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The federal government's building watchdog cut a deal to keep a disgraced former union official out of jail in return for testifying against his former colleagues, the Federal Court has found. Seven of Canberra's top CFMEU officials could have been hit with fines of more than $1 million over the allegations of breaking industrial laws in a case which relied heavily on the word of convicted blackmailer Halafihi Kimonu Kivalu. But the Australian Building and Construction Commission's case against seven members of the union's ACT branch has failed with the evidence of Mr Kivalu deemed, by Federal Court Judge Geoffrey Flick, too unreliable. A criminal case against CFMEU official, former rugby league player Johnny Lomax, which also relied heavily on Mr Kivalu's evidence, collapsed last year and the Canberra Raiders great is now suing the Australian Federal Police over their conduct in the matter. Taxpayers were left with a hefty legal bill after the ACT Supreme Court ordered the AFP to pay the bulk of the CFMEU's costs in a legal battle over an illegal raid on the union's Canberra office in August 2015 by up to 20 officers attached to the Trade Unions Royal Commission. Monday's Federal Court decision is the latest legal setback for the ABCC, in its campaign against the building union after another judge last week sharply criticised for mounting a large and expensive case against the CFMEU over "virtually nothing". In the case against the union's ACT branch secretary Dean Hall and his colleagues, ABCC alleged the CFMEU's Canberra branch organised a blockade of the building site in the city's inner-north in June 2014 on the false pretext of having safety concerns for the safety of the construction workers there. But the real reason the union wanted work shut down, the commission alleged, was building firm Built had refused to sign a union-endorsed enterprise agreement. The ABCC has other witnesses who alleged some of the union officials offered to end the safety dispute if the company signed the agreement and that Mr Hall threatened a "war" after police were called to the blockade. But Justice Flick found that the ABCC director Nigel Hadgkiss had not met the burden proof to substantiate his allegations and found in the union's favour. "The evidence of Mr Kivalu is subject to such serious reservation that no reliance can be placed upon it," Justice Flick wrote. Reacting to the decision on Wednesday morning, Mr Hall was sharply critical of Mr Hadgkiss for running the case. "Nigel Hadgkiss has always been a Liberal Party apparatchik, but, even for him, this was overreach," Mr Hall said. "The ABCC have made their political motivations evident in this case." Mr Hadgkiss issued a brief statement on Wednesday. "The agency is reviewing the court's decision," he said. Nearly two years since the Royal Commission into union corruption hearings came to Canberra in a blaze of publicity, there has only been one conviction as a result of allegations aired in the proceedings; that of Mr Kivalu who was given a suspended jail sentence in June 2016 after pleading guilty to blackmail charges.

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