Statement

Outcome of HSU National Office investigation

Monday, 7 May 2012

Summary
The General Manager of Fair Work Australia has completed her consideration of the HSU National Office investigation report. The report has been sent to the Senate Committee on Education Employment and Workplace Relations. The report found 181 contraventions of the HSU Rules, Schedule 1 to the Workplace Relations Act 1996 and/or the Fair Work (Registered Organisations) Act 2009 (RO Act). Notices of contravention have been issued to individuals and the HSU National Office. The union has also been sent a rectification notice. The General Manager is instructing solicitors to initiate proceedings in the Federal Court of Australia in respect of the reports findings. An independent review into the conduct of the Fair Work Australias investigation into the HSUs National Office and Victoria No. 1 Branch will be completed before the end of July 2012.

Background
The investigation into the finances and financial management of the National Office of the Health Services Union was conducted by a senior manager of Fair Work Australia, known as the Delegate. It commenced on 27 March 2010 and concluded on 28 March 2012 when the Delegate provided the investigation report to the General Manager. An earlier inquiry, which preceded the investigation, commenced on 6 April 2009.

Statement by Ms Bernadette ONeill, General Manager, Fair Work Australia

I have concluded my consideration of the investigation report into the Health Services Union (HSU) National Office and have sent a copy of the report to the Senate Committee on Education, Employment and Workplace Relations in response to their request of 4 April 2012. I am satisfied that providing the report to the Committee will not prejudice the civil proceedings that I intend to initiate. The Delegates investigation report found a total of 181 contraventions of the HSU Rules, Schedule 1 to the Workplace Relations Act 1996 and/or the Fair Work (Registered Organisations) Act 2009 (RO Act). One hundred and five contraventions are of civil penalty provisions. No penalty is available under the legislation for the remaining 76 contraventions. Under the RO Act,
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declarations by the Federal Court of Australia are the only potentially available remedy in respect of these 76 remaining contraventions.

The contraventions involve the HSU National Office along with two current officials, a former auditor, and one former official. The great majority of contraventions relate to the former official. Notices of contraventions have been issued to the individuals concerned. I am unable to name the officials concerned for reasons that include privacy obligations and the fact I have no protection against defamation. The Delegate issued a notice of contravention to the National Office of the HSU on 28 March 2012. The investigation reveals an organisation that abjectly failed to have adequate governance arrangements in place to protect union members funds against misuse. Substantial funds were, in my view, spent inappropriately including on escort services, spousal travel, and excessive travel and hospitality expenditure. After considering the report fully I have concluded that it is in the public interest to act on all of the findings made by the Delegate. I have decided that the public interest strongly favours acting wherever possible to ensure that organizations and their officers and employees are properly held to account for the expenditure of the unions funds. I consider that taking this action will have an important general and specific deterrent effect on this and other organisations. I am instructing solicitors to initiate proceedings in the Federal Court of Australia in respect of the findings made by the Delegate. In my assessment, some adverse findings were clearly available to the Delegate on the basis of the material in the report; some are more finely balanced. My decision is to take action in respect of all the Delegates findings, subject to a legal assessment by counsel that there are reasonable prospects of success. It is also possible that additional contraventions may be disclosed by the material in the report and I intend to take action in relation to any available additional contraventions identified by counsel. The public interest is more finely balanced in relation to the contraventions where no penalty can be imposed. Some of these findings relate to breaches of the HSU Rules that have had significant consequences, such as the failure to have internal policies governing the use of credit cards. The legislative scheme does not provide for penalties to be available for breaches of the unions Rules. However, I am satisfied that it is in the public interest to seek declaratory relief in relation to these contraventions. I consider that there is a public interest in making such contraventions known to members of the HSU and that taking such action will enhance the accountability of the HSU and its officers. In relation to a single contravention by one person, I have decided it is not in the public interest to take further action. This is because it is a single and relatively minor contravention, and the factors put in mitigation by the person concerned have satisfied me that the cost and complexity of any litigation does not justify taking further action. Rectification notice I have also issued a notice to the HSU requiring it undertake numerous steps designed to ensure adequate governance arrangements are in place. The notice requires the HSU take the required action within 30 days in most cases. Under the RO Act, if the notice is not complied with the General Manager can apply to the Federal Court for enforceable orders to ensure compliance with the notice. Referral to the CDPP/Police As indicated on 3 April 2012 I adopted the recommendation of the Delegate and referred the entire report to the Commonwealth Director of Public Prosecutions (CDPP) for his consideration.

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I have further considered whether I am able to provide a brief of prosecution and concluded that I am unable to do so. It is unfortunate that the legislative scheme that has been in place for many years and that I am required to act within, does not permit me to conduct an investigation into whether criminal offences have been committed, whilst at the same time it does not permit me to disclose information concerning potential criminal offences to the appropriate investigatory agency, namely state and federal police. I understand that the Commonwealth Director of Public Prosecutions has provided the report and related material to the Victoria Police and New South Wales Police Force. The CDPP sought my views prior to making that decision. I have also advised the Victoria Police and the NSW Police Force that Fair Work Australia will facilitate the provision of any further information being sought by police, to the extent legally possible. Independent review I also wish to advise that the scope of the independent review I have commissioned from KPMG into the conduct of the investigations has been finalised and are set out below. The review will be comprehensive. It will consider the adequacy of the investigations, the basis for any delay and the integrity of the investigations and whether there are any indications of interference. The review is anticipated to cost approximately $430,000 and be completed before the end of July 2012.

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Terms of Reference
Independent review of Fair Work Australias HSU investigations The investigation process followed by Fair Work Australia in relation to the investigations into the Victoria No. 1 Branch and National Office of the Health Services Union (HSU) will be reviewed to determine: whether the investigations have been conducted appropriately in terms of relevant investigation standards and operating procedures whether there are any opportunities for improvement to Fair Work Australias investigation procedures, and whether the investigations have considered all reasonable lines of inquiry. In considering the above, the review will include but not necessarily be limited to: reviewing the investigations plans and compare to relevant investigation standards and operating procedures determining the appropriateness of the investigation teams skills and whether sufficient people resources were applied to the investigations reviewing and assessing the overall quality of the investigations files reviewing the investigations and analysing the cause of any delays in the completion of the investigations and whether such delays could have been avoided considering the overall integrity of the investigation process and whether there are any indications of potential interference, and reviewing all internal and external communications including, for example, deviations from the investigation plans, and restrictions or limitation that may impact the completion of the investigation plans.

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