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Factionalism - 'It's not good enough'

Labor member Jane Rowe rebels against factionalism in the Labor Party. Producer - Tom McKendrick

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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.