Trade Union Royal Commission Report Uncovers Systemic Corruption

30th December 2015

In excess of forty union officials, individual employers, ex-superannuation trust executives, the CFMEU, AWU and several businesses face prosecution for offences including criminal coercion, intimidation, obtaining property and financial advantage by deception, larceny, fraud, false accounting, procuring, aiding and abetting corrupt commissions, breaching officer duties, carrying on a financial service business without a license, and giving false and misleading evidence to the Commission.

The Royal Commission into Trade Union Corruption and Governance has uncovered for the Australian public a world of corruption, deceit and thuggery most would not have believed existed.

“You can look at any union industry. You can look at any type of industrial union. You can select any period of time. You can take any rank of officeholder, from Secretaries down to very junior employees. You can search for any type of misbehaviour. You will find rich examples over the last 23 years in the Australian trade union movement …They are not the work of a few rogue unions, or a few rogue officials. The misconduct exhibits great variety. It is widespread. It is deep-seated.”

The Royal Commission Report, released today, includes 76 recommendations to amend laws regulating the manner in which registered organisations are managed covering themes such as the regulation of union financial arrangements, union officials responsibility to disclose personal interests, outlawing corrupting benefits, regulation of related entities (‘slush funds’), prohibiting anti-competitive terms in enterprise agreements, outlawing secondary boycotts, re-establishing the strong investigative powers of the Building and Construction Commission, and introducing regular training for right of entry permit holders.

A key recommendation of the Report is to transfer all regulatory functions of the General Manager of the Fair Work Commission and the Fair Work Commission insofar as they apply to registered organisations under the Fair Work (Registered Organisations) Act 2009 (Cth) to a new Registered Organisations Commission. The new regulatory body would exercise additional powers recommended to oversee the financial and general management of unions and registered employer associations.

Accountability for financial management and reporting has been addressed at three levels: greater investigative powers of the regulator, improvements to auditing and reporting of accounts, and the creation of a new ‘independent’ financial compliance officer with responsibility for ensuring compliance with the organisation’s financial obligations under the Fair Work (Registered Organisations) Act 2009 (Cth), regulations and reporting guidelines and financial policies and rules. The financial compliance officer must be separate and independent from the union Secretary.

The Royal Commissioner has recommended the broadening of the definition of persons that would fit within a trade union ‘office’ and alignment of most of the duties with those of company directors. Penalties for breaches of officer duties, including disqualification from office, and criminal penalties for serious breaches, have been recommended to address the current culture of disregard for the law. Unions would not be able to pay penalty fines imposed on officials by the courts.

Contrary to the criticism of the ACTU, the Labor Party, and many of the unions that were the focus of the Commission’s enquiry, the final report is quite conservative. Many of the political players of the day have well and truly ‘dodged a bullet’. The recommendations are hardly radical, and in the main, should appear to any reasonable observer, appropriate measures to address the obvious lack of accountability, substantial and systemic corruption, and anti-competitive behaviour that has characterised Australian unions over the past twenty-five years.

In many respects, it is too conservative. Retaining separate regulatory oversight rather than normalising union structures under Australian corporate law risks further entrenching a culture of exceptionalism that has too often been used to justify corrupt behaviour. It is also a pity that the Royal Commission has not explored the form of training recommended for officers and committees of management. Unless such training is properly designed, AS,ISO or AICD recognised and accredited it risks capture by the very organisations that need reform. Remember the Trade Union Training Authority.

Nevertheless, for those of us that have devoted substantial periods of our professional lives to this area, leaving the union movement frustrated but hopefully, integrity intact, this Report provides some vindication. It paints an accurate picture of the state of the unions, and a reasonable blueprint for reform. Let’s see if the Turnbull government has the guts to pursue it without fear or favour.