The HSU: anatomy of a Labor nightmare

Updated

Claims of sex, corruption and intrigue surrounding the Health Services Union have haunted the Federal Government for three years.

The scandal appeared headed into its endgame earlier this year as police raided the union's Sydney offices and Fair Work Australia released its damning 1,100-page report into former national secretary, now suspended Labor MP, Craig Thomson.

At the centre of the scandal are the union's troubled HSU East branch and four major players:

The HSU and HSU East

The Health Services Union was officially formed in 1991 by the amalgamation of the Hospital Employees' Federation (HEF) and the The Health and Research Employees Association (HREA).

The union represents more than 70,000 workers in the health and aged care sectors.

HSU East was created in May 2010 from the merger of the HSU's Victoria No 1 and No 3 branches with the HSU NSW branch.

HSU East is the branch which was raided by Strike Force Carnarvon detectives on May 2.

They said they were investigating allegations dating back to the mid-1990s.

Suspended HSU national president Michael Williamson has been charged over an alleged cover-up of corruption within the union.

I have major concerns that efforts have been made to interfere with evidence relevant to our investigation ... I don't dismiss the possibility of criminal charges arising from those efforts. Detective Superintendent Col Dyson, head of the NSW Fraud Squad

On April 30 a HSU-commissioned report into HSU East found that the branch had paid out $17 million without a tendering process, and had no rules on credit card use.

The report, headed by Ian Temby QC, also mentioned a number of companies that were alleged to provide services to the union at inflated rates or for dubious services, including IT company United Edge - of which Mr Williamson is a director.

On April 26 the Federal Government had moved to put HSU East into administration, a move which was welcomed by most of the rest of the union.

How many investigations are there?

Alleged corruption and financial mismanagement in the HSU is the subject of four separate inquiries:

A police investigation in NSW

A police investigation in Victoria

A Fair Work Australia investigation which was released on May 7. Read it in full here.

An internal investigation headed by Ian Temby QC

The MP: Craig Thomson

Craig Thomson is the suspended Labor MP who was the HSU's national secretary between 2003 and 2007.

But in the mid-1990s - the period being investigated by the Fraud Squad detectives who raided HSU East on May 2 - he was assistant secretary of what was then the HSU's NSW branch.

Mr Thomson was the subject of a Fair Work Australia investigation which dragged on for more than three years and was finally released under parliamentary privilege on May 7.

Its allegations against Mr Thomson include:

That he used HSU credit cards to spend $5,793 on "escort services"

That he spent $71,300.23 of HSU funds directly on his election campaign for the seat of Dobell

That he withdrew more than $100,000 on his union-issued Mastercard between 2002 and 2007

That nearly $200,000 was spent on staffers who worked largely or if not exclusively on Mr Thomson's political campaign

The Fair Work report found 181 breaches of union rules, most of them allegedly committed by Mr Thomson, and Fair Work Australia is taking civil action against him in the Federal Court.

Mr Thomson denies the allegations and has not been charged with any criminal offences.

"At the end of the day I'm quite confident that we'll be able to show that these allegations are totally without foundation," he said after the release of the Fair Work report.

He also denies any part in any impropriety during his time at the NSW branch which went on to become part of HSU East:

Can I make it absolutely clear I have not spoken to the police today or at any time in relation to these issues whatsoever. So quite clearly, this is not about me. I have never been part of that branch (HSUE). It formed after I left and became a member of parliament. I was a member of the predecessor branch, the New South Wales HSU, but I have not been a member of that branch for 10 years. Can I make it absolutely clear that when I was a member of the HSU NSW branch, I had no financial responsibility; I did not have authority to buy a newspaper, let alone anything else. The police raids are an unfortunate day for the union, but these are issues for the union leadership, Katherine Jackson and Michael Williamson. Craig Thomson

Others beg to differ. This is what Kathy Jackson says about Mr Thomson's denial of any involvement in HSU East's troubles.

"He must be living in some sort of fantasy land ... yes, he had nothing to do with HSU East, but he was a former official of the New South Wales branch, and that branch ... is being investigated." Kathy Jackson

The powerbroker: Michael Williamson

Sorry, this video has expired Video: Michael Williamson stands down from Unions NSW, April 12 (Lateline)

At the centre of the HSU story is Michael Williamson - who has been charged over an alleged cover-up of corruption within the union.

Mr Williamson is the secretary of HSU East and is the suspended national president of the HSU.

He is also a former national president of the Australian Labor Party.

In his role as boss of HSU East, Mr Williamson has been involved in a bitter power struggle with Kathy Jackson. Both were involved in setting HSU East up in 2010.

The Temby report into HSU East refers to allegations that:

Printing firm Communigraphix was paid more than the going rate for printing the HSU journal, and gave Mr Williamson Amex credit cards "which were used for personal benefit"

IT firm United Edge charged the HSU "excessive amounts" for services - Mr Williamson is one of the company's directors

Architects were employed at the union's cost "to carry out work on Williamson's holiday home".

Mr Williamson has denied the allegations. The report's authors said they wanted to speak to Mr Williamson and his wife, but they declined, instead giving statements through their lawyers.

Chris Brown, the man currently serving as HSU national president in Mr Williamson's absence, has described Mr Williamson as a mentor to Craig Thomson.

Craig Thomson's been a protégé of Michael Williamson for many years and it's Michael Williamson that assisted him to get into parliament. Chris Brown, Lateline, May 2

The national secretary: Kathy Jackson

HSU national secretary Kathy Jackson is the woman who is carrying the can as the union implodes.

She has made repeated accusations against Mr Thomson and has labelled Workplace Relations Minister Bill Shorten's move to wind up HSU East "a political stunt".

All it's about is Bill Shorten propping up his numbers in Victoria - the factional numbers - and what Bill Shorten is doing, quite evidently and clearly - is putting forward the Michael Williamson agenda, the Chris Brown agenda, and the Shorten agenda - which is to split the branches. The problem is not that we amalgamated. The problem is once we amalgamated we saw the corruption and what we don't want to see is the breakup of the union into separate entities. Kathy Jackson, 7.30, May 2

Formerly an executive in the HSU's Victorian set-up, Ms Jackson and Mr Williamson were instrumental in the establishment of HSU East.

But she has repeatedly called for Mr Williamson to be sacked or stand down, and welcomed Wednesday's raids on HSU East as a necessary step to cleaning up the union.

"If the union had co-operated with the police, the raid would not have occurred," she told 7.30s Chris Uhlmann on May 2.

In an interview on the same program in January this year, she said she had been gagged by her own national executive and confirmed that she had initiated the Fair Work Australia investigation into Craig Thomson.

She has even gone so far as to set up a website, Clean up HSUeast!, which details allegations against Craig Thomson and Michael Williamson.

But as accusations fly within the union, some of the mud has been flung Ms Jackson's way:

Chris Uhlmann: "In a complaint to Victorian police last month against you, it lists a payment of $58,000 on April 7, 2010 to an account in the name of Jeffrey Peter Jackson and it noted it was a loan to the Victorian number one branch. What was that money for?"



Kathy Jackson: "That was a loan that the branch gave to the number one branch to pay out entitlements of Mr Jackson."



Uhlmann: "And he is your former husband?"



Jackson: "That's correct."



Uhlmann: "Is this all, do you think, above board?"



Jackson: "Totally."



- 7.30, May 2

The Fair Work Australia report found that Ms Jackson did not fulfil her duty as HSU national secretary to lodge appropriate financial reports for the 2007 financial year.

In 2007 Craig Thomson left the national office. The financial reports had not been put in. I then attempted to put those reports in, but not under my signature because I could not sign off on them because we'd found allegations of corruption in our union. So therefore, I wrote to Fair Work Australia seeking their advice about how to handle this issue and I followed their advice. I followed other professionals' advice, including the auditors and the union solicitors. And for them to come out now and to say that I didn't put the report in in time when I actually followed their process is totally outrageous and scandalous on their part. Kathy Jackson, May 7

The stand-in president: Chris Brown

Sorry, this video has expired Video: Chris Brown talks to Lateline, May 2 (Lateline)

Chris Brown was installed as HSU president after Mr Williamson's suspension.

In the tit-for-tat row engulfing the union, Ms Jackson has accused him of being part of an agenda to split up the union; he in turn has pointed the finger:

At Craig Thomson:

The sort of raid that happened today on the offices of the East branch by the police, the police themselves indicated that they were investigating a period that goes back to the mid-1990s. That is a period that Craig Thomson was the assistant secretary of the then-NSW branch. So, I'm not saying that there is, but certainly he was around at that time, so there's a possibility that some of the stuff that they have gathered does relate to Craig Thomson and we'll find that out in due course. Chris Brown on Lateline, May 2

And at Kathy Jackson and Michael Williamson:

Both of those two individuals have been in a factional fight since round about September of last year. Prior to that, they were very close political allies and Kathy Jackson was under the patronage of Michael Williamson for a long period of time. They voted in a bloc, they were able to get things through simply by the force of the power of numbers that they actually had. Now obviously there was a falling out round about last September. Kathy Jackson had a lot of information on Michael Williamson which may in fact be founded. She took it to the police, which is what she should have done, absolutely, but that internal battle has continued. Now that battle is actually what's destroying the union and pulling it apart along with all of the allegations of corruption. We need to get to the bottom of it. We need to know what actually is going on. Chris Brown, Lateline, May 2

But while Mr Brown concedes he has the power to sack Mr Williamson from his national role, he says he is yet to see concrete evidence of "gross misconduct":

We actually haven't had the hard evidence, we haven't had the independent assessment as to whether the allegations are proven or not. The nearest we've come to is the interim report from Temby that was handed down a couple of days ago. And obviously the developments [on May 2], you know, if there is someone who's been tampering or interfering with the investigation, would seem to indicate that there's enough there to look at that seriously. Chris Brown, Lateline, May 2

And he admits that the outlook for the HSU is bleak, as the scandal shows no sign of ending any time soon.

Anyone looking in from the outside must think that the HSU is going to find it very hard to survive this in the long term. Chris Brown, Lateline, May 2

Editor's note: This story was updated on May 10, 2012, after the release of the Fair Work Australia report.

Topics: unions, federal-government, corruption, alp, nsw, sydney-2000, vic

First posted