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Australia – Labour hire and union corruption in the construction industry

29 January 2014

Union officials and labour hire companies have formed corrupt relationships with organised crime figures and receive payments in exchange for arranging lucrative contracts in the construction industry, reports abc.net.au. A joint investigation by ABC's 7.30 programme and Fairfax Media discovered that bribery, extortion, and threats of violence are used to cement the influence of crime figures on Australia's construction sites.

Evidence including covertly recorded conversations, bank records, police intelligence files, and whistleblower accounts implicate a number of senior members of the influential Construction, Forestry, Mining and Energy Union (CFMEU) in New South Wales (NSW) and Victoria in corruption.

The CFMEU stands accused of using the threat of industrial action to pressure large builders to use certain contractors and labour hire companies.

Labour hire companies have also been accused of paying crime figures and union officials to obtain contracts for major building projects, even though, according to the programme, some of those companies have reputations for underpaying their workers and not providing benefits.

Mr George Alex, a convicted criminal with reported links to a motorcycle gang, murderers, and drug traffickers, runs a labour hire company that has landed lucrative contracts in NSW and Victoria. It has been alleged that union figures helped Mr Alex obtain those contracts, despite the fact he has become notorious for running so-called phoenix companies, which go bust then resurface under a different name. As a result, some workers have been left without their entitlements.

In Victoria, Mr Alex is accused of employing Melbourne underworld figure Mick Gatto to negotiate with the unions and obtain work for his current labour hire companies, Active and United.

In separate statements to investigators, Victorian CFMEU state secretary John Setka and his NSW counterpart, Brian Parker, said the union played no part in deciding whether particular labour hire companies got contracts on construction projects.

"The union is not in a position to check the property, or other interests or connections of employers and managers of companies. The union might have a view about a contractor and their history of compliance, but ultimately, whether a subcontractor wins work is up to the builders who contract with them," Mr Parker stated.  

CFMEU national secretary Dave Noonan commented: "Construction workers are entitled and are proud of the fact we have had a strong and effective union in the CFMEU. Any individuals that have engaged in corrupt activity will not be continuing their employment with the union. They will be sacked."

Mr Noonan said he absolutely refuted suggestions that the union had been inactive in fighting corruption: "Our policies are very clear on probity and corruption and on all of these matters, and we have dealt with them in the past. The CFMEU is not the corporate regulator to approve which individuals and which companies can and cannot operate in the industry, nor are we the body that can investigate criminal matters. These are issues for ASIC and the police force and we have consistently called on them to do their job."

In 2010, intelligence gathered by a Victoria Police and Australian Crime Commission drugs investigation revealed that Mr Gatto and his business partner, Matt Tomas, were allegedly involved in "criminal activity in the building industry and narcotics" and have close connections to "the Hells Angels, the CFMEU and drug importers".

It has been alleged that two Victoria labour hire firms, KPI and MC Labour, hired criminal figures and friends and relatives of union officials in return for help getting contracts on building projects, including the massive desalination plant in Gippsland.

The labour hire companies sought favour with union officials by supplying gifts such as AFL grand final tickets, Formula One grand prix tickets, and trips to Crown casino's high-end Mahogany Room.

The Federal Government says the claims of widespread corruption and criminal activity by union officials strengthen the Government's case for re-establishing the Australian Building and Construction Commission.

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