Media Statement from Bob Kernohan, former Victorian AWU President
Mick Gatto and the Cole Royal Commission into the Building and Construction Industry

Here's the ACTU's review of union governance just one year ago.

It's almost one year since we posted the piece below on the ACTU's review of union governance in the wake of the HSU and AWU scandals.

It's fascinating to read it now.  ACTU chief Dave Oliver said he was confident the problems had been limited to a ''couple of individuals in one union''.  Oh really?   I would have thought the CFMEU excesses, Cesar Melham's 2020 fund and a range of other rorts were as obvious as Mick Gatto outside Society Restaurant in Collins Street at lunchtime.

Here's how Ben Schneiders of The Age saw it on 7 March, 2013

Unions say they have been vindicated by a report into union governance commissioned after the Health Services Union scandals.

The report to the ACTU executive on Wednesday made 13 recommendations to improve how unions operate, including the use of credit cards, financial transparency and disclosure of senior officials' pay.

But none of the recommendations are mandatory and it is up to individual unions how, or if, they implement them. While the report said the general picture of Australian unions was that they are ''honestly run'', the report did not investigate that issue itself

Opposition workplace relations spokesman Eric Abetz described the report as a whitewash.

ACTU secretary Dave Oliver said unions should ''feel proud'' of the report, commissioned by the ACTU last year. Its panel of experts was headed by former Federal Court judge Rod Madgwick.

He said the positive response to the report from union leaders on Wednesday meant that he expected them to make changes, where needed.

Mr Oliver said the review was never meant to investigate corruption itself, but he was confident the problems had been limited to a ''couple of individuals in one union''.


He said the report found many unions were ''well advanced in modern governance and management practices'' and that present laws around union rules were ''some of the most rigorous in the world''.

The Coalition has been pushing for tougher rules to force greater disclosure. It also wants unions regulated in the same way as corporations.

Senator Abetz said unions had not taken the issue seriously.`''When you have a handpicked reviewer making voluntary recommendations, you have got to wonder if it was something prepared in anticipation of the Melbourne Comedy Festival.''

Senator Abetz said problems were not isolated to the HSU. The opposition has also highlighted allegations that Electrical Trades Union officials from NSW pocketed $1.8 million in directors fees that under union rules should have gone back to the ETU. And last december Fairfax Media also revealed the existence of a union ''slush fund'', Industry 2020.

Cesar Melhem, Victorian secretary of the Australian Workers Union, was the sole shareholder of Industry 2020, which has raised about $500,000 since 2008 used to support the political activities of his Right faction sub-group within the ALP.

Mr Oliver said its recommendations would relate only to unions themselves, not separate funds created by officials.

And here's how we saw it - first posted 7 March, 2013

Judge Rod Madgwick and his hand-picked team of independent experts have finished their review of union governance.

This is His Honour independently appearing in an ad for the ACTU.


And this is the ACTU's grateful acceptance of His Honour's report, which recommends unions adopt “best practice” governance standards rather than active external reviews of union finances - the report also finds no case for new laws to tighten up union financial controls.


Actu release union governance

Dave Oliver is right - all unions will be keen to embrace this approach, sorry, all union officials will.

How the AFR saw it

Former Federal Court judge Rod Madgwick found that “nearly all” union officials and employers are “honest and behave appropriately in their stewardship of union funds”.

The review recommended “best practice” governance standards for unions rather than investigating misbehaviour or surveying the finances of individual unions.

“Don’t try and convince us that – because there’s a couple of these isolated instances – that the rest of the movement is tarnished in some way,” ACTU secretary Dave Oliver said. “I don’t accept that.”

Speaking after the report was presented to the ACTU national executive in Melbourne, Mr Oliver argued there was no justification to regulate unions in the same manner as companies. Many unions have already overhauled their practices with input from large accounting firms, including KPMG and Ferrier Hodgson.

(The report) did not deal with external accounts or off-balance entities operated by union officials.


And The Australian's view

Governance standards won't be enforced

  • From:The Australian 
  • March 07, 2013 12:00AM
Unions will not be compelled to implement new governance standards recommended by an ACTU-commissioned panel set up in the wake of the Health Services Union scandal.

The ACTU also acknowledged yesterday that there had been no timeframe set for when the 13 detailed recommendations of the panel would be implemented by unions.

The report found, despite the allegations involving the HSU, that Australian unions were "honestly run".

ACTU secretary Dave Oliver said the panel had not been asked to investigate any current impropriety, if it existed, within unions.

Instead it was designed to identify examples of best practice within unions.

This is the entire report

Download ACTU Governance Panel Report to Exec

A few pieces of it caught my attention.

Actu 2
Disclosure of policy is likely to do more to prevent malpractice than any amount of punishment?   The corollary of that seems to be that penalties are not needed, just disclose the policy and Bill's your uncle.

This next comment, however, is a little disturbing for me.

From 1995 until 2002, His Honour Justice Rod Madgwick presided over matters involving defalcation and invalidities in the conduct of the AWU's affairs.   I can find no disclosure of His Honour's involvement in that matter in this report.   The report goes to great pains to single out the alleged crimes of Michael Williamson and Craig Thomson MP and to describe in great detail the malfeasance at the HSU.

The Fin Review opens its report with this summary paragraph

The financial scandals in the Health Services Union did immense harm to the reputation of unions but most are honestly run, according to a review of union governance commissioned by the Australian Council of Trade Unions

The Australian with this

UNIONS will not be compelled to implement new governance standards recommended by an ACTU-commissioned panel set up in the wake of the Health Services Union scandal.

The financial scandals in the Health Services Union did immense harm to the reputation of unions but most are honestly run, according to a review of union governance commissioned by the Australian Council of Trade Unions

Then there is this single reference to circumstances that could reasonably be seen to be The AWU Scandal, now the subject of a well-publicised Victoria Police investigation.   The union's name is helpfully avoided, as is the involvement of the current Prime Minister in the scandal.

Actu report awu scandal
His Honour Judge Madgwick was the judge who presided over that case.   He made decisions and Orders in the matter.  I would have thought a disclosure in that regard, and a note to the report setting out His Honours Judgement (if any) and Orders would have been an important inclusion to the Report.

I find it difficult to accept the Report's characterisation of the scandal, currently the subject of a full-blown Major Fraud Squad enquiry as "alleged large scale defalcation (embezzlement of money) by a senior branch officer and another official".   Compared and contrasted with the treatment focussed entirely on the HSU it seems a significant oversight, particularly in view of the Committee's recommendations about sunlight and openness.

The Committee also expresses its vote of no confidence in meting out punishment to offenders.

Actu gaol no deterrent
Fear of the law or punishment will not hold them back.   The Report links to this Sydney Morning Herald article

THE Chief Justice has made a thinly veiled call for the state government to change sentencing laws, saying the notion that longer prison terms deter crime is ''fiction''.

The impact of an individual's sentence on the likelihood that someone else will commit a similar crime in the future - known as ''general deterrence'' - is one of the factors judges have to consider when sentencing a criminal.

But Chief Justice Tom Bathurst said there was no ''persuasive evidence that it works''.

Therefore, it was important to reconsider whether deterrence should continue to have a role in sentencing, he told the NSW Legal Aid criminal law conference yesterday.

Read more:

So the union movement's woes are almost wholly attributable to two people, Michael Williamson and Craig Thomson.   No more investigations are needed - just the overt adoption of new "best practice" governance procedures.

And don't mention the AWU.   Rod Madgwick did once in the 1990s but I think he got away with it.

And this is the Committee's model for how a good modern union should be run.   Astute observers may note the absence of any external review - the model of a modern major union requires no outside observers.

Union model management

 We will have a lot more on Rod Madgwick later today.