Monday, December 3, 2012
Words from the lesser of the 2 evils : Julie Bishop : Judicial inquiry needed into slush fund affair
The Australian Workers’ Union fraud took place between 1992 and 1996. Hundreds of thousands of dollars went missing and to date no one has been charged.
Many of the missing pieces rest within the knowledge of Prime Minister Julia Gillard and her former partner Bruce Wilson, neither of whom have given testimony to police about their respective roles.
It all began with Gillard’s legal advice on the incorporation of an association in the name of the AWU.
It was a sham from the outset.
According to Gillard, Ralph Blewitt, who lived in Western Australia, was to be the responsible officer for an entity located in WA with Western Australian members, set up under Western Australian laws and registered by the Western Australian Commissioner for Corporate Affairs.
Why wouldn’t a solicitor in the Western Australian office of Slater and Gordon, familiar with the relevant local laws do the work? After all, that is why national law firms have offices in other states.
Had the Perth office taken such instructions they may have asked awkward questions, like whether Wilson or Blewitt were authorised to set up an entity using the name of the AWU. We now know that neither was authorised.
Instead, Gillard, a partner of the firm in Melbourne, did all the work alone and in secret. She sought no advice from experts in the firm and did not use the firm’s precedents for drafting the relevant rules.
No one else within the firm appears to have any idea what she was up to at the time. Neither, as it turns out, did the firm’s major client, the AWU, for Gillard did not open a file on the firm’s record-keeping system. This is a critical point.
Given that the whole point of opening a file is to guard against conflicts of interest, it is simply inconceivable that Gillard overlooked this basic duty to her partners.
Secondly, it was incumbent on her to ensure her partner, Bruce Wilson, and her friend, Ralph Blewitt, had the authority of the AWU to set up a separate legal entity in its name.
She cannot claim that as they were union officials she was entitled to assume they had the authority. They did not.
Had she opened a file, a routine conflict check would have prevented her from proceeding further.
Gillard completed the application with the name of the association “Australian Workers Union Workplace Reform Association”. Its purpose was stated to be “Development of changes to work to achieve safe workplaces”.
Yet Gillard described it as a “slush fund” in her exit interview, “into which the leadership team puts its money so they can finance their next election campaign”.
She said that her “thinking” was that it was “better to have an incorporated association, a legal entity, into which people could participate as members, that was the holder of the account.”
Her advice offended against section 8 of the WA Associations Incorporation Act 1987, which provides that an association cannot have a name “likely to mislead” as to the object or purpose of the association – it was a slush fund for elections, not about safe workplaces.
The name was also “identical with or likely to be confused with” the name of another entity, in this case the AWU.
There were only two members of the association, Wilson and Blewitt, and not the requisite “more than five members”.
Not surprisingly, the Commissioner of Corporate Affairs questioned the application.
Gillard wrote to the commissioner “arguing for its incorporation”.
On whose behalf did she claim to be acting – Wilson and/or Blewitt as officers of the AWU?
Using the authority of her standing as a partner in a law firm, Gillard was able to convince the commissioner that the association had the authority of the AWU, that it was for the purpose of workplace safety, and that it had more than five members.
It is an offence under section 43 of the act to knowingly make false and misleading statements.
Once the association was registered, it is alleged that Wilson fraudulently obtained hundreds of thousands of dollars from building companies, who believed they were dealing with the AWU, for workplace safety and training purposes.
The fraudulent activities continued with various twists and turns but the existence of this slush fund was not detected until 1996.
The federal opposition contends that in relation to the setting up of the incorporation, Wilson, Blewitt and Gillard have a case to answer under Section 43 of the act.
Section 170 of the Criminal Code is also relevant, which provides that “any person who being required . . . to give information . . . knowingly gives information . . . that is false in a material particular is guilty of a crime . . . ”
Section 409 of the Criminal Code sets out the elements of the criminal act of fraud.
“Where’s the smoking gun?” was a familiar refrain in the years before an incriminating transcript came to light during the Watergate investigations that led to President Richard Nixon’s resignation. In the case of the AWU fraud, the ground is already littered with spent cartridges.
Given that the Prime Minister refuses to answer to the Parliament, the only way to get to the bottom of this matter is for there to be a judicial inquiry.
In 1996 there was a formal request by former AWU official and current Fair Work Australia commissioner Ian Cambridge for a royal commission into this fraud.
Former WA AWU official Tim Daley has also requested a formal investigation and has been joined in recent days by former NSW Labor treasurer Michael Costa.
This will be the only way that light can be shed on a dark chapter in the history of the AWU.
Julie Bishop is the Deputy Leader of the opposition.
The Australian Financial Review