Jeff Kennett queries AWU slush fund payments

JEFF Kennett wants building giant Thiess to explain publicly why it paid more than $110,000 into a union slush fund.

JEFF Kennett wants building giant Thiess to explain publicly why it paid more than $110,000 into a slush fund run by allegedly corrupt union boss Bruce Wilson, after Thiess had won a lucrative contract from a public utility, Melbourne Water.

Mr Kennett said he was surprised and annoyed at learning from The Australian of the secret deal, brokered while he was Victorian premier in the early 1990s with a mandate to pursue privatisation and cut unnecessary costs from the state’s struggling economy.

Key documentary evidence in a current Victoria Police Fraud Squad investigation shows that Thiess paid more than $110,000 in Melbourne Water-related “consultancy fees” into the slush fund, known as the AWU Workplace Reform Association. It appears from the documentation that at least some of these fees were charged back to Victorian taxpayers by Thiess.

In addition, hundreds of thousands of dollars were paid by Thiess for non-Melbourne Water “services”, with the money going to the same “workplace reform association”.

The AWU established the association with legal advice from Mr Wilson’s then girlfriend, Julia Gillard, a solicitor at Slater & Gordon and legal adviser to the AWU.

Ms Gillard subsequently told her senior colleague, Peter Gordon, in a tape-recorded interview that it was really a “slush fund” to raise money for union elections. The former prime minister and Mr Wilson have strenuously denied any wrongdoing, with Ms Gillard saying she had no knowledge of the fund’s operations.

Documents show that invoices were generated by the slush fund to enable payment by Thiess for the “provision of consultancy service for Melbourne Water as per agreement”.

Mr Kennett said if he had been alerted to the payments at the time, he would have been alarmed and it could have led to Thiess being stripped of the taxpayer-funded contract it had won in 1993 to carry out Melbourne Water services.

“If this had been brought to my attention, I would have told the head of Thiess to tell me what was going on, within five working days, and it could have resulted in a show cause as to why Thiess should even continue with the contract,” Mr Kennett said.

“I cannot think of a legitimate reason to pay it. I had no idea of it, and I don’t think the minister (for Melbourne Water) had any idea of it.

“It is just not the sort of thing we would have condoned.

“The fact is that it has gone on in secret. It is something that is not part of the norm, either with the invoicing or the collection of the money. It gives rise to greed, it gives rise to corruption. And if it was a regular practice, you have to ask if Thiess, a company which has had a huge impact on Australian construction for years, has changed its practices from then to now.

“Bruce Wilson was a wildcard in the union movement, but that does not excuse Thiess in their behaviour.

“When these sorts of corrupt practices occur, they also drive up the costs. What’s worrying is how much more of it has been going on with others.”

The invoices from the slush fund started just weeks after the Melbourne Water Corporation, a public utility under the Kennett government, made a policy shift to outsource some of its work, and asked contractors to register to provide maintenance services for water supply, sewerage and drainage systems.

The success of Thiess in winning the $37 million maintenance contract with Melbourne Water hinged on Thiess showing “a proven ability in enterprise bargaining” as many of the utility’s staff were union members.

Fraud Squad detectives have been told Thiess achieved industrial peace from the AWU and had few industrial concerns while payments to Mr Wilson’s slush fund were being made.

Detective Sergeant Ross Mitchell has told the state’s Chief Magistrate, Peter Lauritsen, that he was investigating four types of offences in relation to Mr Wilson and others: obtaining property by deception; receiving secret commissions: making and using false documents; and conspiracy to cheat and defraud.

A newly established royal commission led by former High Court judge Dyson Heydon into union wrongdoing has been given terms of reference to probe the AWU slush fund and other wrongdoing by unions.

One of the seven Melbourne Water-related invoices seen by The Australian includes a handwritten note, understood to have been made by a Thiess employee, that states “OK to pay — cost to Melbourne Water”.

Police have been told this meant that at least some of the slush fund payments by Thiess to Mr Wilson were being charged to Melbourne Water.

A Thiess public report on the Melbourne Water contract to shareholders at the time stated: “Thiess’s industrial relations skill accelerated the transition to improved work practices. Even before the contract was signed, an enterprise agreement was negotiated with employees and the AWU.

“The agreement involves improved rates of pay with clearly identified performance incentives, accredited training programs for multi-skilling and a five-step competency rating system.”

Former Thiess executives Joe Trio, the brother-in-law of Mr Wilson, and Nick Jukes have denied any wrongdoing and have insisted that to their knowledge they were paying for legitimate services by the AWU.

The chief executive of Thiess at the time, Martin Albrecht, told The Australian yesterday that recent revelations about the slush fund and payments by the company that he led through the 1990s and subsequently were an “enlightenment”.

“I was not aware of all the nuances, and I am now making my own inquiries as well,” Mr Albrecht said. “It’s not without precedent that you have to make agreements with unions on specific projects, but if you are asking me if I known then what I know today, the answer is no.”

The seven Melbourne Water-linked invoices from the AWU slush fund to Thiess are unusual for not bearing a street address, nor the name of a contact person, nor a telephone number, but all were paid. The address for the invoices was a West Australian post office box.

Cash paid by Thiess into the AWU slush fund was used to buy a terrace house in Fitzroy in Melbourne in the name of one of the union’s officials, self-confessed fraudster Ralph Blewitt, at an auction Ms Gillard attended with Mr Wilson, who was the successful bidder.

The former prime minister’s law firm at the time, Slater & Gordon, performed the conveyancing for the property transaction, and arranged the balance of the finance.

Additional reporting: Michael Smith