Judge warns CFMEU bribes ‘distorted’ wider industry as investigation hits roadblocks

A kickback scheme involving union officials and a crooked businessman seeking CFMEU backing not only corrupted the union but may have undermined competition in the building industry, according to the scathing findings of a senior judge.

NSW District Court Justice Jennie Girdham concluded in May 2022 that more than $30,000 in bribes paid to union officials in Sydney “adversely impacted on the integrity of the CFMMEU” and “had the potential to distort the construction market”.

Corrupt CFMEU conduct has distorted the construction market, a judge has warned.Credit: Joe Armao

The revelation of the judge’s damning assessment – which was uncovered as part of the ongoing Building Bad investigation by this masthead, the Australian Financial Review and 60 Minutes – comes as the union watchdog tasked with gathering evidence to put the CFMEU into administration faces major roadblocks in its ability to access critical police information or investigate the alleged criminal identities who have infiltrated union ranks.

This masthead has confirmed that the Fair Work Commission, which is seeking to place the CFMEU’s construction branches in the hands of external administrators, has limited powers to examine vital information held by federal and state police that reveals the infiltration of the union by shonky businessmen, bikies and organised criminals.

In an attempt to circumvent this, FWC investigators have instead moved to interview often fearful union members and contractors. Industry insiders, including two veteran building union linked figures recently interviewed by the commission, expressed concerns the FWC was “flying blind”.

The two sources, who requested confidentiality citing fears of reprisal, also said that despite the FWC ostensibly having the power to protect whistleblowers, it was unable to provide meaningful practical protection, in the way law enforcement agencies do, for anyone willing to give sworn evidence in the commission’s impending court action to force the union into administration.

Their fears are particularly acute given revelations, first uncovered by the Building Bad series, that multiple violent bikie gang members had secured jobs as CFMEU delegates and that organised crime figures were being backed by certain union organisers.

Instead of seeking a special commission of inquiry or the formation of a multi-agency police taskforce, the Albanese government vowed to implement a once in a generation clean out of the CFMEU via the appointment of administrators.

If the FWC fails to win court approval for an administration, the federal government has flagged passing legislation to force through its reforms.

Because it is not deemed a law enforcement agency, the FWC is incapable of accessing significant police intelligence holdings that cast light on suspected union corruption and relationships between union officials and underworld figures.

The general manager of the FWC, Murray Furlong, acknowledged the limits of his agency’s powers and jurisdiction in a letter dated July 16 which stated “many of the allegations that have been made in the media coverage to date fall outside this jurisdiction”.

In the letter, Furlong also wrote the FWC was “committed to working with law enforcement agencies and sharing information with other regulatory agencies where appropriate”.

However, police sources from Victoria and NSW said state police were deeply reluctant to launch their own investigations because of resourcing concerns and, in the case of Victoria, were referring potentially important police witnesses to the FWC.

The FWC is unable to access information gathered via phone taps, listening devices or coercive questioning hearings held by agencies such as the Australian Criminal Intelligence Commission or Victoria’s Office of the Chief Examiner.

This means it will not have key evidence and intelligence from major police investigations revealing alleged involvement of CFMEU officials and delegates in improper activities, including dealings with bikie gangs and underworld figures.

Between 2017 and 2021, two major state-federal taskforces uncovered detailed information exposing the alleged involvement of still serving union officials and delegates in kickback and corruption schemes.

In Victoria, Operation Pantile gathered extensive phone tap material suggesting Victorian union assistant secretary Derek Christopher may be involved an alleged kickback scheme in which he is suspected of receiving $200,000 worth of supplies and labour from commercial building companies seeking CFMEU favours.

Victoria Police recently said Pantile was an ongoing investigation, while official sources told this masthead that the force had not only compiled voluminous material implicating Christopher in alleged wrongdoing, but material implicating another influential CFMEU insider. There is no suggestion from this masthead that Christopher is guilty of an offence, a finding that can only be made by a court.

Derek Christopher.Credit: Luis Enrique Ascui

In NSW, detectives from a second joint taskforce operation covertly recorded hours of two serving union officials suspected of corruption.

A third Victorian police inquiry, Operation Spitfire, has recently scrutinised two bikie figures who worked as union delegates, including a sergeant at arms of the Rebels bikie gang.

Separately, a federal police taskforce operating in Sydney and Queensland covertly recorded conversations between a still serving senior union official and a notorious underworld figure previously implicated in the bribery of a now retired union boss.

Because the FWC is not deemed an “enforcement agency” under commonwealth legislation, it is prohibited from accessing much of the material gathered in these police investigations. However, the commission will be able to access some police evidence if it is eventually aired in court.

The Fair Work Ombudsman, which is investigating misconduct around making CFMEU agreements, also acknowledged criminal matters are outside its jurisdiction and it is limited to looking at coercion, misrepresentation or unions failing to disclose benefits.

A Victorian inquiry into the construction industry, initiated by Premier Jacinta Allan and due to provide an interim report by the end of the month, also had no public channel to receive evidence until Thursday. After questions were asked by this masthead a link was published on its website.

The “independent” investigator, Geoffrey Watson, SC, hired on Tuesday by the CFMEU’s national office to probe allegations of corruption and criminality has even less power than the Fair Work Commission and ombudsman.

Both watchdogs are also hampered in their ability to access information held by the federal police as part of the investigation that led to NSW District Court Justice Jennie Girdham’s May 2022 conclusions about a businessman who, between 2017 and 2020, bribed three CFMEU officials, including two who are still serving.

While the businessman and union officials are given pseudonyms in the judge’s remarks – and can’t be named publicly for legal reasons – their identities are known to CFMEU executives.

In the previously unreported judicial remarks, Justice Girdham described a scheme in which the building company owner paid almost $31,000 in bribes to secure the union’s help in winning contracts on NSW construction sites.

The judge concluded that the scheme not only infected the union’s integrity but potentially tainted “the honest assessment of tenders to the detriment of other parties or competitors in the industry”.

Girdham said the corrupting of the union was “serious” and “deliberate” and while the sums of money involved were not large, “it is recognised that in cases of bribery that a relatively small bribe may still have a very substantial corrupting effect”.

The court heard the building company owner, who paid bribes with cash and David Jones gift cards, claimed “he was unable to survive in the industry without engaging in bribery with union officials”.

In an unconnected crime, the businessman also accepted $50,000 in a black shoulder bag from an undercover police officer who had told him the money was from a black market tobacco operation and that he needed to transfer it overseas.

Girdham sentenced the businessman to jail for two years and seven months but allowed him to spend the bulk of this time subject to a community corrections order.