012

THE administrator of the Health Services Union's NSW branch has launched the first legal actions aimed at recouping potentially hundreds of thousands of dollars in union funds allegedly defrauded from members by former general secretary Michael Williamson.

The administrator, Michael Moore, has made twin applications to the NSW Industrial Relations Commission and the NSW Supreme Court seeking orders against Mr Williamson himself and also one of his family companies.

The move follows a secret investigation, revealed by The Australian, launched by Mr Moore in which he used powers under the NSW Industrial Relations Act to compel witnesses to give evidence and release documents.

It comes weeks after NSW police brought 28 fresh criminal charges against Mr Williamson, alleging he defrauded members of $620,000 by paying union funds to the private company of his wife, Julie, for work that she allegedly never carried out.

Mr Williamson, a recent former ALP national president, was a powerful political player said to have backed Julia Gillard's coup against Kevin Rudd.

Mr Williamson and Labor-turned-independent MP Craig Thomson are under investigation by NSW Police Strike Force Carnarvon for allegedly taking secret commissions, among other allegations, when Mr Thomson was Mr Williamson's deputy from 1999 to 2002, before Mr Thomson became the HSU national secretary.

Mr Thomson is also under investigation by Victoria Police for allegedly misusing hundreds of thousands of dollars of union funds as national secretary, and spending it on prostitutes, high living and airfares for family members.

Mr Williamson, Ms Williamson, and Mr Thomson have rejected the allegations against them and strenuously denied any wrongdoing.

In the action in the Industrial Relations Commission , which was up for mention yesterday, Mr Moore is taking action under Section 270 of the Industrial Relations Act.

The section starts: "If the commission convicts a person of an offence under this division, the commission may, if satisfied that a state organisation has suffered loss or damage as a result of the act or omission that constituted the offence, in addition to imposing a penalty, order the convicted person to pay compensation to the organisation in the amount that the commission specifies."

In the action in the Supreme Court, which is up for a directions hearing today, the administrator is taking action against J & M Williamson Investments.

The Williamsons own valuable properties, in Maroubra on Sydney's southern beaches, and near Newcastle.

Mr Williamson left the HSU earlier this year on a salary of nearly $400,000 a year, after spending 15 years as head of a union that represents some of the poorest-paid workers in the nation.

Mr Williamson did not return calls yesterday, nor did his lawyer, Vivian Evans, who is on leave.

Bosses paid AWU Victoria fund $186,000

Mark Skulley, AFR, November 16, 2012

A bank account established as an election fighting fund for the Victorian branch of the Australian Workers’ Union received $186,000 in payments from employers, according to Victoria Police documents.

The documents reveal that the AWU Members Welfare No.1 Account was established in 1992 and corporate payments were made between December 1994 and July 1995.

A 1996 briefing paper by Detective Sergeant Glenn Turnley said the account was apparently established as an election account to fund internal campaigns for positions within the union. “It was funded by the candidates usually on the basis of $20 per week,” he said.

Later deposits ranged as high as $39,000 and came from employers such as Thiess Contractors, John Holland, Phillips Fox, Woodside Petroleum and Fluor Daniel.

The documents were released last month under a Freedom of Information request from Melbourne lawyer Harry Nowicki, an adviser to former AWU official Ralph Blewitt.

Mr Blewitt has been at the centre of controversy over a separate fund, the AWU Workplace Reform Association, which he set up with another AWU official, Bruce Wilson.

Prime Minister Julia Gillard helped establish the association in the early 1990s when she was a lawyer at Slater & Gordon. At the time, Mr Wilson was her partner. Ms Gillard has denied any wrongdoing on her part.

The West Australian Police investigated a complaint that the association was used to siphon off about $400,000. Police concluded that the money mostly belonged to Thiess, which declined to make a formal complaint, and no charges were laid.

The Victoria Police documents show that police received a complaint in September 1995 after the then AWU joint national secretary, Ian Cambridge (now a Fair Work Australia commissioner), raised concerns about several accounts held by the union’s Victorian branch.

In 1996, Mr Cambridge swore in an affidavit filed with the Industrial Relations Commission in NSW alleging that the accounts were not opened with the knowledge of the union’s national or state executives.

The union was then racked by in-fighting and power struggles and Det Sgt Turnley concluded the money was “used for union purposes” even though it might not have been audited in union accounts.

“No evidence exists which indicates that the payments to the union by the companies were of a corrupt nature,” he said.

Det Sgt Turnley also complained that the inquiry was hindered by newspaper reports which assumed the payments by the companies were corrupt.

“This has led to speculation and uncertainty from various people within the union movement and although co-operative, the companies spoken to were clearly disgruntled with the adverse media attention,” he said.

The Australian Financial Review

HSU’s records in a muddle, court told

Mark Skulley, AFR, November 16, 2012

Police have taken possession of some records from two of the troubled Health Services Union’s branches, the Federal Court has been told.

The assistant administrator of the Victoria No.1 and Victoria No.3 branches revealed yesterday that more than 400 boxes of records were taken to Sydney when the branches merged with the HSU’s NSW operation to form the East branch.

James Simmonds told the court most of the records had been kept in storage, but about 10 boxes whose contents were regarded as “sensitive” had been kept at the Sydney headquarters of the East branch.

Mr Simmonds said the records were kept in a “very haphazard manner” and he could not say how complete they were. The boxes have been returned to the union in Melbourne, with Victoria Police taking possession of some of the boxes.

He was giving evidence during a Federal Court inquiry in Melbourne into the planned election for the Victoria No.1 branch, which has been delayed by legal action. The administrator of the HSU, former Federal Court judge Michael Moore, is overseeing the break-up of the branches to clear the way for fresh elections that will elect new leaders of the HSU.

Former HSU organiser Diana Asmar is challenging a ruling by the Australian Electoral Commission that she was ineligible to run for the position of secretary due to doubts she was a financial union member and was employed in the industry.

A rival faction in the elections, aligned with former Victorian leader Kathy Jackson, is opposing Ms Asmar’s team. Ms Asmar told the hearing she had paid union dues that were owing in 2009 and had since tried to remain a member of the HSU. Justice Richard Tracey hopes to make a ruling by the end of next week, which would allow the election for the No.1 branch to proceed.

Justice Tracey said he was interested in some “remarkable entries” in the union’s records which indicated Ms Asmar’s membership had switched from “archived” to active status within several days in mid-2009. “There’s a world of difference between resigning and being culled,” he said.

The judge referred to earlier proceedings he had overseen involving the HSU and criticised the state of its records. “This union has been has been in a state of disarray for some time and the sooner that its affairs are regularised for the benefits of its members, the better.”

Separate elections for the NSW and Victorian No.3 branches are already under way and close on November 23.

The hearing continues today.

The Australian Financial Review

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