Messages show how powerful union slugged workers’ retirement savings
When a $2.4 million contract between the powerful CFMEU and industry fund First Super was up for renewal, the long-serving union secretary – and First Super director – Michael O’Connor allegedly saw it as an “opportunity to get some more money out of the fund”.
He informed a union delegate that the board of First Super would approve extending its contract with the CFMEU, instructed the union to raise the contract fee and then engaged a consultant to help the union on negotiations, according to documents filed in the Federal Court.
Federal Court documents show hundreds of messages the financial regulator will rely on in its case against Michael O’Connor, the national secretary of the CFMEU’s manufacturing division. Credit: Graphic: Monique Westerman
In September the Australian Prudential and Regulation Authority launched Federal Court proceedings against O’Connor, national secretary of the CFMEU’s manufacturing division, seeking financial penalties and his removal from the board of the superannuation fund.
The evidence, including Slack messages and emails that APRA will rely on in court to show O’Connor deliberately and over a substantial period of time misused his position as director on the board of First Super, can be revealed.
APRA’s case centres on O’Connor allegedly breaching his director duties by not acting in the best financial interest of super fund members. The regulator will allege O’Connor used First Super to bankroll the salary of a union employee while the union was experiencing financial difficulties, not informing the fund the employee was still carrying out work for the union and privately seeking to increase the fees First Super paid the union.
More money for the union
In October 2017, First Super and the CFMEU entered into a written deal known as the Member and Employer Co-ordinator Services Agreement, or MESC contract. Under the arrangement, the union was to manage the employment of the co-ordinator responsible for recruiting and retaining First Super members, while the fund would pay the union the employee’s fees and reimburse their expenses.
Two years later, O’Connor told a union employee, known as CS, the board of First Super had or would approve the contract’s extension without going to tender. He told CS this was “an opportunity to get some more money out of the fund”, according to court documents obtained by this masthead.
On December 17, 2019, O’Connor sent an email approving the CFMEU to advertise for a vacant position as a member and employer co-ordinator, although it wasn’t until February 2020 that the board of First Super gave the nod to begin negotiations with the union to extend the contract for another two years.
Before the position was filled, O’Connor instructed CS to send an invoice to First Super as part of the MESC contract for the period between April and June.
“The union issued an invoice to the trustee which included the cost of an additional co-ordinator TBA [to be announced],” APRA has alleged. “The invoice INV-0156 dated 10 March 2020 contained a line item for VIC/TAS TBA - $125,051.56.”
O’Connor shortly after withdrew the job ad. By then, he had spoken to a union employee, referred to in court documents as BT, about the possibility of her being effectively seconded to First Super “but doing both work as a MESC co-ordinator and work forming part of her role as an MSR [member support and retention] organiser for the union”. She began in that role from early April 2020.
In late March, O’Connor also met with a consultant to discuss how the union could raise its contract fees. The union presented its revised offer to the fund in late April 2020, which included a 5 per cent fee hike and an additional one-off roll-over fee of $350,000, on the advice of the consultant.
APRA has alleged O’Connor was quietly involved in negotiations on behalf of the union “with the intention of benefiting the union at the expense of First Super and its members’ interests”, amounting to a breach of his directors’ duties.
Lots of work for the union, little work for the super fund
The regulator has compiled 275 messages BT sent to the CFMEU Slack channel that it says shows the employee, who was effectively seconded to First Super, worked predominantly on union-related matters.
The vast majority of her messages, released by APRA, relate to her role as a union organiser.
APRA has alleged BT “did little work in her role as a MESC co-ordinator”, until her resignation on October 15, 2021.
Despite her secondment, O’Connor – and other union staffers – still viewed BT as a CFMEU employee, according to emails released by APRA.
The national secretary has been accused of directly reaching out to BT and instructing her to undertake union-related work, including on November 23, 2020, when he told her to post a video on the union’s Facebook page with an approved message and on November 27 when he instructed her to prepare a list of Vietnamese-speaking members for small factories.
But by the end of 2020, First Super began questioning what BT was up to.
It is not clear from the court documents how O’Connor responded, but APRA said it is “inferred” the national secretary read the email, and he knew the inquiry was related to BT’s “failure to perform work in her MESC co-ordinator role”.
Two months later, however, O’Connor asked BT to help him review the union’s process for joining new members, according to the regulator.
The matter is listed for a first case management hearing in April.
APRA declined to comment. First Super has been contacted for comment. O’Connor is yet to file his defence and hasn’t responded to requests for comment.
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