AFP arrests Sydney construction figure George Alex, Michael Ibrahim’s wife Caitlin Hall

A building industry figure who was a target of the trade union royal commission has been arrested, along with the wife of a jailed drug smuggler.

Michael Ibrahim pictured with Caitlin Hall.

Federal police have restrained more than $20m in assets including 12 properties, 17 vehicles, 65 bank accounts, a caravan and a boat in a tax fraud investigation that has led to charges against a dozen people.

Sydney construction industry figure George Alex, targeted at the trade union royal commission, and the wife of jailed drug smuggler Michael Ibrahim were among those arrested by the AFP in dawn raids on Tuesday.

Search warrants were executed at 10 locations across Sydney, nine in southeast Queensland and two in the ACT.

The joint-agency investigation allegedly uncovered a crime syndicate using labour hire and payroll companies in the building and construction industry to siphon money that should have been paid to the Australian Taxation Office.

Federal police and partner agencies said on Wednesday that the investigation began in December 2018 as a result of AFP intelligence from other organised crime investigations. These are believed to include investigations into Ibrahim.

More than $17 million had allegedly been defrauded since July 2018, ending up in bank accounts controlled by syndicate members and associates and funding lavish lifestyles.

How the alleged fraud worked (via the Australian Federal Police, Australian Securities and Investments Commission and tax office):

“It will be alleged in court that the syndicate had effective control of labour hire companies undertaking legitimate work in the building and construction industry. The syndicate then outsourced the processing of their payroll services to separate payroll companies. This is usually a lawful practice that involves a payroll company processing the individual payment of employee wages, superannuation, insurance and tax obligations to the Australian Taxation Office (ATO).

“It will be alleged in court that the syndicate also operated and controlled these payroll companies for the sole purpose of not paying mandatory Pay As You Go Withholding (PAYGW) tax to the ATO.

“Employee and contractor wages, superannuation and insurance were correctly paid, but money allocated to be paid to the ATO for tax obligations was diverted and allegedly laundered through a variety of other entities. When a substantial tax debt was accrued by these payroll companies, the syndicate would abandon them and create new payroll companies in an attempt to continue the fraud and conceal their illegal activities.

“These funds were moved through other entities in an attempt to disguise its origin, before eventually being transferred into bank accounts controlled by syndicate members and their associates, including those belonging to a senior member of an Outlaw Motor Cycle Gang (OMCG) and the partner of an organised crime figure currently in prison.”

In 2016, notorious crime figure Pasquale Timothy Barbaro was shot dead in an ambush while getting into a Mercedes-Benz outside Mr Alex’s home in the Sydney suburb of Earlwood.

Federal police with sniffer dogs on Tuesday executed a warrant at the same Larkhall Ave home as part of the money laundering and tax evasion investigation, seizing a 2011 Porsche Cayenne.

Mr Alex was taken to the Southport watch-house and according to court records is facing charges of conspiracy to defraud and dealing with proceeds of crime.

Caitlin Hall leaves Surry Hills Police Centre in Sydney on Tuesday night. Picture: Richard Dobson

His 22-year-old son, Arthur, was arrested alongside him at the Surfers Paradise home, listed as renting for $1600 a week.

Caitlin Hall, wife of drug kingpin Michael Ibrahim, was also arrested at her home at Greystanes in western Sydney on Tuesday as part of the operation, involving the Australian Federal Police, Australian Tax Office and the Australian Securities and Investments Commission.

Ibrahim was in May sentenced to 30 years’ imprisonment for trying to import almost 1.8 tonnes of MDMA, 136kg of cocaine and 15kg of ice.

The AFP declined to comment on whether the raids were linked to the previous investigations into Ibrahim.

A spokeswoman said the raids were “part of an ongoing organised crime investigation”.

The trade union royal commission’s final report in 2015 said there was a “substantial body of documentary evidence” to show George Alex and associate Joseph Antoun made regular $2500 payments to CFMEU organiser Darren Greenfield in 2013 and possibly earlier.

In return, Mr Alex, Mr Antoun and businesses associated with them were alleged to have received special treatment from the CFMEU, including facilitation of new EBAs.

Businesses of Mr Alex and Mr Antoun weren’t treated as aggressively as they otherwise would have been when they owed workers money.

Mr Antoun was shot dead by a hitman in front of his partner at their home in Strathfield in Sydney’s west in December 2013.

The commission also heard evidence Mr Alex engaged in an elaborate “phoenixing” operation as the apparent principal behind labour hire companies supplying casual labour to building contractors.

George Alex is taken into custody at Surfers Paradise.

Phoenixing involves companies going into liquidation with unpaid worker entitlements and liabilities to parties such as the tax office, then being succeeded by a new company and the process repeating.

In his evidence at the commission, Mr Alex said terrorists Khaled Sharrouf and Mohamed Elomar regularly attended boxing training at his house – but he denied they were around for “muscle”.

Commissioner Dyson Heydon found Mr Alex’s evidence about Elomar and Sharrouf being present for boxing was “not credible”, and that the two men were among a group that “formed a protective and somewhat intimidating protective circle around (Mr Alex)”.

Mr Heydon referred Mr Alex – an undischarged bankrupt – to NSW Police and the NSW DPP for possible offences under the Crimes Act.

“In the witness box (Mr Alex) swung between charm, affability, anger, wild exaggeration and threats of violence.

“But one thing was constant: he was almost always unbelievable. He conveyed an impression of being a phoney.

“If not a crook, he was an associate of crooks.”

Tuesday’s raids are understood to be unrelated to the commission.

Mr Alex’s mother lives at the Larkhall Ave, Earlwood, home that was raided by police and it serves as his Sydney base when he’s there.