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HSU demands Kathy Jackson repay $250,000

The Health Services Union has launched a legal action against its own national secretary Kathy Jackson demanding she repay almost $250,000 paid into a slush fund.

The HSU succeeded in a bid to lodge an amended statement of claim on Friday in the Federal Court in Melbourne which added its allegations over the slush fund to its case that was already under way as the union has sought to recover legal fees.

Ms Jackson in return had launched a counter-claim seeking almost hundreds of thousands of dollars in back pay. The HSU is now seeking to recover money paid to the National Health Development Account (NHDA) which was controlled by Ms Jackson.

The union alleges that between February 2004 and May 2010, $246,500 of member's funds was transferred to the NHDA in breach of numerous governance and reporting rules. The union has also referred the spending to the royal commission into the union movement. HSU records show some of the money was used to support political campaigns for state Labor MPs.

The union claims that under its rules no donations or grants above $1000 could be made without the approval of the branch's committee of management. Further, the branches were required to identify any payment of more than $1000 to the Fair Work Commission in its annual accounts.

But the HSU claims appropriate disclosures were not made when money was paid from the various branches where Ms Jackson had senior roles. It claims that Ms Jackson opened the NHDA bank account and was the account holder for the unincorporated association.


The union says that the initial payment of $80,000 to the NHDA in February 2004 was not approved by the branch's committee of management, as required under the rules, nor was it declared in the required reports to members or the commission. There was also no associated invoice from the NHDA to explain the services that warranted the payments.

Similar accusations are made about the other payments which the union claims were authorised by Ms Jackson. The union also claims that Ms Jackson did not inform the union's committee of management of her interest in the NHDA. That meant the related party transactions had not been declared in the union's financial accounts.

It argues that each of the payments to the NHDA amounted to a misuse of Ms Jackson's position. 

"The NHDA transfers were made in order for Jackson to obtain an advantage for herself in that the transfers were to an account in which Jackson was the account holder, or to an account that was held in an unincorporated association of which Jackson was a member, or to an account in which Jackson had a beneficial interest," the union's amended statement of claim says.

As well as seeking the repayment of the money, the union has asked for Ms Jackson to provide an account to the union for the transfers. Ms Jackson has previously said she never used money from the fund "for my own private benefit or for payment to third parties unless such payment was conscientiously believed by me and relevant others to serve the legitimate political purposes of the union".

"I say that I have done nothing in relation to the fund that is criminal or that was not in the best interests of the union as I genuinely believed them to be."

Fairfax Media is not suggesting Ms Jackson was aware of any improper accounting practices and was unable to contact the union’s auditor.

A case is due to go to trial in December.