Health Services Union former leader Kathy Jackson ordered to repay $1.4m
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Health Services Union former leader Kathy Jackson ordered to repay $1.4m

Disgraced former union leader Kathy Jackson has been ordered to pay about $1.4 million after a damning judgment found she stole money from the Health Services Union.

The finding in a civil case against Ms Jackson will add weight to a criminal investigation currently under way against the one-time whistleblower.

Former Health Services Union leader Kathy Jackson

Former Health Services Union leader Kathy JacksonCredit:Louise Kennerley

Federal Court Justice Richard Tracey found Ms Jackson guilty of misusing her position as head of the union to fraudulently gain financial advantage.

Among her unauthorised expenses are hundreds of thousands of dollars on clothes at high-end department stores, fine dining, grocery and liquor shopping, personal mortgage repayments, and flights and hotels while on multiple overseas vacations.

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The judgment marks the end of the HSU's long-running lawsuit against Ms Jackson, its former national secretary.

In the ruling on Wednesday, Ms Jackson was found to have misappropriated union money in a variety of ways, including large cash withdrawals, the misuse of three credit cards and from a financial settlement from a Melbourne cancer hospital.

HSU national secretary Chris Brown described the decision as "finally bringing justice to the union's 70,000-plus members".

"Many HSU members are among the lowest-paid workers in the country, delivering essential services and caring for the most vulnerable members of our community," he said.

"Kathy Jackson knew this, yet she spent their money on lavish banquets running into tens of thousands of dollars, extravagant family holidays and luxury goods among other things."

Former HSU leader and federal MP Craig Thomson claimed some justification and called for swift police action against Ms Jackson, who had pursued him for years.

Mr Thomson said "millions" had been spent by police pursuing him while they had been aware of the allegations against Ms Jackson for years and "sat on their hands".

"I do note for my $5000 [criminal] conviction I had a public arrest on TV. The consequences are the end of my career and dignity and job prospects generally," he told Fairfax Media. "Whereas Kathy has continued to act in a criminal manner for many years without scrutiny."

A three-day Federal Court trial last month examined reams of receipts and bank statements to shed light on the many ways Ms Jackson had been dipping into union funds for years to fund a lavish lifestyle.

Justice Tracey ordered Ms Jackson pay the union more than $1.3 million in compensation for damage to the union, and a further $67,912 for overpaid salary she received while on holiday.

Important to the union's case was a $250,000 payment from the Peter MacCallum cancer hospital in 2003 to Ms Jackson's HSU No. 3 branch.

The payment was to settle a back-pay dispute at the hospital, but instead was used as seed money for a bank account from which Ms Jackson withdrew large sums of money for her own personal use and $50,000 to her ex-husband as part of a divorce settlement. The hospital workers received nothing.

Ms Jackson is under criminal investigation for alleged widespread theft and fraud from a police anti-corruption taskforce connected to the royal commission into trade unions.

Almost all of the union's civil claims of Ms Jackson's misappropriation were upheld on Wednesday, with only Ms Jackson's credit card misuse reduced from nearly $400,000 to about $306,000.

"Between 2003 and 2011, Ms Jackson used the credit cards to pay for personal expenses, retail purchases, food and alcohol, entertainment and health and fitness services," Justice Tracey said.

Just before the civil trial started, Ms Jackson dramatically declared bankruptcy.

Central to the sudden deterioration of her finances was her transfer of part of her $1.3 million house on the NSW South Coast to her de facto partner, Fair Work Commission vice-president Michael Lawler.

Ms Jackson is under criminal investigation for alleged widespread theft and fraud from a police anti-corruption taskforce connected to the royal commission into trade unions.

Employment Minister Eric Abetz said while Ms Jackson was to be commended for standing up and uncovering corruption in the HSU her wrongdoing cannot be condoned.

"I welcome the decision of the Court. The Australian trade union movement is the better for it."

Prime Minister Tony Abbott previously lauded Ms Jackson as a "brave, decent woman", while frontbencher Christopher Pyne said she would be remembered as a "revolutionary" and a "lion of the union movement".

The pair on Wednesday declined to comment on their previous endorsements of her.

Opposition Leader Bill Shorten, a former friend of Ms Jackson, attacked Mr Abbott. "Tony Abbott's consistent praise for Kathy Jackson shows how far he will go to smear his political opponents. Does Tony Abbott still think Kathy Jackson is a hero?"