The financial scandal in the Health Services Union (HSU) involving its national president Michael Williamson and former national secretary Craig Thompson ended in the courts when both of them were convicted for fraud and theft offences.
It became the trigger for Prime Minister Tony Abbott to announce on February 10 last year that he was setting up a Royal Commission into Trade Union Governance and Corruption headed by former High Court judge Dyson Heydon.
Kathy Jackson, Thompson’s successor as national secretary of the HSU, was lauded in the press as a whistleblower for bringing attention to the malfeasance. Abbott declared her “heroic”.
She was the royal commission’s star witness, but it turned out that she too was accused of having her hand in the HSU till by the union’s current national secretary Chris Brown.
The matter was sent to trial in the Federal Court and Heydon’s Interim Report, released in December, made no mention of Jackson in its 1,817 pages.
On August 19, Federal Court judge Richard Tracey ordered Jackson to repay $1.4 million in compensation and overpaid salary to the HSU. Added interest and costs in the judgement are likely to increase the amount to a sum closer to $2 million.
Among other things, Justice Tracey found that Jackson had used HSU credit cards to spend $175,154 on travel-related expenses, $101,792 on retail goods, $20,864 on entertainment and $14,639 on food and alcohol.
The judge also said Jackson had moved $284,500 of HSU money into a slush fund called the National Health Development Account without authorisation.
More than $100,000 found its way into Jackson’s personal bank account and a similar amount was spent on her divorce settlement from Jeff Jackson who was also a HSU official. Just prior to going on holidays, Jackson withdrew almost $56,000. About $80,000 was spent on what was described as “political expenditure”
Justice Tracy’s considered view that Jackson had shown a "pervasive sense of entitlement’’ seems to be rather understating matters.
But the union is going to find it hard to recover the money. On the eve of the federal court trial, Jackson declared herself bankrupt. Her main asset, a property worth about $1.3 million in Wombarra in the northern suburbs of Wollongong, has been put into the hands of her partner, Fair Work Commissioner vice-president Michael Lawler, who was appointed to the Commission by Abbott in 2002 when he was Minister for Employment and Workplace Relations.
This course of action bears a remarkable resemblance to that pursued by Williamson. When he was granted bail after his conviction pending sentencing he immediately filed for bankruptcy declaring that he had almost no assets to his name.
This was despite the fact that his annual salary at the HSU ranged from $290,000 to more than $500,000. His generous superannuation payment of $1.8 million was given to his wife as part of a divorce settlement even though he continued to live with her at their luxury home on the NSW Central Coast until he was involuntarily relocated to Silverwater prison when his bail was revoked.
The HSU covers some of the lowest-paid workers in the country. As Brown said following the Federal Court’s decision: “Kathy Jackson knew this, yet she spent their money on lavish banquets running into tens of thousands of dollars, extravagant family holidays and luxury goods among other things.”
The HSU has referred about $900,000 of Jackson’s expenditure to a joint taskforce known as Heracles, headed by the Victorian and federal police, which was set up to follow cases arising from the union’s royal commission.
Brown is reported as saying that he would be surprised if the taskforce did not lay charges against Jackson.
If this happens she might find herself in another similar situation to Williamson who was sentenced to seven-and-a-half year’s imprisonment with a non-parole period of five years.