Opening Statement on CFMEU 10 June 2015

CHECK AGAINST DELIVERY

ROYAL COMMISSION INTO TRADE UNION GOVERNANCE AND CORRUPTION

HEARINGS COMMENCING 10 JUNE 2015

CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION

CONTINUATION OF 2014 HEARINGS INTO:

CBUS LEAK TO THE CFMEU

CFMEU NSW DEALINGS WITH THE ALEX COMPANIES

COUNSEL ASSISTING OPENING STATEMENT

In the hearings beginning today the Commission will continue its work from 2014 in relation to two case studies involving the CFMEU.

The first of these is what is known as the Cbus leak to the CFMEU. As set out by the Commissioner in the preliminary hearing on 23 April of this year, this issue was dealt with at some length in the Interim Report handed down in December last year. In 2013, senior employees of Cbus, (the Construction and Building Unions Superannuation fund), leaked certain private information of members of Cbus to Mr Brian Parker, the former Secretary of the NSW Branch of the Construction and General Division of the 2

CFMEU. The information was hand delivered to the Lidcombe office of the CFMEU by Ms Lisa Zanatta. She was then the Senior Adviser – Member Relations, Workplace Distribution. Ms Zanatta did this with the knowledge and consent of at least Ms Maria Butera, who was, at that time, Executive Manager - Workplace Distribution at Cbus.

The Interim Report did not reach any conclusion about the role of Mr Atkin, the Chief Executive Office of Cbus, to whom Ms Butera directly reported, and it also left open questions in relation to Mr Parker. These issues will be further explored in the current hearings.

Since the 2014 hearings, a number of events have occurred at Cbus.

Both Ms Zanatta and Ms Butera have lost their jobs.

A final report by KPMG in relation to leaks from Cbus has been completed and a report has been provided to the Board of Cbus and to the Commission.

A governance review conducted by Mr Graeme Samuel AC (former chair of the Australian Competition and Consumer Commission, at it is now known) and Mr Robert van Woerkom has been completed and a report has been provided to the Board of Cbus and to the Commission.

In light of these and other developments the Commission will be conducting further investigations into various questions. These include: as senior officers of Cbus, how did Ms Butera and Ms Zanatta come to behave as they did? Were they ‘rogues’ within the organisation, or were their actions authorised? Were their actions indicative of the so-called “culture” at Cbus, especially the culture within the workplace co-ordinators branch? What steps should have been taken to prevent that behaviour from occurring again and to preserve member privacy more generally?

The KPMG and Samuel reports may assist in answering these questions, as may the further examination of witnesses.

The second of the two case studies to be dealt with in the current hearings concerns dealings between certain CFMEU officials, Mr George Alex, and executives working for companies apparently associated with Mr Alex. Mr Alex, an undischarged bankrupt, appears to be involved with labour hire companies and, more recently, 3 scaffolding, traffic control and security companies. The labour hire, traffic control and security companies supply casual labour to building contractors.

These companies have features consistent with their operation as so-called “phoenix” companies. Features of “phoenix’ companies include the intentional transfer of some or all of the assets from an indebted company to a new company to avoid paying creditors, tax and/or employee entitlements. The directors leave the debts with the old company often placing that company into administration or liquidation, leaving no assets to pay creditors. Meanwhile, a new company, often operated by the same directors, or people associated with them, in the same industry as the old company, continues the business under a new structure. By engaging in this practice, the directors avoid paying debts that are owed to creditors, employees, employee superannuation funds and the like, and the ATO.

The CFMEU is on the record as opposing casual labour and phoenix operators in the construction industry. It publicly states its concern for workers whose entitlements are put at risk. An important avenue of enquiry has been why the CFMEU has entered into enterprise bargaining agreements (EBAs) with companies apparently associated with Mr Alex which have such a poor track record of survival.

As the Commissioner set out on 23 April this year, it was not possible to complete an examination of these issues in 2014 for a number of reasons. These included the health of Mr Alex last year.

At the resumption of this case study next week, it is expected that a number of witnesses, including Mr Alex and officers of the CFMEU will give evidence.