The serious financial fraud that surfaced in the scandal-ridden Health Services Union (HSU) provided the federal government with a handy excuse to establish the Royal Commission into Trade Union Governance and Corruption.
Although the commission has powers wide enough to inquire into all unions, the HSU is one of five organisations specifically mentioned in its terms of reference alongside the Australian Workers Union, Communications Electrical Plumbing Union, Construction Forestry Mining Energy Union, and the Transport Workers Union.
So it might be expected that officials from the HSU would be subject to particularly rigorous questioning following the recent convictions over large-scale fraud of two former officials, Michael Williamson and Craig Thomson.
But when self-styled whistleblower Kathy Jackson appeared before the commission in June she was not unduly pressed about allegedly siphoning off union funds into a “slush fund”, the National Health Development Account (NHDA). She denied using HSU credit cards for more than $1 million of personal expenses, as well as inappropriately paying $36,000 of union funds to a company called “Neranto No 10” of which she and her former husband were co-directors.
The commission also heard that she could not remember any details of a large number of cash withdrawals, including one of $50,000.
Jackson is the former secretary of HSU No 3 Branch. She is the current honourary national secretary of the union. It was her exposure of Williamson and Thomson that eventually led to their convictions.
Her salary in 2010 was about $173,000 a year and thereafter increased to $287,000 a year.
In May this year, before the commission hearings began in earnest, lawyers for the HSU told the Federal Court Jackson had siphoned off $246,500 of HSU members’ money into the NHDA account of which she was the beneficiary. Their statement of claim accused Jackson of misusing her office and misappropriation of union funds.
In late April, the current secretary of HSU No 3 Branch, Craig McGregor, referred these allegations to the Royal Commission. So the commission was certainly forewarned of the union’s action in the Federal Court.
So too were the mainstream media, where comments were made about the “soft treatment” Jackson received from counsel assisting the commission, Jeremy Stoljar SC, in the June hearing. This was contrasted with the “aggressive” line of questioning that McGregor faced.
Perhaps this unusually adverse publicity was the reason why Jackson was recalled to the inquiry on July 30.
When the proceedings opened, Stoljar said that further investigations since Jackson first appeared as a witness had uncovered that she transferred $50,000 from her union’s general account to the NHDA account she controlled on March 23, 2009. One day later $50,000 was withdrawn as a bank cheque for her former husband, Jeff Jackson.
Stoljar asked Kathy Jackson if she had forgotten the reason for the $50,000 payment. When she confirmed that this was a proposition that she agreed with, Stoljar replied “That’s just not credible is it?”
She then made the incredible claim that the $50,000, and all the other money that she transferred to the NHDA account between 2004 and 2010, was no longer union members’ money once it had been deposited in her bank account.
She asserted that she had a general authorisation from her branch committee of management to spend the money in the account as she saw fit for general political and union interests. This is despite the fact that there are no minutes confirming the authority and most of the branch committee allegedly have no recollection of the secret account.
Jackson then accused the commission of “ambushing” her and demanded publicly-funded legal representation. She was given until August 25 to return to the inquiry with legal representation.
A total of $53 million has been set aside for this royal commission. This ought to be sufficient to employ enough forensic accountants to analyse suspect bank accounts, dodgy accounting procedures, and sworn evidence at odds with the financial records available to the commission.
But apparently this is best left to others in the media and elsewhere while the inquiry busies itself with what ACTU assistant secretary Tim Lyons has described as giving “the impression that the commission has predetermined the issues at hand prior to the conclusion of hearings”.
Following the opening day of this commission’s hearings in April this year, a journalist from The Australian said: “the challenge will be whether the government can convince the electorate that the commission is a legitimate use of taxpayers’ funds, not purely a show trial designed to stitch up its political enemies”.
On the evidence so far, the challenge has failed miserably.
[For commentary on the Royal Commission visit commissionwatch.com.au.]