Federal Politics

Royal commission refers Kathy Jackson, Cesar Melhem to prosecutors

The trade union royal commission has referred Victorian MP Cesar Melhem and former union boss Kathy Jackson to prosecutors for possible charges, and concluded unions are riddled with "widespread" and "deep-seated" misconduct.

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Abetz applauds trade union Royal Commission

At top levels of trade unions there were 'unacceptable activities' according to Conservative Senator Eric Abetz, who applauds the Royal Commission findings. (Vision courtesy ABC News 24)

Mr Melhem, a former union boss, has been referred to Victorian prosecutors over a string of accusations relating to corruption and the creation of false invoices.

In his final report released on Wednesday, Commissioner Dyson Heydon referred Ms Jackson, the former national secretary of the Health Services Union, to prosecutors for possible charges over obtaining property and financial advantage by deception.

Kathy Jackson is set to be charged.
Kathy Jackson is set to be charged. Photo: Louise Kennerley

The Australian Workers' Union has been referred over deals with Cleanevent, Thiess, John Holland, Chiquita Mushrooms, ACI Operations and Winslow Constructors.

John Holland Pty Ltd and Chiquita Mushrooms have also been referred to prosecutors.


Contacted on Wednesday morning about the royal commission's findings, Mr Melhem said he had only just begun to read through the report. But he said his initial impression of what had been found by Justice Dyson Heydon was not good.

"He has just adopted [counsel assisting the royal commission into trade unions, Jeremy] Stoljar's submission, which is just so f***ing pathetic," Mr Melhem said.

Embattled Labor MP Cesar Melhem.
Embattled Labor MP Cesar Melhem. Photo: Darrian Traynor

The commission was set up under former prime minister Tony Abbott in what Labor and unions have dismissed as a political witch-hunt.

In a blistering preamble to the final report, Mr Heydon concluded the commission had probably only uncovered the most egregious examples of misconduct.

"These aberrations cannot be regarded as isolated. They are not the work of a few rogue unions, or a few rogue officials. The misconduct exhibits great variety. It is widespread. It is deep-seated.

"It would be utterly naïve to think that what has been uncovered is anything other than the small tip of an enormous iceberg."

It says that corruption and misconduct are hard to identify because there is usually no "victim" to be found and whistleblowers are loath to come forward, partly out of "a well-founded fear of reprisals".

"But it is clear that in many parts of the world constituted by Australian trade union officials, there is room for louts, thugs, bullies, thieves, perjurers, those who threaten violence, errant fiduciaries and organisers of boycotts."

The report states that Mr Melhem had been "responsible for numerous actions favouring the interests of the union over the members which may be breaches of legal duty".

Ms Jackson might have "committed a crime by obtaining $250,000 from an employer by false pretences".

The commission ran for nearly two years and held 189 days of hearings involving 505 witnesses.

The report effectively accuses the unions of closing ranks against the commission, making "investigation extraordinarily difficult" because those who breached loyalty were "reviled and ostracised".

"This was not true loyalty. It was only a perversion of it … It led to a prodigious amount of evidence which ranged from being less than frank to being mulishly stubborn to being blatantly mendacious."

The report also pointedly rejects claims the commission was one-sided and focused only on unions rather than employers. In any corrupt transaction, "examination was directed to both the person who provided the benefit and the person who received it", the report states.

"Where referrals of potential criminal conduct have been appropriate, they have been made, whether or not the individuals affected had been acting on the union side or the employer side."

The union movement has roundly rejected the findings, with ACTU secretary Dave Oliver branding the inquiry a blatant political stitch-up.

Speaking at a press conference on Wednesday afternoon, Mr Oliver said the royal commission was not about finding out about potential corruption.

"The royal commission was always about prosecuting an ideological, partisan agenda," Mr Oliver said.

In all, 45 individuals and organisations have been referred for possible charges. The commission also makes 79 recommendations for law reform, including the creation of a new watchdog for unions with its own budget and investigative powers similar to the corporate regulator, the Australian Securities and Investments Commission.

Andrews government minister Jacinta Allan, who was giving a press conference on Wednesday on preparations for New Year's Eve, said she had not yet seen the Royal Commission's report.

"It's very difficult to comment on a report I have not seen, but I am advised they do contain serious and significant recommendations and it would not be appropriate for me to make any speculation on matters that may appear in the courts," she said.

Asked about Premier Daniel Andrews' previous statements that a decision would be made on Mr Melhem's fate once the royal commission report came out, Ms Allan said: "It's difficult for me to speculate on what may happen next."

"I do not want to be in a position where any comments I make today in haste would potentially jeopardise court appearances" by people named in the report, Ms Allan said.

Victorian opposition industrial relations spokesman Robert Clark demanded Mr Andrews act immediately to remove Cesar Melhem from the Labor Party.

"He can't wait for months or years for the courts," Mr Clark said.

Mr Clark said that, while there were criminal offences possibly arising against Mr Melhem, there were clearly unacceptable practices revealed by the trade union royal commission's final report.

"If he doesn't act he is condoning that Cesar Melhem took payments from behind workers' backs and sold them out in wage negotiations," Mr Clark said.

"He needs to do what Jacinta Allan has failed to do; he needs to read the report, and he needs to act," Mr Clark said. "This is not something that has come out of left field - there has been day after day of evidence, and the commission has done its work."

Mr Clark said that, if Mr Andrews did not act to remove Mr Melhem from the Labor Party over the royal commission's findings, he was supporting rorts in union offices. "It's time for Daniel Andrews to act to clean up the Labor Party," he said.

Liberal senator Eric Abetz said the report showed there had been "completely unacceptable" and corrupt activity at the highest levels of trade unions.

"Unfortunately, the ACTU and other Labor leaders were not willing to call out corruption for what it is," he said.

"They tried to run a campaign against the royal commission and the royal commissioner that has badly backfired and, as a result, Mr Shorten's career is in tatters and the ACTU and trade union membership continues to be diminished."

He called on Labor to help clean up the union movement.

"My message is raise the white flag, accept the recommendations and support the government once and for all weeding out corruption in the trade union movement and get rid of the corrupt CFMEU from our building and construction sites and support the Australian Building and Construction Commission," Senator Abetz said.

The government's efforts to re-establish the commission were blocked in the Senate in August.

"For Bill Shorten to continue to run the activities that he has of allowing his frontbenchers to denigrate the Royal Commissioner badly backfired, badly misjudged and it shows why Bill Shorten should never become the Prime Minister of our country," he said.

Senator Abetz said he hoped the government adopted the commission's recommendation for tougher penalties for officials who break the law.

"At the moment … if you are a trade union official ripping off members, your penalty is $10,000 whereas if you are a company director ripping off shareholders, you could potentially go to jail for five years and face fines of $300,000.

"I don't see any material or moral difference between a company director ripping off shareholders or a trade union official ripping off their members."

Australian Industry Group Chief Executive Innes Willox said the report showed the royal commission was a worthwhile exercise and the case for change to laws governing trade unions and related entities was "irrefutable".

"The recommendations need to be carefully considered and the necessary changes introduced as soon as possible," he said, adding that re-establishing the ABCC should be prioritised.