Key Bill Shorten ally Cesar Melhem faces new probe over alleged corrupt deals
The workplace watchdog has launched a fresh corruption investigation into Bill Shorten's Australian Workers Union protege, and the union itself, in a move that could sharpen the federal government's attack on the Opposition Leader.
Controversial Victorian Labor MP Cesar Melhem is now under formal investigation by the Fair Work Commission over allegedly corrupt deals struck as AWU head.
The revelation comes as the government tries again this week to have its Australian Building and Construction Commission legislation passed. At least two of the companies involved in the deals under the Fair Work spotlight are construction firms.
A Victorian state upper house MP since 2013, Mr Melhem is a close political ally of Mr Shorten, who was his predecessor and mentor as AWU Victorian secretary.
A key focus of the Fair Work inquiry is a series of kickbacks from employers to the AWU in exchange for workplace deals that allegedly sold out low-paid workers, saved employers millions of dollars and boosted the political power of Mr Melhem and Mr Shorten.
The investigation will also renew a dilemma for Victorian Premier Daniel Andrews – how to deal with Mr Melhem, whose short stint in Parliament has been marked by controversy over his union past.
Mr Melhem refused on Monday to comment on the new investigation.
In 2015 Mr Melhem stood down as upper house whip due to controversy triggered by the Heydon royal commission over his time at the AWU.
Mr Melhem is an important member of Mr Shorten's Right faction. He has strongly denied wrongdoing in his time at the AWU's Victorian helm, telling the royal commission that in 23 years he had done nothing but improve conditions for workers.
Some of the workplace agreements to be investigated by the Fair Work Commission could also draw attention to contentious deals that involved Mr Shorten before he handed the union reins to Mr Melhem in 2006.
Among them was an agreement with cleaning company Cleanevent. In 2010 Mr Melhem rolled over an earlier, substandard wages deal that
saved the company about $2 million in labour costs in exchange for the company making $25,000 annual payments to the union.
In his final report, commissioner Dyson Heydon
described the $25,000 payment to the AWU as "corrupt" and recommended Mr Melhem be considered for serious criminal charges and that the Fair Work Commission consider pursuing Mr Melhem for breaching his duties as AWU secretary.
Fairfax Media understands that, to date, police have not begun investigations against the MP. However, Fair Work is now acting on the recommendations. Under new maximum penalties, Mr Melhem could face fines of hundreds of thousands of dollars if he were found to have seriously breached his duties.
The royal commission also accused Mr Shorten of having struck deals at Cleanevent in the mid-2000s that allowed below award payments and reduced conditions. Mr Shorten denied this when grilled by the royal commission in mid-2015.
A spokesman for Mr Shorten stressed that the Fair Work Commission was not investigating Mr Shorten. He referred Fairfax Media to the royal commission's own finding that: "There is no submission that Mr Bill Shorten may have engaged in any criminal or unlawful conduct."
Other deals to be investigated include Mr Melhem's role in creating allegedly false invoices to Melbourne builder Winslow Constructors.
Winslow paid the AWU hundreds of thousands of dollars for the union dues of its workers over more than a decade. The practice of large payments from Winslow to the union also occurred when Mr Shorten ran the AWU, as
revealed by Fairfax Media in June 2015.
In a remarkable response to royal commission questions in 2015, current AWU state secretary Ben Davis conceded the Winslow payments "profoundly" weakened the union.
The national AWU also said the evidence pointed to a "potential betrayal" of the union.
The royal commission also recommended Mr Melhem be considered for criminal action over an allegedly corrupt deal by which construction giant Thiess John Holland, the builder of Melbourne's EastLink tollway, paid the AWU nearly $300,000 and saved as $100 million on labour and other costs.
When confronted with damaging documentary evidence in the royal commission, Mr Melhem was accused by counsel assisting Jeremy Stoljar of dishonesty and making up answers.
Mr Melhem replied. "You're the one making it up, not me."
His troubles started in December 2012 when a Fairfax Media
investigation first revealed details of an employer-bankrolled slush fund, Industry 2020, established by Mr Melhem as AWU secretary in 2008.
Fairfax revealed how the fund was used for interference in the elections for the disgraced Health Services Union, and for ALP branch-stacking.
In 2014, the controversy over Industry 2020 brought Mr Melhem to the attention of the royal commission where it emerged he had also used the slush fund for spending on expensive international restaurants, hotels, electronics, cigars and alcohol.
He even donated money from the fund to a group that appeared to be linked to a former Lebanese Christian militia.
In the final report, Commissioner Heydon recommended Mr Melhem be considered for a series of serious criminal charges involving bribery and false accounting.
Mr Melhem narrowly escaped political execution in mid-2015 after details of the workplace deals emerged, infuriating fellow Labor MPs.
In exclusive comments to Fairfax Media in June 2015, Mr Melhem was on the cusp of resignation: "I am considering all options in the interest of the government," he said ahead of a discussions with Premier Daniel Andrews.
But Mr Andrews – who belongs to a part of the Labor Left not aligned with the Shorten forces – did not force Mr Melhem's departure. Labor insiders insist the Premier, who is battling factional unrest, is especially mindful of the dangers of further alienating the Melhem/Shorten group within his ranks.
http://www.smh.com.au/national/inve...er-alleged-corrupt-deals-20161128-gsz04f.html
