Scorching end to whistleblower Kathy Jackson’s day in the sun

It all came to a dramatic end for Kathy Jackson. With melted wings, she fell to earth in the ceremonial courtroom 6A of the Federal Court in Melbourne when judge Richard Tracey found yesterday that the corruption-busting union boss had herself rorted more than $1 million of members’ money.

It was a decision that could have unanticipated consequences for Jackson’s partner, Fair Work Commission vice-president Michael Lawler, as the Health Services Union comes calling for money Justice Tracey says was stolen by Ms Jackson to pay for luxury holidays, shopping, wining and dining.

Mr Lawler has lived with Ms Jackson for many years, their financial affairs co-mingled in a number of bank accounts, details of which Ms Jackson submitted in affidavits to the court.

In recent months, Mr Lawler attempted to conclude a transfer of the couple’s home from her name to his, ahead of the HSU actions in court.

Mr Lawler, who earns $435,000 a year, has supported Ms Jackson throughout her war with her former employers at the HSU and has been on fully-paid sick leave for nine months since June last year, although he recently returned to work at the commission.

Given his substantial salary, there is no suggestion that Mr Lawler has benefited in any way from union funds.

Jackson's time to pay

He did not respond to questions from The Australian as to whether he had taken holidays, work trips or other travel with Ms Jackson on any of the travel dates noted in Justice Tracey’s decision.

And he did not respond to questions on whether he knew the whereabouts of a work of art bought at auction by Ms Jackson in January 2009. Portrait of Catherine Hattam is a minor charcoal sketch, stylistically outside the general oeuvre of the artist, Charles Blackman, but bought for $4636 on a union credit card.

Among the raft of findings by Justice Tracey was his observation that the mindset of a factional warrior such as Ms Jackson readily evolved into a sense of entitlement to use the union’s resources for personal interest.

He found she had established a $284,500 slush fund and steadily transferred most it to herself until the union account was entirely depleted in 2013.

The money was used, according to the union’s analysis, to stoke Ms Jackson’s personal bank accounts, on a divorce settlement for a previous marriage (before she established a household with Mr Lawler), and on large sums for travel and shopping.

Union credit cards were used for hundreds of thousands of dollars more on travel, shopping, entertainment, extravagant food, alcohol, menswear, children’s items, homewares, electrical gadgets and computers.

Justice Tracey ordered Ms Jackson to pay $1.4m in damages to the HSU — an order that is tangled by Ms Jackson’s move on the eve of the trial to file for bankruptcy.

The stunning reversal of fortune for Ms Jackson, who painted herself as a Boadicea in the vanguard of whistleblowing against union corruption, has left crumpled the accolades of recent years from some of the most senior members of the federal government, led by Tony Abbott, who described her as a figure of heroic courage.

But as the HSU closed in on Ms Jackson’s own conduct, the rave reviews from the government — and especially from Employment Minister Eric Abetz, who had accorded her high praise for courage in exposing rorting in the HSU — dried up.

Now, with both the Royal Commission into Trade Union Governance and Corruption and a Victoria Police fraud squad looking into allegations against her, yesterday’s Federal Court decision provides a backdrop to potentially far worse results for Ms Jackson.

She attempted to inoculate herself against the HSU action by filing for bankruptcy on the eve of the trial, on June 29 this year, and her statement of affairs named Mr Lawler as a creditor after he asserted that she owed him for mortgage payments made on the couple’s house and school fees for her children.

But Mr Lawler has not yet been accepted as a creditor by the bankruptcy trustee, the insolvency expert Paul Leroy at Hall Chadwick.

The HSU however, has been admitted as a significant creditor in the Jackson bankruptcy following the Federal Court ruling, given that the court had the opportunity to look at both sides of the case, including Ms Jackson’s numerous affidavits.

In the situation of Mr Lawler, his position as a creditor remains simply a claim listed in Ms Jackson’s statement of affairs.

His claim will need to be supported by evidence before it is accepted as part of Mr Leroy’s investigation.

As part of that investigation, the trustee will look for assistance from the HSU and will be open to looking into other past transactions by Ms Jackson that may warrant investigation.

With creditors playing a key part in the bankruptcy process, in is conceivable that the trustee may find himself caught in the middle as Mr Lawler and the HSU duke it out.

Mr Lawler recently returned to work after many months of sick leave, and was listed for a hearing yesterday morning at the Fair Work offices on William Street in Sydney.

Today, he is listed for hearings at 10am, 1pm and 4.15pm, suggesting a late return to Wombarra, 65km south of Sydney, where he and Ms Jackson live on a large property overlooking the ocean and set amid rainforest.

Their home is likely to play a central part in the fight over Ms Jackson’s estate, given significant price growth in this area over the past year.

The home has also been the centre of controversy after the HSU outlined its case in June, arguing that Mr Jackson siphoned unauthorised union funds into an earlier mortgage she held on a home in Balwyn, in Melbourne’s east, and then, upon the sale of that home, transferred the $620,000 profit into a $1.3m home in Wombarra shared with Mr Lawler.

Mr Lawler guaranteed the Wombarra loan and paid the ongoing mortgage.

Nine months later, Ms Jackson transferred half of the ownership of the Wombarra property to Mr Lawler for no cost, as permitted to de factos under NSW property laws.

The couple attempted to shift the other half of the property
into Mr Lawler’s ownership this year but was blocked by the Federal Court.