‘Nobody’s stopping it’: The taxpayer money trail from building sites to the underworld
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The Victorian government covered up rampant and ongoing CFMEU-linked organised crime infiltration and corruption on its multibillion-dollar Big Build infrastructure scheme by failing to ensure scrutiny of “senior bureaucrats and ministerial offices”, according to the top investigator appointed to clean up the construction sector.
The accusation that Victorian Labor has in effect run a protection racket comes amid new revelations of wrongdoing including the employment of “baseball bat-wielding violent people” on the Big Build, where women have been bashed and then black-banned after they complained.
A major investigation by this masthead and 60 Minutes has also uncovered how gangland and bikie-linked figures are receiving large payments from companies on publicly funded projects looking to gain favour with union insiders, leaving state and federal taxpayers in effect underwriting payments to the underworld.
Some of the firms making the suspect and often recurring payments of between $30,000 and $600,000 also operate in NSW, Queensland and South Australia.
Bank and financial records reveal payments continued even after state and federal governments promised last year to stamp out bad behaviour in the nation’s construction sector by forcing the construction division of the CFMEU into administration and committing to sweeping reforms and inquiries.
Evidence of recent payments sought and delivered to gangland figures, including Mick Gatto, sparked federal police raids in Melbourne on Thursday as part of an operation codenamed Rye.
Detectives spent hours on Thursday searching the home and office of Gatto’s accountant, Charles Pellegrino, for evidence in connection with their investigation into the construction sector. No charges have been laid.
The sight of armed federal agents and sniffer dogs at Pellegrino’s home belies a more complicated picture of action and inaction, with state police separately facing claims of inaction in the face of CFMEU-gangland corruption.
The claims that the Allan government’s response to the problems in Victoria’s construction sector amounts to a cover-up are made by Geoffrey Watson, SC, the corruption-busting barrister who CFMEU administrator Mark Irving, KC, appointed to probe wrongdoing in the sector.
Charles Pellegrino during the police raids on Thursday.Credit: Jason South
Last July, after allegations the CFMEU and Big Build had been corrupted were first raised in the Building Bad investigation by this masthead, The Australian Financial Review and 60 Minutes, Allan claimed she had not known of the problems and strongly supported the federal government’s appointment of Irving. She also commissioned an inquiry by ex-public servant Greg Wilson.
Allan, who has held senior infrastructure delivery portfolios stretching back to 2014, last week stood by her government’s response to the scandal.
When the Wilson inquiry was released in December, it failed to identify any specific instances of corruption or criminal infiltration and did not hold any official or politician to account. Instead, its focus was on how authorities and building firms could do more to combat corruption.
“It was hopeless. Where it didn’t go was where it needed to go,” Watson told this masthead and 60 Minutes, in an interview in which he also canvassed how bikies and criminals were earning up to $10,000 a week for Big Build jobs that required no or little actual work.
“It needed actually to go inside the doors of the senior bureaucrats and actually into the ministerial offices in Spring Street. It didn’t do any of that. It was, I’m afraid, a terrible disappointment. It operates as a cover-up because it didn’t get to the bottom of anything.”
Watson said the state government undoubtedly knew of the corrupting of its Big Build.
Geoffrey Watson, SC, has been investigating issues at the CFMEU for the union’s administrator.Credit: 60 Minutes
“Senior people in the bureaucracy know about it, because I’ve received information suggesting that they were directly told about it,” he said. “Now, it seems to me that they wouldn’t have been doing their job properly if they were not communicating that with the relevant ministers.”
Watson stressed he was not accusing Wilson of wrongdoing but said his concern lay with the failure of the Allan government to ensure his inquiry adequately probed Big Build wrongdoing.
He pointed out that gangland figures appeared so unconcerned by the government’s response they were still profiting from taxpayer projects.
Highlighting how organised crime groups have shrugged off efforts to remove them from the construction sector, the Comanchero bikie gang is standing over building firms in Melbourne in concert with a Big Build subcontractor, according to multiple union and building industry sources who requested anonymity.
The same Big Build subcontractor not only pays Comanchero senior leaders but has separately been paying Gatto, helping to bolster support from the CFMEU and strike deals with union officials and competitors.
In NSW, no arrests have been made in connection with the recent firebombing of a CFMEU official’s ute.
Former Victoria Police officer Peter De Santo says his warnings about infiltration of the CFMEU were ignored.Credit: Alex Coppel
A key theory being examined by investigators is that the man was targeted by gangland figures in NSW because he was aligned to the union’s new anti-corruption regime in that state.
Former senior police officer Peter De Santo said his warnings about bikie infiltration in the building sector to Victorian government officials were seemingly ignored. That inaction had then turned Victoria’s Big Build into an underworld “honey pot.”
“The government were told a decade ago that [bikies] were infiltrating various industries and that included the construction industry,” he said. “I sat in meetings with representatives of the government and briefed them.”
Allan’s staunch support of the CFMEU administration that appointed Watson creates a political nightmare for the premier because it makes it much harder for her to dismiss his comments.
An inquiry of the sort Watson argued was needed in Victoria would almost certainly reach into the office of Allan given she was the minister overseeing the Big Build before replacing Daniel Andrews as premier. She also held various transport and infrastructure portfolios as a senior minister in the Victorian government since 2014.
Watson’s public intervention, along with new information uncovered by this masthead, will also reverberate through the federal election campaign given it suggests the Albanese government’s response to the Building Bad scandal is not working as planned.
On Friday, Albanese defended his government’s record on the CFMEU.
“We have intervened to knock off the incorrect practices that were taking place by the CFMEU,” he told reporters in Western Australia. “Unions, like employers, should all obey the law and should behave civilly.”
Watson said the evidence indicating taxpayers have been part-funding a money trail leading from the Big Build to the underworld, and ongoing criminal problems in the building sector in NSW, highlighted the inadequacy of government interventions.
“Political solutions haven’t been put in place. Nobody’s done anything to try and stop it. Now we are here with the administration in place and we’re trying to pick up some pieces,” he said, noting that the unresolved High Court challenge mounted against the administration by some building unions had left suspected corrupt CFMEU officials in positions of influence.
Watson also confirmed that subcontractors on the Big Build had been paying Gatto to sort out union-related issues as recently as a few weeks ago, claiming he had “seen evidence of it”, and that bikies who once ruled sections of the Big Build were still extorting state government subcontractors.
Asked why improper practices could be allowed to infect state government projects, Watson said: “Well, nobody’s stopping it.”
The federal police operation that sparked Thursday’s search of Charles Pellegrino’s house and office is investigating payments made from late 2020 until as recently as this month, as part of a probe into a suspected criminal conspiracy to give or receive “corrupting benefits” to influence union officials, which is outlawed under the Fair Work Act.
A federal police officer during the raid on the home of Mick Gatto’s accountant Charles Pellegrino.Credit: Jason South
There is no suggestion Pellegrino and Gatto are guilty of any offence, only that police are investigating why construction firms are paying large sums via suspected front companies controlled by Pellegrino.
Gatto hung up when contacted last week, but when asked via text message about payments to Pellegrino, responded: “I can’t see how I can possibly help you.”
Banking records sighted by this masthead reveal companies targeted in Operation Rye are variously linked — on paper at least — to Pellegrino. They include Landfill and Quarry Services Australia Pty Ltd, International Infrastructure Investments Pty Ltd and M.O.S Developments Pty Ltd. The records indicate payments have been made by more than a dozen building firms.
Federal police during the raid the Northcote offices of Charles Pellegrino on Thursday.Credit: Luis Enrique Ascui
Watson said his investigations had determined that Gatto, and other gangland figures, were approaching companies with union or other building industry problems.
“[Those problems] are sorted out on the guarantee of a payment and those payments are tens of thousands, sometimes a hundred thousand, hundreds of thousands, and sometimes they’re ongoing quarterly payments. We’re talking about millions of dollars,” he said.
Watson also said Gatto appeared to have a direct line to influential union figures that allowed him to dictate CFMEU operations.
A review by this masthead of some of the companies paying Gatto shows that they have been accused by the CFMEU of grave safety breaches or have collapsed owing money, suggesting Gatto has represented firms that disregard union members’ interests at the same time union bosses have opened their doors to him.
While NSW, Queensland and South Australia are all dealing with the fallout of the Building Bad scandal, ongoing problems appear most acute in Victoria, where there is also the biggest overlap on taxpayer-funded projects.
Earlier this month, this masthead revealed how the state’s $13 billion Metro Tunnel site had hosted a ghost shifts scheme, under which workers from a CFMEU-backed labour-hire firm linked to notorious gangland figure Toby Mitchell were paid up to $10,000 a week for hours they never actually worked.
A network of Pacific Islander bikie figures, including a crime grouping known as the “Hampton Park Boys”, also operated via the same labour-hire firm as Mitchell, MC Labour. MC Labour last week said it welcomed a government investigation into the allegations.
Building industry figures, speaking anonymously because of concerns of violent retribution, told this masthead that Mitchell’s role delivering protective equipment and recruiting for MC Labour on the Metro Tunnel was an open secret.
The CFMEU’s new leadership, led by Mark Irving, KC, and national secretary Zach Smith, warned union colleagues this month that the Metro Tunnel rorts could cost taxpayers tens of millions of dollars.
Another example involves the Gatto-linked and CFMEU-backed M Group labour-hire firm, which has won major contracts on the Mickleham Road Upgrade in Melbourne’s north.
The Australian Financial Review reported this month that the Tax Office was chasing a $13.7 million debt from M Group.
Geoffrey Watson said his ongoing investigations had uncovered how bikies and their associates had separately infected multiple other sites through a system of taxpayer-funded nepotism.
“It was exponential so that there were, well, not dozens, hundreds of them [bikie associates, friends and relatives] on building sites,” he said.
As a result, the Big Build had “just become a place of resort or retreat for bikies to come in and take control over business.”
One case study unearthed by this masthead involves the nephews of former CFMEU assistant secretary Elias Spernovasilis, whom the union forced onto the Big Build, despite one having been previously jailed for serious offences, including drugs and weapons crimes, and having a reputation for violence.
One nephew, Rebels bikie associate and drug trafficker Shannon Tibos, was appointed a union delegate on rail level-crossing removal projects.
Shannon Tibos.
Dozens of his Big Build payslips provided to this masthead, as well as other records, reveal Tibos regularly earned between $4000 and $11,000 a week, despite often not attending work.
A payslip from early 2024 records him earning $10,245 on the Big Build in a single week. When a Big Build subcontractor delayed paying Tibos, Tibos messaged the company owner threatening to harm him and warning he would alert his union boss uncle, Spernovasilis.
“I’ll see you soon. F--- your bullshit … I’m saying something to my uncle and I’ll deal with it how I deal with it,” the message said. “I hope you are up all night tonight because I’ll see you.”
A 2024 complaint to state government officials alleged the subcontractor had been “forced” to hire Shannon Tibos on the Glen Huntly level-crossing removal project and pay him “most weeks 7 days over 12 hours on nightshift without attending work”.
“Shannon was also paid … to be HSR [health and safety representative] on the North East Link.”
The $26 billion North East Link 10-kilometre road project in Melbourne has more than doubled its original budget. In the face of the overruns, the federal government last year increased its contribution to the project to $5 billion.
The North East Link is one of the biggest infrastructure projects in the country.Credit: Jason South
In April 2024, Victoria’s Major Transport Infrastructure Authority was told in writing by the Big Build subcontractor that it was facing further threats of violence from unnamed people after the company had delayed paying workers because it was collapsing.
The subcontractor claimed they were told: “I needed to leave the state or I would get a bullet through my head.”
Spernovasilis’ second nephew, Peter Tibos, was also placed by the union on the North East Link and Hurstbridge rail line upgrade. In September, Peter Tibos was charged after allegedly attempting a carjacking and firing a gun in Doncaster in Melbourne’s east.
Peter Tibos.
Watson told this masthead that the Tibos brothers were not an aberration but indicative of a pattern of infiltration involving gangland figures being paid up to $10,000 a week but “they don’t have to turn up to earn it”.
Watson said he had identified two factions in the union responsible for having assisted the placement of bikies and criminals on the Big Build.
One faction was variously led by now ex-union boss Derek Christopher and Spernovasilis, who, in addition to supporting his nephews, empowered a gangland identity he affectionately called his “brother”, ex-heavyweight boxer and gangland figure Billy Mitris, to effectively monetise the union’s support of access to the Big Build and other major construction sites.
For instance, in return for the promise of regular payments, Mitris helped place a labour-hire company run by an alleged bikie associate onto the North East Link, where the firm still operates.
Billy Mitris.
Watson said Mitris had “no qualifications in the area” of union bargaining “but he was able to get enterprise bargaining agreements” for labour-hire firms seeking entry to the Big Build or other major sites.
“These things are worth a fortune. They’re a gold mine, and he was able to get that through his connection with Spernovasilis, the assistant secretary,” Watson said.
On Saturday, this masthead revealed that a report for the administrator prepared by Watson had alleged another gangland figure, Faruk Orman, had likely been paid by an interstate labour-hire firm $250,000 in a “brown paper bag” to deliver a prized CFMEU enterprise bargaining agreement that the firm needed to access the Big Build. Orman has dismissed Watson’s report as false.
There is no suggestion by this masthead that Watson’s investigation into Orman contains sufficient evidence to support a prosecution or that its contested findings would be upheld in court.
In the report, Watson also said the former state senior vice president of the union, Joe Myles, should be referred to the Fair Work Commission for failing to act with care and diligence for his role in approving the Orman EBA.
Myles and his wife, Elizabeth Doidge, have both refused repeated requests from this masthead to answer questions about their knowledge, if any, of gangland figures supported by elements of the CFMEU.
Watson has described Myles as a key player in the so-called Queensland faction, a loose grouping of formerly Brisbane-based CFMEU identities with links to bikie gangs and which came to hold significant sway over certain Big Build sites.
Myles is not a bikie and has no criminal convictions. Doidge is the CFMEU’s key Labor Party operative. Prior to her removal from the union along with Myles as part of the CFMEU administrator takeover last year, Doidge was focused on building ties to members of the Allan and Albanese governments.
Elizabeth Doidge and Joe Myles.
In this same period, Watson has found Myles was a central player in a union faction in which bikies were appointed Big Build delegates and wielded significant power on government sites.
“Bikies were introduced into the CFMEU at a critical time when some new organisers were brought down from Queensland, bringing with them some very heavyweight bikes,” Watson said.
After gaining a role as Big Build health and safety representatives or Big Build subcontractor shop stewards, “bikes would bring on more bikies and it just grew and it grew”, he said.
A photo of Myles at a hip-hop concert in Melbourne in 2023 shows him with key members of the Queensland faction: a violent bikie and convicted criminal called Joel Leavitt, who was a Big Build health and safety representative; influential CFMEU member and Rebels bikie Jahmahl Pearson, who was recently jailed for a tobacco wars arson but previously worked on the Metro Tunnel; and Luke Collier, a criminal who previously pleaded guilty to assaulting a woman and who the CFMEU forced onto Big Build labour-hire firms.
From left: Luke Collier, Joe Myles, Joel Leavitt and Jahmahl Pearson.
According to files from the state government’s Southern Program Alliance, Leavitt was appointed a union delegate on the Melbourne Metro underground rail project and the Hurstbridge train line upgrade, and he used his union backing to run rampant rorts, not only pocketing up to $10,000 a week in wages, but demanding jobs for his bikie associates on the Big Build.
One list of workers that Leavitt’s criminal crew presented to the Southern Program Alliance for high-paying shifts not only includes two of Leavitt’s Rebels gang affiliates, but also relatives of Shannon Tibos.
Watson described Leavitt’s placement on the Big Build as “the single worst instance” of gangland infiltration he had so far uncovered and a “very black moment in the history of the CFMEU”.
“He’s an extremely violent criminal with a bad record,” said Watson, describing how Big Build workers and subcontractors knew that Leavitt and his associates were not mere bikies but “baseball bat-wielding violent people”.
Alongside Leavitt on the Big Build were also three other bikie-linked union delegates: outlaw bikie gang member Marty Albert, who worked as a union delegate on Melbourne’s Suburban Rail Loop; and two Big Build health and safety representatives, Johnny “Two Guns” Walker, who was previously convicted of manslaughter, and Charlie Farrugia.
Johnny “Two Guns” Walker.
Farrugia is facing charges of brutally bashing a union rival, while Albert was facing charges last year over his alleged involvement in a separate bashing.
When these gangland-linked Big Build figures were exposed in the media – be it via Leavitt’s shooting outside a bikie clubhouse in 2023 or Walker and Albert’s exposure via the Building Bad revelations – most were forced from their union-backed roles.
Derek Christopher, Myles and Spernovasilis were among union executives sacked last August after the appointment of the administrator.
But Leavitt and members of his bikie crew have kept operating by leveraging their union and construction contacts, according to records gathered by authorities, while sacked union bosses like Christopher and Myles continue to meet serving union organisers and wield influence from afar.
Leavitt has been linked to building company payments made via front companies in the past four months, according to records sighted by this masthead. In recent weeks, he represented himself as working for a labour-hire firm.
Just last week, Christopher posted a Facebook message stating he was “a financial member of the union awaiting the High Court decision” that could restore his power as a union executive. Christopher also attacked rumours he was secretly assisting authorities probing the union gangland links.
“I would be happy to be invited to any organisers or delegates or branch meeting to have the debate or be asked any questions,” Christopher wrote.
Both Watson and former senior police officer Peter De Santo said the removal of bikies and union bosses from their posts last year did not produce anything close to a proper accounting of how a “cancer” was permitted to spread across the state’s construction industry.
De Santo said that a decade ago, while he was running Victoria Police’s anti-gang division, the state government ignored his recommendations for stronger laws.
Premier Jacinta Allan moved to introduce long-stalled anti-bikie-association laws after the Big Build scandal last year, but De Santo described the changes as too little, too late.
Serving police said, on condition of anonymity, that the state government had also bungled the planned reform of asset seizure laws that the force was hoping to use against targets in the construction industry, rendering them ineffective without further legislative change.
Privately, high-ranking law enforcement sources acknowledge there has been a hand-balling of allegations between federal and state agencies since the Building Bad series broke, with most agencies concerned they are not resourced to tackle the problems.
Watson was scathing of Victoria Police’s response to the scandal, saying he felt “real discomfort from the lack of action” by the force.
“That’s something I just can’t really get my head around. The AFP have got a more limited brief,” he said.
In the months after the Building Bad scandal broke, Victoria Police assessed a series of allegations, referring the most serious to federal agencies and laying only minor charges.
Asked last week about whether she was aware of the ongoing gangland activity linked to Big Build subcontractors, Premier Jacinta Allan said all allegations should be referred to police.
She disagreed with Watson’s opinion that the Wilson report was a cover-up and declined to directly answer questions about why no public officials had been held responsible for the rorting on the Big Build.
Highlighting the inadequate response of state authorities to corruption in the construction sector, Victoria Police is yet to finalise an investigation started seven years ago into suspicions Derek Christopher received secret benefits from building company bosses.
On Thursday, as federal agents raided Pellegrino’s home, Mick Gatto mixed with Christopher along with other serving and former union officials at the funeral of Christopher’s father.
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