Union officials have formed corrupt relationships with organised crime figures, receiving kickbacks in exchange for arranging lucrative contracts in the construction industry.

A joint investigation by ABC's 7.30 program and Fairfax Media has discovered that bribery, extortion and threats of violence are used to cement the influence of crime figures on Australia's construction sites.

Companies connected to major crime figures have won contracts on private and government projects, including Victoria's desalination plant and the Barangaroo development in Sydney.

Evidence including covertly recorded conversations, bank records, police intelligence files and whistleblower accounts implicate a number of senior members of the influential Construction, Forestry, Mining and Energy Union (CFMEU) in New South Wales and Victoria in corruption.

In a secretly recorded conversation, one building industry figure tells a colleague that he has given cash bribes and other inducements to several members of the union's Victorian hierarchy, along with lower-level union shop stewards.

Labour hire companies have paid crime figures and union officials to obtain contracts for major building projects, even though some of those companies have become infamous for ripping off workers and leaving them without their entitlements.

The CFMEU is able to pressure large builders to use certain contractors - including labour hire companies - by wielding the stick of costly industrial action and holding out the carrot of peace on building sites.

A Victorian CFMEU official, Danny Berardi, resigned immediately after Fairfax and 7.30 supplied evidence that he got at least two companies to help renovate his properties for free in return for getting them work on Melbourne construction sites.

Investigation into influence of Sydney crime figure

The CFMEU's national executive has also launched an internal investigation into the influence of Sydney crime figure George Alex in the union's NSW arm after a whistleblower questioned his relationship with senior union officials.

Sorry, this video has expired Fairfax journalist Nick McKenzie says corruption and organised crime are entrenched in construction industry

Mr Alex - a convicted criminal with links to Comancheros bikies, murderers and drug traffickers - runs a labour hire company that has landed lucrative contracts in NSW and Victoria, including the Barangaroo development.

It has been alleged that union figures helped Mr Alex obtain those contracts, despite the fact he has become notorious for running phoenix companies, which go bust then resurface under a different name. As a result, some workers have been left without their entitlements.

Late last year, Mr Alex's companies owed more than $1 million in workers' benefits and unpaid taxes in NSW and Victoria. The NSW CFMEU recently recovered $250,000 from Mr Alex.

In Victoria, Mr Alex employed Melbourne underworld figure Mick Gatto to negotiate with the unions and obtain work for his labour hire companies, Active and United.

Union chief concerned about claims of criminality

In separate statements to 7.30 and Fairfax Media, Victorian secretary John Setka and his NSW counterpart, Brian Parker, said the union played no part in deciding whether particular labour hire companies got contracts on construction projects.

"The union is not in a position to check the property, or other interests or connections of employers and managers of companies," Mr Parker said.

Sorry, this video has expired CFMEU national secretary Dave Noonan on ABC News Breakfast

"The union might have a view about a contractor and their history of compliance, but ultimately, whether a subcontractor wins work is up to the builders who contract with them."

Mr Parker also said he had a "professional" relationship with Mr Alex, but no social relationship, and that he had not sought work for Active Labour Hire at Barangaroo.

CFMEU national secretary Dave Noonan said he was "deeply concerned about any criminal activity in the industry", and urged anyone with evidence of criminality in the industry to report it to police.

"We will not tolerate corruption within the union," he told ABC News Breakfast.

"Construction workers are entitled and are proud of the fact we have had a strong and effective union in the CFMEU. Any individuals that have engaged in corrupt activity will not be continuing their employment with the union. They will be sacked."

Sorry, this video has expired Fair Work Building and Construction Commission director Nigel Hadgkiss claims to know of corrupt payments

Mr Noonan said he "absolutely refuted" suggestions that the union had been inactive in fighting corruption.

"Our policies are very clear on probity and corruption and on all of these matters, and we have dealt with them in the past," he said.

"The CFMEU is not the corporate regulator to approve which individuals and which companies can and cannot operate in the industry, nor are we the body that can investigate criminal matters. These are issues for ASIC and the police force and we have consistently called on them to do their job."

'Field left open for corrupt officials'

Nigel Hadgkiss, the director of the Fair Work Building and Construction Commission, has revealed law enforcement agencies have recently obtained evidence about "the payment of bribes to senior union officials" in Victoria.

However, he said that in the past, police had not acted on evidence of corruption in the building industry, leaving the field open for criminals and corrupt officials. He described this as "very frustrating".

History of corruption Widespread use of inappropriate payments in the industry

Widespread use of inappropriate payments in the industry Threatening and intimidatory behaviour

Threatening and intimidatory behaviour Widespread requirements to employ union-nominated persons in critical positions on building projects

Widespread requirements to employ union-nominated persons in critical positions on building projects Unlawful strikes and threats of unlawful strikes

Unlawful strikes and threats of unlawful strikes Read more about the major structural reform recommended by the commission

In 2010, intelligence gathered by a Victoria Police and Australian Crime Commission drugs investigation revealed that Mr Gatto and his crane company business partner, Matt Tomas, were allegedly involved in "criminal activity in the building industry and narcotics" and have close connections to "the Hells Angels, the CFMEU and drug importers".

It has been alleged that two Victoria labour hire firms, KPI and MC Labour, have hired criminal figures and friends and relatives of union officials in return for help getting contracts on building projects, including the massive desalination plant in Gippsland.

A number of outlaw motorcycle gang members and other people linked with them were given jobs at the plant.

A KPI staff list sent to a major contractor at the Victorian government-funded Springvale Road overpass project reveals it is employing the relatives of two CFMEU shop stewards, two outlaw bikie figures and several relatives of Mr Gatto.

The labour hire companies sought favour with union officials by supplying gifts such as AFL grand final tickets, Formula One grand prix tickets, and trips to Crown casino's high-end Mahogany Room.

Government, builders call for re-establishment of ABCC

The Federal Government says the claims of widespread corruption and criminal activity by union officials strengthen the Government's case for re-establishing the Australian Building and Construction Commission.

Sorry, this video has expired Corruption allowed to run rampant without strong ABCC, says Master Builders Australia

"Any argument against the re-establishment of the ABCC has just disappeared out the window," Senator Abetz said this morning.

"Bill Shorten and Labor need to acknowledge that there is corruption and there is a need for the ABCC."

Master Builders Association chief executive Wilhelm Harnisch says the allegations are unnacceptable and prove that the ABCC needs to be restored

"It was exactly these sorts of allegations that led to the establishment of the Cole Royal Commission," he said.

"These fresh allegations of corruption and criminality are totally outside the community's expectations of how normal people should behave and there must be a full inquiry to get to the truth."

Mr Harnisch says the allegations point to a culture of intimidation and coercion created by the building unions.

"These allegations also illustrate how the behaviour of building unions holds back the productivity of the construction sector to the detriment of the Australian community," he said.

Lend Lease chief executive Steve McCann told the ABC they have a "zero tolerance approach" to corrupt or fraudlent behaviour in the industry.

The CFMEU at a glance With more than 140,000 members, the Construction, Forestry, Mining and Energy Union (CFMEU) is one of Australia's largest unions.

With more than 140,000 members, the Construction, Forestry, Mining and Energy Union (CFMEU) is one of Australia's largest unions. The CFMEU was established in 1992 via the amalgamation of unions representing several different trades.

The CFMEU was established in 1992 via the amalgamation of unions representing several different trades. Trades covered by the CFMEU include: bricklaying, carpeting, concreters, crane drivers, glaziers, labourers, painters, plant operators, plasterers, steelfixers, stonemasons and tilelayers, among others.

Trades covered by the CFMEU include: bricklaying, carpeting, concreters, crane drivers, glaziers, labourers, painters, plant operators, plasterers, steelfixers, stonemasons and tilelayers, among others. The union has branches in each of Australia's capitals, as well as major regional centres.

The union has branches in each of Australia's capitals, as well as major regional centres. The CFMEU's website says it employs around 400 full-time staff and officials.

The CFMEU's website says it employs around 400 full-time staff and officials. Its national secretary, Dave Noonan, has held the top job since 2006.

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