Media Room

Prime Minister announces Royal Commission into Trade Union Governance and Corruption

Prime Minister Tony Abbott has announced that he will be recommending to the Governor-General the establishment of a Royal Commission to inquire into alleged financial irregularities associated with the affairs of trade unions.

In making the announcement this afternoon, Mr Abbott made clear the Royal Commission would not be an inquiry into the activities relating to trade unionism or the day to day activities of honest trade union officials.

Rather, the Commission will inquire into the activities relating to ‘slush funds’ and other similar funds and entities established by, or related to, the affairs of these organisations.

Background

There has been growing concern arising from revelations and allegations involving officials of unions establishing and benefiting from funds which have been set up for purposes which are often unknown and frequently unrelated to the needs of their members.

Before the election the Coalition promised to establish a judicial inquiry into the alleged misappropriation of Australian Workers’ Union funds.

A number of similar allegations have also been raised in relation to other funds established by officials of other unions.

The Government believes the allegations to date strongly indicate there are systemic issues involving secret funds, commissions and kickbacks that need to be considered.

In addition, recent reported allegations of corrupt behaviour, unlawful kickbacks and standover tactics in the construction industry have provided impetus to the establishment of the Royal Commission.

Of note, a key plank of the Coalition’s industrial relations agenda – re-establishing the Australian Building and Construction Commission – is currently before the House of Representatives, which resumes for 2014 tomorrow.

Royal Commission

The Commission will inquire into any entities established by registered employee associations or their officers, with specific regard to:

  • Their financial management;
  • The adequacy of existing laws to deal with their integrity and accountability;
  • Whether such entities have been used for any unlawful purpose; and
  • Whether funds in such entities have been used for the purpose of furthering the interests of a registered employee association, its officers or members, or any other person, association or organisation.

The Commission has also been asked to look into any bribes, secret commissions or other unlawful payments or benefits arising from arrangements between registered employee associations or their officers and other parties.

While the terms of reference are not limited to particular organisations, particular allegations or particular industries, the following employee associations have been identified for scrutiny:

  • the Australian Workers Union;
  • the Construction Forestry Mining and Energy Union;
  • the Electrical Trades Union;
  • the Health Services Union; and
  • the Transport Workers Union.

Appointment of Commissioner

The Government will recommend the appointment of former Justice of the High Court of Australia, the Honourable Dyson Heydon AC QC, to lead the Commission. Mr Heydon was appointed to the High Court by the Howard Government in 2003, and was known for his adherence to ‘black letter’ legal interpretation.

In Mr Heydon’s ten years on the High Court bench, this approach often saw him at odds with the majority of the Bench on constitutional matters. He developed a reputation for producing lone judgments, though not always diverging significantly with the majority. He preferred to apply the common law explicitly and not delve into questions of parliamentary intent.

Broad terms of reference will allow the Heydon Commission to be able to go wherever the evidence leads it. As such, union officials, employers and any other persons who are involved in such conduct will be subject to equal scrutiny.

Terms of Reference

The Royal Commissioner will inquire into and report on:

  1. The governance arrangements of any separate entities established by registered employee associations or their officers, purportedly for industrial purposes or for the welfare of their members, with particular regard to:

(a) the financial management of such entities;

(b) the adequacy of existing laws as they relate to such entities with respect to:

(i) the integrity of financial management; and

(ii) the accountability of officers of registered employee associations to their members in respect of the use of funds and other assets in relation to such entities;

(c) whether such entities are used, or have been used for any form of unlawful purpose;

(d) the use of funds solicited in the name of any such entities, for the purpose of furthering the interests of:

(i) a registered employee association;

(ii) officers of a registered employee association;

(iii) members of a registered employee association; or

(iv) any other person, association or organisation.

  1. Without limiting the matters in paragraph 1, alleged activities relating to the establishment or operation of any such entities as they relate to the various registered branches of the following employee associations:

(a) the Australian Workers Union;

(b) the Construction Forestry Mining and Energy Union;

(c) the Electrical Trades Union;

(d) the Health Services Union;

(e) the Transport Workers Union; and

(f) any other person, association or organisation in which in respect of which credible allegations of involvement in such activities are made.

  1. The circumstances in which funds are sought from any third parties and paid to such entities.
  2. Where such entities and activities related thereto exist, the extent to which persons represented by registered employee association:

(a) are protected from any adverse effects or negative consequences arising from their existence; or

(b) are informed of their existence; or

(c) are able to have influence or control of their operation; or

(d) have the opportunity to hold officers of such associations accountable for any alleged wrongdoing.

  1. Any conduct which may amount to a breach of any applicable law, regulation or professional standard by any officer of a registered employee association in order to:

(a) procure an advantage for themselves or another person, association or organisation; or

(b) cause a detriment to a person, association or organisation.

  1. Any conduct in relation to such entities which may amount to a breach of any applicable law, regulation or professional standard by officers of registered industrial employee associations who hold, by virtue of their position, a position of responsibility in relation to any such entities.
  2. Any bribes, secret commissions or other unlawful payments or benefits arising from contracts, arrangements or understandings between registered employee associations or their officers and any other party.
  3. The participation of any persons, associations or organisations other than registered employee associations or their officers in conduct of the type described in paragraphs 1, 2, 3, 4, 5, 6 or 7.
  4. The adequacy and effectiveness of existing systems of regulation and law enforcement in dealing with any conduct of the type described in paragraphs 1, 2, 3, 4, 5 6, 7 or 8, and in particular, the means of redress available to registered employee associations and their members who have suffered a detriment as a result of such conduct.
  5. Any issue or matter reasonably incidental to the above.

Definitions

registered employee association means an organisation registered under the Fair Work (Registered Organisations) Act 2009, its predecessor legislation or equivalent State legislation, and as defined by section 12 of the Fair Work Act 2009.

law means a law of the Commonwealth or of a State or Territory.

officer of a registered employee association means any employee or elected officer holder of such an organisation.

Organisation includes any registered industrial organisation, corporate entity or association, whether incorporated or not.

separate entity means a fund, organisation, account or other financial arrangement that is either a separate legal entity to a registered industrial organisation and/or is not covered by the statutory financial reporting obligations that the organisation is subject to under the Fair Work (Registered Organisations) Act 2009, its predecessor legislation or equivalent State legislation.

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