Bill Shorten has questions to answer over past AWU dealings

Bill Shorten is battling to run away from the subterranean dealings of his past with the Australian Workers Union. This week alone, complaints from the Labor leader’s office have gone to the top of the nation’s public broadcaster.

It is not hard to see why. The lead story on Tuesday’s edition of the ABC’s 7.30 told of “missing files” that could shore up the account of former executive Stephen Sasse from construction consortium Thiess John Holland.

In sworn evidence to the royal commission into union corruption earlier this month, Sasse claimed Shorten was centrally involved in 2004 negotiations for his firm to pay Shorten’s union $300,000 during construction of Melbourne’s EastLink tollway.

Asked if a related invoice from the AWU looked bogus, Sasse replied: “I fear so.”

Shorten has denied direct involvement, flick-passing responsibility to former AWU underling Cesar Melhem.

Another murky area of AWU dealings that Shorten has striven to disassociate himself from is the infamous case of Bruce Wilson, who persuaded large companies in Perth — including Thiess Contracting and John Holland — to part with $385,000 in 1992.

As is now widely known, Wilson set up a registered association with a quasi-union name and the help of Julia Gillard, then a union lawyer and his girlfriend. Late last year in its interim report the royal commission was critical of Gillard’s legal work but found she had committed no wrongdoing. Wilson faces possible police charges for fraud.

Shorten, then a rising young star in the union movement, inherited Wilson’s union position some years later as secretary of the AWU’s Victorian branch.

He has denied the claim of former AWU official and Shorten mentor Bob Kernohan, who wanted to pursue Wilson in 1996, that Shorten told him there had been a payout to Wilson and “we are all moving on”.

Several things indisputably come down on Shorten’s side in disassociating from the Wilson slush fund, even if royal commissioner Dyson Heydon believes Kernohan. First, Shorten hailed from a younger generation; his rise to the top of the AWU postdated Wilson. Second, as author Aaron Patrick points out in his book Downfall: How the Labor Party Ripped Itself Apart, Shorten saved a basketcase AWU Victorian branch by fixing its finances and membership.

There is, however, a connection to Wilson that stands — and it is an uncomfortable one even if there are not Wilson-style criminal allegations. One thing Shorten appears not to have ditched in cleaning up the AWU is the general Wilson model for snaring large financial contributions.

No one suggests Shorten pocketed money like Wilson, but large sums of company money continued to flow into the union based on “side deals” outside registered enterprise pay deals. These sums were described in AWU accounts as money for “training” or “paid education” — but it is clear, as Melhem has admitted, that the money could be spent “more or less on anything”.

Asked about the Thiess John Holland deal, Melhem indicated this week he inherited the broad description of the funds from Shorten in 2006. “This arrangement was there before my time and continued when I became secretary as well,” he says. Interestingly, Melhem also accepted the AWU had “profited” from Thiess John Holland payments.

Shorten found an unlikely ally during last Sunday’s ABC Insiders program. Conservative contrarian Gerard Henderson said: “I don’t think that’s a very serious allegation. I mean, if employers want to put money into a union, they’re entitled to do it, and if Bill Shorten wants to get money from employers and put it in a union, I’m not too fussed about that.”

This is the Labor line, the Shorten line. Taken to its logical conclusion, it is an argument that could get all sorts of unions, including the militant Construction Forestry Mining and Energy Union, off the hook. Henderson took it as read that workers — as well as the AWU — scored a good result. Try telling that to workers at Chiquita Mushrooms, among possibly others, whose conditions were reduced as part of an AWU deal. One suspects Henderson is using relativism here, and might not use the same principle if talking about the big bad CFMEU.

The key, it would seem, is that Shorten’s was a moderate union. This newspaper in editorial columns has expoused the virtues of unions prepared to show flexibility, appreciating that maximising productivity and profitability are sound goals. They happily coincide with high employment — and higher union membership.

But a number of seasoned warriors this week have reacted with dismay at the suggestion it is OK for unions to make profits: to take money from employers in any form whatsoever. They thought the only objective was to deliver better conditions for workers who pay membership dues and expect the best collective representation.

David Marr, in his latest Quarterly Essay on Shorten, recounts the sage advice of respected former ACTU secretary Bill Kelty to a young Shorten that he had to be a “moderate” union leader: “That means increasing productivity. But you’ve got to be tough. You’ve got to have a fight.”

It is certain Kelty was not saying unions should take employer money whenever opportunities arise. Shorten made deals to shut out the CFMEU because employers wanted industrial stability, not mayhem. Shorten’s political career flourished. As Patrick puts it: “He would also control the ALP’s numbers in the party, which would allow him to put his own supporters in parliament, thus shoring up his future support base.”

How ironic. Shorten’s historical enemy, the CFMEU, proved to be his friend by driving employers into his arms.