On Monday, May 6 we spoke a bit about Cesar Melhem, the traditional custodian of the current AWU slush fund.  We opined that Cesar Melhem's reward would be great in Labor's Upper House Heaven.

This screen grab from the Parliament of Victoria's website tells us that Cesar Melhem was sworn in on 9 May, 2013.

Well Cesar Melhem is famous for the $500K AWU slushy called Industry 2020.

He set it up in 2008 but it was first reported publicly on 12 December 2012.

New AWU Slush Fund Revealed 

12 December, 2012, The Age

THE Australian Workers Union is again under pressure after the emergence of a current slush fund used to bankroll ALP factional dogfights including elections within the disgraced Health Services Union.

AWU Victorian secretary Cesar Melhem reluctantly went public yesterday to confirm that a non-profit company he runs, Industry 2020, had raised about $500,000 since 2008 to support the political activities of his Right faction sub-group within the ALP.

Notable among those activities was a ''significant'' outlay of funds on the bitter HSU election in 2009. As workplace relations minister in August 2008, Prime Minister Julia Gillard was a guest speaker at the inaugural fund-raising lunch for the Industry 2020 fund at Flemington racecourse, which generated about $250,000 with nearly half that profit.

This reports completes the picture.

IT IS the unedifying underbelly of Labor politics. The world of slush funds and grubby deals that reached its zenith in the scandals that swamped the Health Services Union.

As Fairfax Media has revealed, the Labor-affiliated Australian Workers Union is also devoting its energies into running a fund called Industry 2020, off its books, which has raised at least $500,000.

Not formerly (sic) connected to the AWU, Industry 2020 has Victorian secretary Cesar Melhem as its sole director and shareholder.

Since its inception four years ago, Industry 2020 has held functions attended by Labor politicians, other union officials, as well as big companies that deal with the AWU. It has been used to pay for factional battles in the HSU and in Labor marginal seats.

For AWU members the question must be: are their interests being compromised by this arrangement? What do they know of the donors and their motives for pouring money into Industry 2020? Where is all the money going? Why are they unaware of this fund?

Today The Sunday Age reports this:

Victorian Labor has failed to account for a secretive slush fund that has generated half a million dollars and is controlled exclusively by the party's newest MP, former Australian Workers Union Victorian secretary Cesar Melhem.

Opposition Leader Daniel Andrews has refused to comment on the status of the controversial Industry 2020, which has been bankrolled by major companies including builder John Holland and recycling giant Visy through union-organised events since 2008.

As sole director of the fund, Mr Melhem's move into Parliament raises questions about potential conflicts of interest but also about the fate of money donated if he dissolves the fund and removes himself from it.

Last year Mr Melhem took control of Industry 2020, which he acknowledged in December had been used to bankroll the political activities of his Right subgroup within the ALP, including on the factional fight over control of the disgraced Health Services Union.

It's unbelievable that a fund like that can be in the sole and exclusive control of one man.   Industry 2020 started life as a public company limited by shares, was converted into a proprietary company limited by shares and has one director and shareholder - Cesar Melhem.

It's reported as being a not-for-profit, but it is not registered with the ATO as a deductible gift recipient, thus it cannot accept tax deductible donations. It must have convinced someone that its turnover does not attract a GST component because it's not registered for GST either.

Here's the ATO's registration details for the company's ABN, last updated by the ATO 14 May and printed here by me this morning.

This summary shows the  details in greater clarity - you'll note the ATO still has the structure as a public company (the ASIC has the process about taking it private).   But it's status with the ATO will be interesting - it's not registered for GST and not registered as a deductible gift recipient - so what does it do other than give Cesar Melhem 100% control of the money?

 Here's the goldmine from the ASIC this morning.   This is publicly available information - it cost me $9 on the www.asic.gov.au website to get this up to the minute printout.   I know it includes addresses, that's what comes from being on a publicly searchable register.

Firstly a word about the Victorian Parliament's Register of Members' Interests.   The Parliament publishes a summary once every year, in September, so the last entry on the public website for the Register is from September 2012.   The policy of the Victorian Parliament is that new members have 30 days to make their first declaration of interests.   Cesar Melhem has 20 days to go.

No trust, no deed, no agency, no GST, no Deductible-Gift-Recipient status.   Just a formerly public company structure that commenced with Cesar Melhem as a director in June, 2008.   He is the owner of all the shares, all the issued capital, the whole lot.  He is the sole director.   So what's in it?

As workplace relations minister in August 2008, Prime Minister Julia Gillard was a guest speaker at the inaugural fund-raising lunch for the Industry 2020 fund at Flemington racecourse, which generated about $250,000 with nearly half that profit.

Read more: http://www.smh.com.au/opinion/political-news/new-awu-slush-fund-revealed-20121211-2b7zo.html#ixzz2TgC2r8HJ

 

This is from the same report by Ben Schneiders and Royce Millar

AWU Victorian secretary Cesar Melhem reluctantly went public yesterday to confirm that a non-profit company he runs, Industry 2020, had raised about $500,000 since 2008 to support the political activities of his Right faction sub-group within the ALP.

Notable among those activities was a ''significant'' outlay of funds on the bitter HSU election in 2009.

The authors of that report refer to the company as a non-profit company.  I haven't read the Articles of Association but there's nothing in its structure that differs from any other Pty Ltd trading company that does business in Australia, except that it's not registered for GST or tax deductible gift status.

This is a shocking look for Labor, with the former AWU head holding these assets in his personal name in a company proprietary to him and where he is the sole director and shareholder.
If the company was a Trustee Company for a Trust with a Deed that clearly set out the roles of Trustees, Settlors etc you'd expect to see some notation to that effect somewhere.

I'd love to know what you make of it - here's what the Liberals said on the day after the 12 December press reports.   Only thing is that Cesar Melhem is now a Labor Member of Parliament, who still controls a union slush fund.

Old habits die hard.