Blackmail charges for two Victorian CFMEU leaders

Two of Australia’s most powerful construction unionists have been charged with blackmail.

Union leader John Setka is one of two CFMEU officials to be charged with blackmail. Picture: Aaron Francis

Two of Australia’s most powerful construction unionists have been charged with blackmail as a year-long investigation into Victorian CFMEU state secretary John Setka and his deputy, Shaun Reardon, arising from the trade union royal commission, culminated in dramatic arrests.

The arrests yesterday morning of Mr Setka and Mr Reardon for allegedly blackmailing concreting firm Boral during a protracted ­industrial war coincided with Bill Shorten unveiling measures aimed at “deterring and detecting corruption” in trade unions. Pre-empting royal commissioner Dyson Heydon’s final report to the Governor-General this month and seeking to address damning allegations of fraud in the Nat­ional Union of Workers, the ­Opposition Leader pledged to bolster penalties for officials and ­auditors engaged in wrongdoing.

He also promised to extend the Australian Securities & Investments Commission’s remit to regulate “serious” breaches by union officials to build “transparency and accountability” in unions, should Labor win government. “Recent revelations of theft and the flagrant misuse of union members’ money by a small number of union officials are utterly unacceptable and require a tough, fair and effective response,” Mr Shorten said.

The reforms were branded “hollow” by Master Builders Australia chief executive Wilhelm Harnisch, while Employment Minister Michaelia Cash claimed the announcement was a “stunt”.

Police have spent the past year building a case against Mr Setka and Mr Reardon for the alleged blackmail of Boral during the Construction Forestry Mining and Energy Union’s long dispute with construction giant Grocon.

The CFMEU complained of “overkill” and “theatrics” yesterday after federal and Victorian state police from the Heracles taskforce swooped on Mr Setka while he was driving, arresting him in front of his children, aged three and two.

Mr Reardon was arrested at his home in Ocean Drive, near Geelong, and taken to Melbourne to be charged.

Mr Setka, 51, and Mr Reardon, 47, were bailed yesterday after about two hours in police custody and will appear in Melbourne Magistrates’ Court tomorrow, where they will plead not guilty.

Peter Head, general manager at Boral Concrete, Southern Region, and company official Paul Dalton testified at the royal commission that Mr Setka and Mr Reardon warned at a meeting in 2013 that the CFMEU would continue to escalate a black ban against the company if it did not block supplies to Grocon.

“By making that demand, Mr Setka may have committed the criminal offence of blackmail, ” Mr Heydon, the royal commissioner, said in his interim report in ­December last year. “Mr Reardon also may have committed the offence of blackmail or may have aided and abetted Mr Setka and may be liable as an accessory.”

Mr Head told the royal commission that Mr Setka said “words to the effect … ‘the CFMEU is at war with Grocon’, and ‘if you want to starve the enemy, you cut their supply lines’ ”.

Mr Setka also allegedly said “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”.

Mr Heydon said Mr Setka was also possibly guilty of coercion under industrial laws.

Australian Federal Police sources said it took a year to make sure the evidence was in an “admissible” form.

The CFMEU has this year paid $9 million to Boral and $3.55m to Grocon to settle lawsuits.

Mr Shorten yesterday denied the commission had forced his hand, claiming the measures would help ensure “unions remain strong and modern”. “Labor has identified a ­problem and we’re separating it from the politics, unlike the ­Abbott-Turnbull government,” he said, promising higher penalties for “egregious” conduct by officials and auditors and $4.5m to the Fair Work Commission.

Senator Cash said: “The Labor Party has waited until parliament has risen for the year to announce a half-baked attempt to clean up the union movement.”

She called for Labor to back “vital” legislation proposed by the government, the Registered Organisations Act, and the reinstatement of the building ­industry watchdog, the Australian Building and Construction ­Commission.

Senator Cash said the government would await Mr Heydon’s report before deciding on its own reforms “to further reform and strengthen union governance”.

Labor also pledged to reduce the disclosure threshold for political donations from $13,000 to $1000 and extend whistleblower protection

“At the core of the Liberals and their political ideology is a desire to destroy the ability of unions to ­effectively represent workers, making it easier to rip away pay and conditions like penalty rates,” Mr Shorten said.

Mr Harnisch said he welcomed the “overarching statement” of Labor’s reforms, but added that “unless the ALP commits itself to dealing with the culture of bullying and intimidation, then the building industry look at these proposals as tokenism”.