Police expose cracks in AWU fraud scandal

ONE of the best kept secrets in Australian politics and legal circles for 20 years has been the remarkable story of how Bruce Wilson allegedly engineered a major fraud in the 1990s by siphoning hundreds of thousands of dollars into a union fund that his then girlfriend and solicitor, Julia Gillard, had provided legal advice to help establish.

A major reason why this secret has, until relatively recently, been played down as a fanciful conspiracy theory by those who have either had much to lose or been blinkered by their own politics and prejudices can be traced to the doctrine of client legal privilege. The privilege has worked like a protective shield over Mr Wilson.

As a client at the time of Slater & Gordon, the Melbourne-based law firm, Mr Wilson has long enjoyed the comfort of believing that the instructions and information he gave to his girlfriend and solicitor in the 1990s, Ms Gillard, and to her boss in the firm's industrial unit, Bernard Murphy, were privileged and would remain confidential.

But in the Melbourne Magistrates' Court yesterday, large cracks in Mr Wilson's shield began to appear. The cracks are being opened up by police.

GRAPHIC: AWU: The players

PDF: The Wilson application

For all of this year, Detective Sergeant Ross Mitchell, of Victoria Police's Fraud Squad, has been in charge of a methodical investigation into the Australian Workers Union slush fund scandal.

Detectives have travelled throughout Australia to interview witnesses, take statements and seize documents. They are putting together the evidence of an alleged fraud that the AWU's former national head, Ian Cambridge, now a Fair Work Australia commissioner, first raised in 1995 and is still determined to see resolved. It was an alleged fraud that culminated in a chunk of ill-gotten cash used to buy a terrace house at Kerr Street, Fitzroy, for the use and benefit of Mr Wilson.

One of its two architects, Mr Wilson's former mate and sidekick Ralph Blewitt, comprehensively admitted his involvement in interviews with The Australian, and in subsequent detailed statements to Victoria Police, last year.

Three months ago, Detective Sergeant Mitchell quietly obtained a search warrant, No 1536/13, authorising the seizure of hundreds of documents from Slater & Gordon's offices at 485 Latrobe Street, Melbourne.

The warrant, details from which were provided to The Australian yesterday after formal application to the Magistrates' Court, sought the following: "Files which include but are not limited to all documents relating to Ralph Blewitt, Bruce Wilson, Julia Gillard, the Australian Workers Union Workplace Reform Association and property at 1/85 Kerr Street, Fitzroy, which include all personnel files belonging to Julia Gillard including her invoices/billings, time sheets and travel records, personnel files belonging to 'Elisha' and 'Lisa Hargraves', the Australian Workers Union, deed register, the exit interview conducted between Julia Gillard and Peter Gordon on the 11th September 1995, partnership meeting documents pertaining to Julia Gillard and the AWU, the conveyancing and mortgage file relating to the $150,000 loan to Ralph Blewitt for the purchase of 1/85 Kerr Street, Fitzroy, and any other relevant documents to this enquiry that may be discovered."

But Detective Sergeant Mitchell and the lawyers advising him and the Fraud Squad also anticipated a challenge by Mr Wilson - a claim that "client legal privilege" should prevent the police from making use of the material that was taken from the law firm.

This is why Detective Sergeant Mitchell stated in the document in the Magistrates' Court yesterday that in the event of such a claim by Mr Wilson police would argue that "client legal privilege should be rejected on the grounds that the contents of the documents prepared by Mr Wilson or solicitor/s at Slater & Gordon (or both), were made in furtherance of the commission of a fraud or an offence". In this context, Detective Sergeant Mitchell cited section 125 of the Evidence Act of Victoria.

This section of the Evidence Act states that client legal privilege can be lost under certain circumstances, including if "a communication made or the contents of a document prepared by a client or lawyer (or both) ... in furtherance of the commission of a fraud".

The section also extends to "a communication or the contents of a document that the client or lawyer (or both), or the party, knew or ought reasonably to have known was made or prepared in furtherance of a deliberate abuse of a power".

Facing the prospect of fraud charges over the scandal, Mr Wilson now needs to persuade a court that the confidential documents should not be permitted to come back to haunt him, Ms Gillard or anyone else. Mr Wilson and Ms Gillard have strenuously denied wrongdoing.

The transparency of Nick Styant-Browne, a former equity partner of the firm who last year disclosed to The Australian highly sensitive documents, including a transcript of the September 1995 tape-recorded exit interview between Ms Gillard and the firm's then head, Peter Gordon, has given the police a helpful start.

Access to the seized documents would be the icing on their evidentiary cake.