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Exclusive - Inside the Building Rackets

An exclusive investigation reveals the corrupt and dangerous underworld growing beneath the nation's construction industry.

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Officials from Australia's powerful building unions are being bribed by corrupt companies that need their support to win multi-million-dollar contracts.

The construction industry rackets involve labour hire, traffic management, scaffolding, crane and building companies, several of which are connected to bikies and organised crime figures.

A Fairfax Media and ABC 7.30 program investigation has identified several influential CFMEU officials, organisers and shop stewards in NSW and Victoria who have been given bribes and other inducements.

The corruption has flourished because policing agencies have failed to take action. Both the CFMEU and the federal government's building watchdog have called for greater law enforcement on corruption and crime in the construction industry.

Union endorsement is all but essential for labour hire, traffic management, scaffolding and crane companies to be engaged on large projects.

In one case, a labour hire company run by Sydney and Melbourne crime figures has won CFMEU endorsement despite owing union members more than $1 million in unpaid wages and entitlements.

Evidence includes leaked covertly recorded conversations, bank records, police files and witness testimony. At least six people from the Victorian CFMEU branch, including senior officials and shop stewards, have received kickbacks.

On Monday the Victorian CFMEU organiser Danny Berardi resigned after Fairfax revealed at least two building companies helped renovate his properties for free in an apparent breach of secret commission

laws, which carry jail penalties of up to 10 years. Mr Berardi helped these companies get work on Melbourne construction sites.

Victorian branch secretary John Setka said: ''Last week I received specific information about an organiser, and after an immediate investigation he is no longer employed by the union.''

Every branch of the union had adopted strict rules for conflicts of interest and declaring outside income last year, he said. ''There is no place for officials who engage in criminal or corrupt behaviour in this union or any other.''

Several covert recordings reveal a Melbourne building industry figure telling colleagues about how his company paid kickbacks or a "cash bribe" to several figures "in the hierarchy of the union".

CRMEU wide racket of dirty deals

Image: Inside the building racket of Barangaroo, Springvale, Multiplex and the Victorian desalination plant. 

Union figures have also been given premium tickets to sporting events worth several thousand dollars and money to gamble at casinos by the owners of companies seeking their support.

Relatives of criminals and associates of CFMEU figures have also been employed by labour hire and traffic management firms in return for union support to win contracts.

The CFMEU's national executive has launched an investigation into allegations surrounding labour hire companies run by George Alex.

The probe was sparked after a CFMEU whistleblower, believed to be a senior NSW official, wrote to national secretary Michael O'Connor to describe how some influential NSW union officials gave "unwarranted favourable treatment" to Mr Alex.

Mr Alex, who has deep business links to drug dealers and bikies, has made deals with union figures in NSW and Victoria to win enterprise bargaining agreements for his labour hire firms, Active Labour and United.

Mr Alex's union support comes despite his labour hire companies having ripped off union members who work for them.

Late last year, Mr Alex's companies owed more than $1 million in workers' benefits and unpaid taxes in NSW and Victoria. The NSW CFMEU recently recovered $250,000 from Mr Alex.

One of Mr Alex's companies has won a lucrative contract related to the Barangaroo site after being promoted by an influential NSW CFMEU figure. Another senior NSW union figure requested Mr Alex employ his son, who was a convicted murderer.

In Victoria, Mr Alex's agreement with the CFMEU involved him paying Melbourne underworld figure Mick Gatto tens of thousands of dollars to help broker a deal and run Mr Alex's operations. Gatto has also been engaged by other construction-industry companies seeking the CFMEU's support.

A condition of Mr Alex's Victorian CFMEU deal involved his company United hiring union firebrand Craig Johnston, who in 2004 served a nine-month prison sentence after being convicted for affray, assault and damaging property for an infamous ''run-through'' at two Melbourne companies.

Mr Alex, whose Victorian operation was overseen by Comanchero bikie Amin Fakhri, paid Mr Johnston an inflated wage of at least $2000 a week.

Union shop steward Andrew Roussis also helped Mr Alex's United win work on Multiplex's Upper West Side site in Melbourne's CBD.

In statements on Monday, CFMEU national secretary Dave Noonan, NSW secretary Brian Parker and Victorian secretary John Setka said they took corruption allegations seriously and called on police and corporate regulators to investigate companies and individuals involved in criminal conduct.