Inquiry hots up after Boral chief stars

THE CFMEU, ACCC and our legal system have been found lacking.

WHEN Peter Head and Paul Dalton walked into Auction Rooms cafe in North Melbourne on April 23 last year, John Setka and his deputy, Shaun Reardon, were waiting for the two Boral managers. For the previous two months, Setka, the Victorian secretary of the Construction Forestry Mining and Energy Union, had overseen bans on the supply of Boral concrete to Melbourne building projects where the CFMEU had a presence.

Boral and the union were not directly in dispute. The CFMEU was targeting Boral because it was the exclusive Victorian supplier of wet concrete to prominent construction firm Grocon. The union wanted to hurt Grocon, whose chief executive Daniel Grollo remains in bitter conflict with Setka and the CFMEU.

According to Dalton, Setka did most of the talking, telling the Boral duo that “concrete supply is like an intravenous drug — builders can’t survive without it’’.

“We’re at war with Grocon and, in a war, you cut the supply lines,’’ Setka allegedly said. “Boral Concrete is the supply line to Grocon.’’

Dalton said Setka urged Boral to stop supplying Grocon for two weeks, offering to have the union blockade the company’s plants so “no one would have to know that you have stopped supply’’.

Dalton refused, saying Boral would continue to support Grocon and “we will not be doing any deals with the CFMEU’’.

Setka allegedly replied: “All wars end and once peace is established the CFMEU will be at the table to divide up the spoils. The CFMEU will decide who gets what and what market share Boral will get. You’ll have no loyalty from any of the builders.’’

The meeting ended after 45 minutes, upon which Head and Dalton said they returned to Head’s car to write notes of the meeting.

These notes and their witness statements were key exhibits this week as the Abbott government’s Royal Commission into Trade Union Governance and Corruption held three days of hearings into the CFMEU.

The commission’s star witness was American-born Boral chief executive Mike Kane, who used his time in the witness box to rail against the union’s conduct, the alleged complicity of Boral competitors, and the inadequacy of legal remedies in light of the union allegedly defying injunctions to end the bans.

“It’s my considered opinion, based on 41 years in the construction industry, that on the construction sites in Melbourne the law doesn’t apply, the law is applied by the CFMEU,’’ he told the hearing.

Accusing the union of engaging in a “criminal conspiracy’’ to interfere in the marketplace, he said the CFMEU’s alleged conduct amounted to “blackmail’’. “We have complained to the (Australian Competition & Consumer Commission), we have complained to every federal and state government agency that would listen to us, and as we sit here today in the Melbourne CBD, it’s in full force and effect,’’ he said.

Claiming that Boral was “roadkill’’ in the union’s attempts to gain control over Melbourne high-rise construction sites, Kane said: “When I look at the gravity of the evidence submitted in that meeting with my people in Melbourne and John Setka, where he basically offered the blackmail, where he went and basically said he was going to be the one carving up market share: if a management person had said anything like that in a meeting anywhere that was recorded, that person would be facing criminal charges.’’

Indeed, Kane has “respectfully’’ suggested to the commission that it exercise its legal powers and refer Setka’s alleged conduct to Victoria Police for investigation under the blackmail provisions of the Crimes Act.

As counsel assisting the commission Jeremy Stoljar SC pointed out, the maximum penalty for blackmail is 15 years’ jail.

In a 13-page letter to the commission, Kane advocated a raft of legal changes broadly designed to give greater powers to regulators and constrain unions.

They included the legal ability for governments to be able to “swiftly’’ invoke deregistration proceedings against unions that “engage in a pattern of violating the law’’.

“Our business has been threatened with a permanent removal of market share that we have built up over 50 years by bullies unlawfully exercising, for nefarious end, power entrusted in them by mostly law-abiding union members,’’ he wrote.

“I used to believe that this type of racketeering could only flourish in the shadows.

“But, apparently, in Melbourne, on high-rise construction projects, the law as it stands is largely an impotent observer to the behaviour of these thugs, cowards and bullies.’’

Royal commissioner Dyson Heydon appeared impressed by Kane’s evidence, telling the qualified Illinois lawyer he was making “powerful points’’.

At the conclusion of his evidence, Heydon told Kane: “If anyone within Boral does have ideas for the future regulation of institutions so as to avoid this happening in the future, we’d be interested in seeing that.’’

Under the commission’s procedures, lawyers for the CFMEU were unable to immediately cross-examine Kane or any of the other witnesses who have provided damaging testimony about the union’s alleged conduct.

Before being able to question Kane, the union must provide a statement from another witness bearing on the accuracy of his evidence. The union must identify “with precision’’ which topics it wishes to cross-examine Kane on.

This process imposes challenges for the union. If, for example, it wanted to try to contradict the claims by Kane that Setka engaged in “blackmail’’ during his meeting with Head and Dalton last year, it would potentially have to provide a sworn statement from Setka and open him to cross-examination by Stoljar.

The CFMEU made a strategic decision to have Dave Noonan as its sole media spokesman on the royal commission.

Setka has remained silent, save for two broad denials issued on Twitter this week.

Given there are ongoing legal proceedings between Boral and the union, union sources said they were concerned that Boral’s lawyers could use Setka’s commission testimony to assist their strategy in the court cases.

That said, the CFMEU is being smashed in the public arena, with the union subject to days of screaming headlines and damaging media coverage.

Outside the commission, Noon­an has accused Kane of trying to “make Australia more like America’’. “You wouldn’t think this is a company who itself have been heavily fined for breaches of the Trade Practices Act,” he said.

“This is a show trial. The real court cases happen in real courts. Mr Kane was not subjected to cross-examination.

“It could not be described as evidence, it was a political speech.

“I don’t think Australians need to be lectured by multi-millionaire executives of foreign corporations on how the law could work better for those multinational corporations.”

But Noonan’s defence has been dwarfed by coverage of testimony by Kane, builders and swearing unionists, including an audio recording of Setka telephoning an employer to complain about a “f..king dog Turkish f..king panting piece of shit on your job’’.

Beyond the CFMEU, the ACCC’s handling of its investigation into the Boral allegations is under renewed scrutiny.

Kane complained that he could not understand why the ACCC had not moved faster against the union

“This is, to me, a blatant antitrust violation and so I don’t even understand what the issue is as to why the ACCC cannot quickly, quickly move in this matter, but they’ve not,’’ he said.

According to Kane, the ACCC said it could not get witnesses to give evidence or corroborate Boral’s claims. The criticism and the length of time taken by ACCC investigators has been exploited by critics of the current system.

Master Builders Australia wants responsibility for investigat­ing secondary boycotts in the building industry shifted from the ACCC to the building industry watchdog overseen by Nigel Hadgkiss.

Master Builders chief executive Wilhelm Harnisch said the industry was “perplexed’’ as to why the ACCC had taken so long to act on the Boral allegations.

“In terms of secondary boycott issues, I think all of the evidence before the royal commission highlights that there are massive instit­utional gaps in applying the secondary boycott provisions,’’ Harnisch said.

“This gap has been exploited by the CFMEU through its brutal use of raw, illegitimate power.’’

Undoubtedly, one of the government’s objectives is to seek to exploit the royal commission to strengthen the Coalition’s case for the re-establishment of the Australian Building and Construction Commission.

On the day Kane gave evidence to the commission, Nationals senator Bridget McKenzie stood up in federal parliament to call on the ACCC “to immediately act on union corruption’’ in Victoria, her state.

“I would really recommend that the ACCC move forward on this issue,’’ she said. “It is not good enough: Boral says it is losing up to $10 million to $12 million a year because of this behaviour and we need to address it sooner than later.’’

The commission is due to report by the end of the year. Expect Heydon to recommend a suite of legislative measures that the government will seek to implement to clamp down on unions and weaken the institutional power of the labour movement.