Gillard failed to disclose slush fund's existence

TWO disgraced union officials were able to sell a Melbourne terrace house and keep fraudulently obtained money.

TWO disgraced union officials were able to sell a Melbourne terrace house and keep fraudulently obtained money after Julia Gillard failed to disclose to the union's national leadership, or to authorities, the existence of a secret slush fund she had helped set up for them.

Documents examined by The Weekend Australian show that at the time of the sale in February 1996 the leadership of the AWU, Bill Ludwig and Ian Cambridge, still had no inkling that a slush fund bearing the union's name had ever been established.

The AWU heavyweights could not take legal action to stop the sale because they lacked any knowledge of either the slush fund or of the terrace house that had been purchased by the slush fund.

The AWU was the client of Ms Gillard and of her employer, Slater & Gordon. However, the slush fund that bore the name of the union was never disclosed to the union heads by either the solicitor or her firm.

This is despite Ms Gillard having been closely questioned six months earlier - in September 1995 - by Slater & Gordon head Peter Gordon about the slush fund, the related fraud claims involving her then boyfriend, AWU official Bruce Wilson, and the terrace house in Fitzroy.

The firm's serious concerns after its own internal probe led to the AWU, Mr Wilson and fellow official Ralph Blewitt being abruptly dropped as clients of Slater & Gordon, and Ms Gillard leaving her job in September 1995.

Julie Bishop asked the Prime Minister in federal parliament on Thursday: "Why did not the Prime Minister herself report the fraud involving the Australian Workers Union Workplace Reform Association that she helped establish?"

Ms Gillard replied: "By the time the matters she refers to came to my attention, they were already the subject of inquiry and investigation."

Documents show that from August 1995 the AWU's national leaders, Mr Ludwig and Mr Cambridge, were openly and actively using legal and other measures to try to find out everything they could about possible fraudulent conduct, but were stymied by a lack of disclosure.

They did not discover until later in 1996 that the terrace house had been purchased in early 1993 with money from the slush fund.

Ms Gillard attended the 1993 auction and was involved in the conveyancing, and has always insisted she knew nothing of the slush fund's workings.

The house, which had been bought by Mr Blewitt with almost $100,000 in cash stolen from the slush fund - the AWU Workplace Reform Association - was sold for $230,000 in February 1996.

The beneficiaries from the sale of the house, Mr Wilson and Mr Blewitt, shared about $80,000 after the repayment of a loan from Slater & Gordon's mortgage lending scheme.

From August 1995, the AWU was doing an intense and public investigation of alleged fraud and seeking a freeze on unauthorised bank accounts, while Slater & Gordon was doing a separate, secret internal probe.

The AWU leadership was alerted to the slush fund for the first time on April 3, 1996, by a Commonwealth Bank officer, Andrew Chalker, who had been asked to identify and report back on every account related to the AWU.

It took several more weeks before the AWU heads received copies of cheques proving slush fund money had helped purchase the house.

The Prime Minister was asked yesterday if she would welcome a renewed police investigation, following Mr Blewitt's admissions to The Australian in August this year that he was involved in "sham transactions" and fraud with the slush fund.

Ms Gillard, who has repeatedly insisted she did nothing wrong and that she was never aware of the workings of the slush fund, said the police "can do whatever they want to do".

"Any authority that wants to do anything about any aspect of it is fine by me," Ms Gillard said.

"I'm not at all worried about anything to do with any of this, it's 17 years ago.

"The fact that the opposition is, in this sleaze atmosphere, is just telling people they haven't got any ideas for the future."

The slush fund secretly received more than $400,000 by issuing invoices in the name of the union for bogus work to major builder, Thiess Contractors.