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Health Services Union expenses affair
Also known asCraig Thomson affair
Participants
Inquiries
Convicted
  • Craig Thomson
  • Michael Williamson
Charges
  • Theft (Thomson)
  • Fraud (Thomson and Williamson)
  • Fabricating invoices (Williamson)
  • Hindering police (Williamson)
Verdict
ConvictionsAs of 18 February 2014 conviction and sentence pending.

The Health Services Union expenses affair was an Australian political scandal that concerned criminal activities associated with the financial affairs of the Health Services Union of Australia (HSU), between 2006 and 2007; and the Health Services Union "east branch" (HSUeast) between 2006 and 2011.[1][2]

Following regulatory and administrative investigations and criminal trials, on 18 February 2014 Craig Thomson, a former national secretary of the HSU and a former Labor politician, was found guilty of theft and defrauding the HSU in order to pay for personal expenses.[3][4][5][6]

In October 2013, Michael Williamson, a former national president of the HSU, a former general secretary of HSUeast, and a former union and Labor power broker, pleaded guilty to two charges of fraud totaling nearly A$1 milion, one charge of fabricating invoices and another charge of recruiting others to hinder a police investigation.[7] An earlier independent report commissioned by the union detailed that companies associated with Williamson and his family had allegedly fraudulently received more than $5 million from the union in period from 2006 to 2011.[7]

As of 18 February 2014 civil proceedings against Thomson and Williamson are pending.

Background

The Health Services Union (HSU) is a specialist health union that had around 60,000 members working in all areas of healthcare across Australia.[when?] The membership of the union includes doctors, nurses and allied health professionals such as physiotherapists and radiographers, ambulance officers, clerical and administrative staff, managers and support staff.[8][9]

Thomson started his career representing hospital and ambulance workers in New South Wales as an industrial officer for the Health and Research Employee Association (HREA). He became head of the HREA Industrial Department. He was subsequently elected to the position of Assistant Secretary.[10] In 2002, Thomson was elected as the national secretary of the HSU, a trade union with which the HREA had merged.[11] During his term at the union it was rebranded as a united federal union and the state branches adopted similar names and logos. After a seemingly successful career in the union movement, Thomson was endorsed as Labor's candidate for the federal seat of Dobell on the NSW Central Coast and won the seat at the 2007 federal election.[11][12] He was re-elected as the Member for Dobell in 2010, representing Labor.

Williamson rose to prominence as an official of the HSU, representing the interests of low-paid workers in the health sector in New South Wales and then Australia. Williamson was general secretary of HSUeast, covering New South Wales, Victoria, the Australian Capital Territory and Queensland, serving in this role between 1997[13] until June 2012. He was elected as the inaugural national president of the union in 2003[14] until October 2011. He was elected as the national president of the Australian Labor Party, serving between 2009 and 2010; and was a vice president of NSW Labor.[15] Williamson was also a vice president of Unions NSW until April 2012. He was a member of the national executive of the Australian Council of Trade Unions (ACTU);[16] a trustee of First State Super; and a non-executive director of SGE Credit Union,[16] a credit union for NSW Government employees.

Following Thomson's move into politics, his successor as national secretary was Kathy Jackson, who rose through the ranks of the HSUeast branch and its predecessors in Victoria, Jackson was aligned with Labor's moderate Unity faction, and a factional enemy of both Thomson and Williamson.[citation needed]

Allegations of impropriety

Succeeding Thomson as general secretary of the HSU in January 2008, Jackson identified financial irregularities in the union's accounts and engaged external auditors to investigate. Reporting in May, the audit raised "concerns about evidence of misuse of union funds by Mr Thomson."[11] In December, the union engaged tax specialists BDO Kendall to "conduct an investigation" over the alleged improper use of Thomson's union-issued corporate credit card. The Sydney Morning Herald revealed the allegations in April 2009; Thomson denied all wrongdoing and stated that an independent audit had not identified any inappropriate use of the card, noted that other people would have been able to incur charges on the account, and said the accusations had been fabricated by rivals within the HSU.[2]

Inquiries by Australian government agencies

Fair Work Australia, the federal workplace relations regulator and tribunal, conducted a three-year investigation into improprieties in the use of union funds involving both the Victorian No. 1 Branch, and the national office of the HSU.[17] On 23 December 2011, the appointed investigator, Terry Nassios, produced the Victoria No.1 report, which was publicly released publicly on 16 March 2012.[18] The report, consisting of 183 findings, was tabled in the Senate on 7 May 2012. Within this report, 153 findings pertained to Craig Thomson's breaches of union rules and sections 237(1), 285(1), 286(1), and 287(1) of Schedule 1 of the Workplace Relations Amendment (Registration and Accountability of Organisations) Act 2002 (Cth).[17][19]

The Fair Work Australia investigations were criticised for failing to investigate the finances of the HSU following a petition in July 2009 by the members of HSU No. 4 Branch.[20] On 15 October 2012 Fair Work Australia launched civil proceedings against Thomson related to his use of HSU funds. Thomson stated that he would contest these charges.[21]

Following the release of the Fair Work Australia report, the Australian Federal Police commenced investigations. Thomson claimed he was not one of the five people of interest.[22][23][24]

Other investigations

Following a 2011 resolution of the Union Council of the HSUeast branch, an investigation into the financial affairs of the branch was conducted. The Union Council resolved to seek counsel from the President of the New South Wales Bar Association to select an independent panel of experts to investigate:[25]

  • adequacy of governance arrangements and business practices of HSUeast;
  • access to financial and business related information for union members to ensure transparency and scrutiny;
  • policies and procedures and potential conflicts of interest for office bearers, or staff that hold directorships or shares/ownership in companies that supply goods to HSUeast;
  • policies around the use of HSUeast credit cards; and
  • other matters the panel deems appropriate.

Following an interim report delivered in April 2012 and a final report delivered in July 2012, Ian Temby AO QC and Dennis Robertson, an accountant, found that $20 million was paid by HSUeast without any form of tendering or contract. This included $5 million paid to companies operated by Williamson and his wife.[25][26] Prime Minister Julia Gillard commented It's clear that there have been real problems at the HSU. That’s distressing I think to everyone who cares about working people.[27]

Meanwhile, NSW Police officers raided the union's Sydney office on 2 May 2012, seizing documents and computers as part of the "Strike Force Carnarvon" investigation into secret commissions allegedly received by Williamson and Thomson. Williamson was intercepted in a basement attempting to remove a bag of documents.[28][29]

Credit card misuse by an official of the national office of the HSU

The Fair Work Australia (FWA) report concluded that Thomson had spent almost $270,000 of HSU funds on his 2007 election campaign to win the seat of Dobell on the NSW Central Coast. This included $200,000 for two staffers who worked on the campaign, and another $71,000 directly expended on the campaign. Other money, including from Thomson's union credit card, was used to pay for office supplies including furniture and utility connections.[30]

Following his successful election campaign at the 2007 federal election[31] Thomson resigned from the HSU on 14 December 2007. On 18 May 2012 it was reported that Terry Nassios, the FWA investigator said he was unsure if some payments had been made on the card after that date and that he was recommending the payments after the resignation date be reported to the public prosecutor for investigation.[32]

During Question Time on 16 August 2011, Prime Minister Gillard was asked if her confidence in Craig Thomson was based on a thorough investigation of his credibility. She replied, "I have complete confidence in the member for Dobell. I look forward to him continuing to do that job for a very long, long, long time to come."[33]

Gillard later moved to suspend Thomson from the ALP on 29 April 2012, saying "At the moment, Australian voters see a dark cloud over Parliament. I have made a judgment about the Parliament and about respect for the Parliament. There is a line which has been crossed here." She said the decision was solely hers but that Thomson agreed with her. Later he stated that he had had different reasons for leaving the party than those given by the PM.[34]

In his speech to the House of Representatives on 21 May 2012 Thomson said that there were credit cards which showed expenditure on escorts and prostitutes for at least two other officials.[35] He implied that Jeff Jackson, a former HSU executive member and the former husband of HSU National Secretary Kathy Jackson was one of two officials responsible for the spending on prostitutes, a claim earlier made by HSU branch president Pauline Fegan.[36] Thomson's allegations were rejected by union figures he named as being able to support his claims, including his half-brother, former union official Struan Robertson.[37]

Thomson questioned the impartiality of the investigation. Michael Lawler the Vice President of FWA was involved in internal HSU politics at the request of his partner Kathy Jackson. Jackson allegedly supplied most of the documents used by the FWA in its HSU National Office investigation.[38]

FWA's Nassios, citing a newspaper report, stated $15,000 had been repaid by Jeff Jackson in settlement of three payments of $5,000 identified as "back pay" dishonestly claimed.[39] When asked by Fair Work Australia to clarify if this claim pertained to Jackson, Thomson declined to provide any details, citing legal advice.[36]

On 15 October 2012 Fair Work Australia launched civil proceedings against Thomson related to his use of HSU funds. Thomson stated that he would contest these charges.[21]

Thomson was later arrested and found guilty of defrauding the HSU.[40]

Financial irregularities within the HSUeast branch

Williamson, a former National President of the Australian Labor Party, served in dual capacities within the HSU - as the National President of the HSU, and the General Secretary of the HSU East Branch - until all positions were declared vacated by the Federal Court in 2012.[41] He was named in the Temby report as engaging in irregularities, such as placing family members in union jobs, paying inflated prices for services, and heading United Edge, a company supplying information technology services to the union.[42][43][44][45][46]

On 4 October 2012, Williamson was charged with offences relating to fraud and obstruction of justice, and was suspended as director of United Edge.[47]

  • he was suspended as president in October 2011.[48]
  • until June 2012 when the Federal Court dismissed all elected union officials and appointed an administrator to dissolve the "east branch" of the union.[49]
  • April 2012 when he resigned after being asked to explain to its executive why he should not be removed.[50][51]

Suspension of the HSU from the Australian Council of Trade Unions

In April 2012 the Australian Council of Trade Unions voted[52] to suspend the membership of the HSU on the basis of corruption.[53] Following government action, the Federal Court of Australia removed the union's national executive and appointed judge Michael Moore as administrator.[54]

On 15 May 2012, ACTU president Ged Kearney addressed the ACTU congress on the HSU scandal. "I know I speak for everyone in this room when I say that misuse of member's money and contempt for the accountability to members are unacceptable", she said. Union figure Paul Howes stressed the positive, saying, "I'm actually pleased that we know that this happened because it's the lesson for us is making sure it never happens again and never allowing a couple of disgusting individuals get away with stealing money out of the pockets of hard-working, low-paid health workers or any other union members in this country."[55]

Addressing an ACTU congress on 15 May 2012, Gillard said of the HSU's impact on the Australian union movement's reputation, "...the very poor conduct of one union risks tarnishing that reputation."[56] Paul Howes, addressed the congress a day later and said, after defending union skills in hunting down unscrupulous employers, "If we have a dodgy trade union official who rips off those workers, we need to hunt them down too, hunt them down too to make sure they pay back what they took from the hardworking men and women of the Health Services Union."[57]

Political ramifications

Gillard spoke in support of a parliamentary code of conduct, saying, "I do want to see members of Parliament always doing the right thing. There are various rules now for members of Parliament but I'm obviously open to suggestions that we have a code of conduct." Independent MP Tony Windsor flagged action along with Rob Oakeshott to increase Parliament's powers to deal with cases such as Thomson's. "I think that there is a need for, if people are proven to be guilty in some of these circumstances, that Parliament may need some greater power or have a process where they actually leave the building", he said.[58]

Following the 2013 federal election, in February 2014 the coalition government announced a proposed Royal Commission into trade union governance and corruption to inquire into alleged financial irregularities associated with the affairs of trade unions. The HSU was one five unions named in the Commission's proposed terms of reference.[59][60]

References

  1. ^ Grattan, Michelle. "Threat to PM's numbers". The Age. Retrieved 10 May 2012.
  2. ^ a b "Craig Thomson union credit card rort paid for brothels". Smh.com.au. 8 April 2009. Retrieved 21 August 2011.
  3. ^ Akerman, Pia. "Craig Thomson found guilty of defrauding HSU". The Australian. Retrieved 18 February 2014.
  4. ^ Davies, Anne (18 February 2014). "How Craig Thomson came undone". Sydney Morning Herald. Retrieved 18 February 2014.
  5. ^ Cooper, Adam (18 February 2014). "Craig Thomson found guilty of fraud, theft charges". Sydney Morning Herald. AAP. Retrieved 18 February 2014.
  6. ^ Donovan, Samantha (18 February 2014). "Thomson found guilty on fraud/theft charges". PM. ABC Radio. Retrieved 18 February 2014.
  7. ^ a b McClymont, Kate (15 October 2013). "Former HSU boss Michael Williamson pleads guilty to fraud". The Sydney Morning Herald. Retrieved 19 February 2014.
  8. ^ "HSU: Anatomy of a Labor nightmare". ABC News. 15 May 2012. Retrieved 24 June 2012.
  9. ^ "Call for administrator as HSU membership plummets". The Sydney Morning Herald. 26 May 2012. Retrieved 24 June 2012.
  10. ^ Jacobsen, Geesche (4 February 2001). "Ambulance Officers On Strike Alert". Sydney Morning Herald. Retrieved 24 January 2010.
  11. ^ a b c "Timeline of HSU credit card affair". Herald Sun. AAP. 31 December 2013. Retrieved 20 February 2014.
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  13. ^ McClymont, Kate (9 September 2011). "Thomson: new credit card claims". The Sydney Morning Herald. Retrieved 19 February 2014.
  14. ^ Williamson, Michael (6 May 2003). Address by National President to annual conference dinner (Speech). First national conference of the Health Services Union. Sydney. Retrieved 19 February 2014.
  15. ^ Rainford, John (27 November 2013). "Union corruption rips off workers". Green Left Weekly. Retrieved 19 February 2014.
  16. ^ a b Patten, Sally (11 April 2012). "Super fund can't sack HSU boss". The Australian Financial Review. Retrieved 19 February 2014.
  17. ^ a b Higgins, Ean (8 May 2012). "Escorts and campaign funds 'put on Craig Thomson's card'". The Australian. Retrieved 14 June 2012.
  18. ^ Wright, Jessica (17 March 2012). "Damning report of misuse of funds in health union". The Age.
  19. ^ Nassios, Terry. "Investigation into the National Office of the Health Services Union" (PDF). Report of the Delegate to the General Manager of Fair Work Australia. Fair Work Australia. p. 133. Retrieved 10 May 2012.
  20. ^ Millar, Royce (13 September 2011). "Fair Work refused to investigate HSU books". The Age. Retrieved 7 June 2012.
  21. ^ a b Cullen, Simon (15 October 2012). "Fair Work begins court action against Thomson". ABC News. Australia. Retrieved 15 October 2012. Cite error: The named reference "FWA begins court action" was defined multiple times with different content (see the help page).
  22. ^ Lane, Sabra. "Fair Work report finds Thomson misused union funds". ABC News. Australia. Retrieved 7 May 2012.
  23. ^ "I am not a person of interest: Thomson". Adelaide Advertiser. AAP. 4 October 2012.
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  27. ^ Ireland, Judith; Willingham, Richard (24 July 2012). "PM 'distressed' by explosive report into HSU rorts". The Sydney Morning Herald. Retrieved 30 July 2012.
  28. ^ "'Game over' for Williamson, says HSU". SBS News. 2 May 2012. Retrieved 27 June 2012.
  29. ^ "Police extend probe on HSU". The Australian. 15 June 2012. Retrieved 27 June 2012.
  30. ^ Jones, Gemma (8 May 2012). "HSU cash spent on election campaign". Daily Telegraph. Retrieved 17 May 2012.
  31. ^ "Commonwealth of Australia Legislative Election 24 November 2007". Retrieved 24 January 2010.
  32. ^ Nicholson, Brendan (8 May 2012). "Craig Thomson still spending long after departure from HSU". The Australian. Retrieved 17 May 2012.
  33. ^ Sheehan, Paul (22 August 2011). "Thomson saga sinks Labor into the abyss". Sydney Morning Herald. Retrieved 16 May 2012.
  34. ^ "'A LINE HAS BEEN CROSSED' - Prime Minister sidelines controversial MPs". Sky News. 29 April 2012. Retrieved 26 June 2012.
  35. ^ "Hansard, May 21, 2012". Parliamentary Debates (Hansard). Commonwealth of Australia: House of Representatives. 21 May 2012. Retrieved 8 June 2012.
  36. ^ a b Wallace, Rick (9 April 2009). "Second Labor figure Jeff Jackson embroiled in union brothel scandal". The Australian. Retrieved 8 June 2009. Cite error: The named reference "Fegan" was defined multiple times with different content (see the help page).
  37. ^ "Half-brother refuses to support Craig Thomson". Herald Sun. 23 May 2012. Retrieved 18 July 2012.
  38. ^ Uhlmann, Chris (29 May 2012). "Senior Fair Work official embroiled in HSU fighting". ABC News. Retrieved 7 June 2012.
  39. ^ Schneiders, Ben (4 July 2009). "Chief of strife-torn union promises to pay back $15,000". The Age. Retrieved 17 May 2009.
  40. ^ Akerman, Pia (18 February 2014). "Craig Thomson found guilty of defrauding HSU". The Australian. Retrieved 18 February 2014.
  41. ^ "Federal Court splits up HSU East branch, sacks leaders, Refuses Kathy Jackson bid". Retrieved 24 June 2012.
  42. ^ "ACTU Responds to HSU Report". 1 May 2012. Retrieved 24 June 2012.
  43. ^ Richardson, Graham (9 April 2012). "Foul stench from snouts in HSU trough". The Australian. Retrieved 24 June 2012.
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  49. ^ Higgins, Ean (21 June 2012). "Federal Court splits up HSU East branch, sacks leaders, refuses Kathy Jackson bid". The Australian. Retrieved 19 February 2014.
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  52. ^ The vote in support was 1 797 to 103 opposed, a 94.5% ratio.
  53. ^ "ACTU suspends Health Services Union". ABC News. 5 April 2012. Retrieved 26 June 2012.
  54. ^ "Federal Court splits up HSU East branch, sacks leaders, Refuses Kathy Jackson bid". The Australian. Retrieved 24 June 2012.
  55. ^ Cullen, Simon (16 May 2012). "Gillard pledges allegiance amid HSU scandal". ABC News. Retrieved 16 May 2012.
  56. ^ Lucas, Clay (15 May 2012). "Gillard hits out at Abbott, HSU". Sydney Morning Herald. Retrieved 16 May 2012.
  57. ^ Iggulden, Tom (17 May 2012). "Kelty points finger at Labor amid union woes". ABC News. Retrieved 17 May 2012.
  58. ^ "Gillard flags code of conduct amid Thomson affair". ABC News. 14 May 2012. Retrieved 17 May 2012.
  59. ^ Abbott, Tony; (Prime Minister); Brandis, George; (Attorney-General); Abetz, Eric; (Minister for Employment) (10 February 2014). "Royal Commission into trade union governance and corruption" (Press release). Canberra: Commonwealth of Australia. Retrieved 10 February 2014.
  60. ^ "Five unions named in royal commission". SBS World News. SBS. AAP. 10 February 2014. Retrieved 10 February 2014.
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