FAIR WORK AUSTRALIA

Report of the Delegate to the General Manager of

Fair Work Australia Investigation into the National Office of the

Health Services Union under section 331 of the Fair Work (Registered Organisations) Act 2009

Terry Nassios 28 March 2012

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Table of Contents PART 1: BACKGROUND AND COMPLIANCE FRAMEWORK .......................................... 1 Chapter 1 - Introduction ..................................................................................................... 1

Structure of this Report ..................................................................................................... 1 Definitions ........................................................................................................................ 1 Interview and document references .................................................................................. 9 Registration and structure of the Union........................................................................... 10 Appointment of National Secretaries of the Union .......................................................... 13 The power under which the AIR and FWA can conduct inquiries and investigations ....... 14

The Workplace Relations Act - August 2002 .............................................................. 14 Chronology of Events ..................................................................................................... 26

Chapter 2 - The Compliance Framework ......................................................................... 71 The Legislative Scheme ................................................................................................... 71

Background ................................................................................................................ 71 The National Office of the HSU is a reporting unit ...................................................... 73

Extracts from the RAO Schedule, Reporting Guidelines and RAO Regulations .............. 73 Organisations are required to have rules ................................................................... 73 Lodgement with the AIR of particulars of loans, grants and donations ....................... 75 The Keeping of Financial Records ............................................................................. 77 Preparation of GPFR and Operating Report ............................................................... 77 Provision of Financial Documents to Members and Presentation to a Meeting .......... 81 Lodgement with the Australian Industrial Registry ...................................................... 83 A reporting unit must have an auditor ......................................................................... 84 Timeframes for compliance ........................................................................................ 85 General Duties in relation to the Financial Management of Organisations ................. 87

Relevant provisions of the HSU Rules ............................................................................ 89 Background ................................................................................................................ 89

Extracts of the Rules ...................................................................................................... 89 National Council ......................................................................................................... 89 Fares and expenses .................................................................................................. 92 National Executive ..................................................................................................... 92 The National President .............................................................................................. 93 The National Secretary - Rule 32 ............................................................................... 94 The National Assistant Secretary ............................................................................... 95 Trustees ..................................................................................................................... 95 The National Auditor .................................................................................................. 96 National Funds and Property - Rule 36 ...................................................................... 96 The Finance Committee ............................................................................................. 98

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Preliminary Discussion of the Requirements of the Rules ............................................ 98 Duties of National Council and National Executive. ........................................................ 99

Authorisation of Expenditure - control of funds and property ...................................... 99 What is the ‘general administration of the Union’?.................................................... 103 Day to day expenditure by the National Office ......................................................... 109

PART 2 MATTERS CONCERNING MR THOMSON ........................................................ 119 Chapter 3 - Mr Thomson’s submissions regarding my letter of 12 December 2011 .. 120

Mr Thomson’s period as National Secretary of the HSU ............................................... 120 Conduct of the Investigation ......................................................................................... 122

Investigation not authorised by legislation ................................................................ 122 The nature of my ‘Preliminary Findings’ is not authorised by legislation ................... 124 The obligation of fairness to Mr Thomson ................................................................ 126 Evidence obtained in breach of Parliamentary Privilege and impermissible use of Hansard ................................................................................................................... 130 Evidence obtained from the FWA interview with Mr Thomson .................................. 132 Bias.......................................................................................................................... 133

Interpreting Trade Union Rules ..................................................................................... 135 Construing Resolutions of Organisations ...................................................................... 139 Resolution of the National Executive Meeting on 25 and 26 February 2003 ................. 142 Construing Management Rules of Organisations .......................................................... 143 Meaning of “Control” in rules of organisations ............................................................... 145 HSU ‘Objects’ Rule ....................................................................................................... 146 HSU Management Rules .............................................................................................. 147

Appointment and removal of officers and industrial/research staff ............................ 149 Fixing Remuneration of industrial/research staff ...................................................... 154

HSU Financial Rules .................................................................................................... 155 Control of Expenditure ............................................................................................. 155 Duties and Powers of a National Secretary of an Australian Trade Union ................ 158 General duties in relation to the financial management of organisations .................. 161

Chapter 4 - Employment of staff of the National Office ................................................ 163 FWA's view of the Rules governing employment and remuneration of National Office staff .................................................................................................................................. 163

Provisions of the Rules ............................................................................................ 163 Capacity of National Secretary to appoint National Office staff - Rule 32(n) ............. 163 Determination of wages and conditions of National Office staff - Rule 27(a) ............ 165

Findings in relation to employment of National Office staff ........................................ 167 Employment of Criselee Stevens .................................................................................. 167

Evidence .................................................................................................................. 167 Mr Thomson’s submissions ...................................................................................... 173 Conclusions ............................................................................................................. 174

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Findings 1 and 2 - Employment of Criselee Stevens ................................................ 175 Employment of Matthew Burke ..................................................................................... 176

Evidence .................................................................................................................. 176 Mr Thomson’s submissions ...................................................................................... 183 Conclusion ............................................................................................................... 183 Findings 3 to 5 - Employment of Matthew Burke ...................................................... 185

Payment of $25,000 per annum to Karene Walton while she was employed by the ACTU ..................................................................................................................................... 185

Evidence .................................................................................................................. 185 Mr Thomson’s submissions ...................................................................................... 196 Conclusion ............................................................................................................... 197 Finding 6 - Payment of $25,000 per annum to Karene Walton while she was employed by the ACTU ............................................................................................................ 197

Employment of Struan Robertson, Nicole Rodger, Karinda Flavell, Katie Hall and Mark McLeay ......................................................................................................................... 197

Evidence .................................................................................................................. 197 Mr Thomson’s submissions ...................................................................................... 201 Conclusion ............................................................................................................... 202 Findings 7 to 9 - Employment of Struan Robertson, Nicole Rodger, Karinda Flavell, Mark McLeay and Katie Hall .................................................................................... 203

Employment of Belinda Ord .......................................................................................... 203 Evidence .................................................................................................................. 203 Mr Thomson’s submissions ...................................................................................... 204 Conclusions ............................................................................................................. 204 Findings 10 and 11 - Employment of Belinda Ord .................................................... 205

Chapter 5 - Financial Management of the National Office ............................................ 207 Introduction .................................................................................................................. 207

Mr Thomson’s general obligations in relation to the financial management of the National Office ................................................................................................................. 207

Powers and Obligations of the National Secretary - Rule 32 ......................................... 207 The keeping of records ............................................................................................ 209 Compliance with Rule 32 ......................................................................................... 210

Authorisation of Expenditure through Financial ‘Delegations’ ....................................... 214 Effectiveness of purported delegations .................................................................... 217

The absence of policies dealing with various financial issues .................................... 222 Failure to prepare, and to seek approval of, policies regarding the establishment of credit cards ............................................................................................................................ 222

Evidence .................................................................................................................. 222 Mr Thomson’s submissions ...................................................................................... 229 Conclusions ............................................................................................................. 230

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Finding 12 - Failure to prepare, and to seek approval of, policies regarding the establishment of credit cards.................................................................................... 231

Failure to prepare policies regarding the use of credit cards ......................................... 231 Evidence .................................................................................................................. 231 No formal policies existed ........................................................................................ 231 Documentation of credit card transactions and permitted use of cards ..................... 232 Instructions to staff regarding when to use Diners Club card compared with CBA Mastercard ............................................................................................................... 239 Mr Thomson’s submissions ...................................................................................... 241 Conclusion ............................................................................................................... 242 Findings 13 and 14 - Failure to prepare policies regarding the use of credit cards ... 245

Failing to prepare policies regarding cash withdrawals ................................................. 245 Evidence .................................................................................................................. 245 Mr Thomson’s submissions ...................................................................................... 251 Findings 15 and 16 - Failing to prepare policies regarding cash withdrawals ........... 254

Failure to prepare policies regarding travel related expenses ....................................... 254 Evidence .................................................................................................................. 254 Mr Thomson’s submissions ...................................................................................... 255 Conclusions ............................................................................................................. 257 Findings 17 to 22 - Failure to prepare policies regarding travel related expenses .... 259

Failure to prepare policies regarding spousal travel ...................................................... 260 Evidence .................................................................................................................. 260 Mr Thomson’s submissions ...................................................................................... 263 Conclusions ............................................................................................................. 264 Findings 23 and 24 - Failure to prepare policies regarding spousal travel ................ 265

Expending the funds of the HSU .................................................................................... 265 Not supervising or authorising payments of expenditure from National Office funds on a daily basis .................................................................................................................... 265

Evidence .................................................................................................................. 265 Mr Thomson’s submissions ...................................................................................... 276 Conclusions ............................................................................................................. 276 Finding 25 - Not supervising or authorising payments of expenditure from National Office funds on a daily basis .................................................................................... 277

The administration of credit cards ................................................................................. 277 Use of credit cards to withdraw cash ............................................................................ 277

Evidence .................................................................................................................. 277 Mr Thomson’s submissions ...................................................................................... 286 Findings 26 to 28 - Use of credit cards to withdraw cash .......................................... 289

Expenditure incurred on Mr Thomson’s credit cards for his benefit after the resignation date .............................................................................................................................. 290

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Evidence .................................................................................................................. 290 My power to make findings of contravention regarding transactions that were incurred after the resignation date ......................................................................................... 294 Mr Thomson’s submissions ...................................................................................... 295 Conclusions ............................................................................................................. 295 Findings 29 to 32 - expenditure incurred on Mr Thomson’s credit cards for his benefit after the resignation date ......................................................................................... 297 Transactions that were incurred after the resignation date ....................................... 297

Authorisation of expenditure incurred by National Office staff on their credit cards ....... 301 Evidence .................................................................................................................. 301 Mr Thomson’s submissions ...................................................................................... 305 Conclusions ............................................................................................................. 308 Findings 33 to 38 - Authorisation of expenditure incurred by National Office staff members on their credit cards .................................................................................. 309

Expenditure incurred on Mr Thomson’s credit cards for incidental goods or purported authorisation of expenditure for incidental goods incurred by staff members of the National Office on their credit cards .............................................................................. 310

Evidence .................................................................................................................. 310 Mr Thomson’s submissions ...................................................................................... 312 Conclusions ............................................................................................................. 313 Findings 39 to 42 - Expenditure incurred on Mr Thomson’s credit cards for incidental goods and purported authorisation of expenditure for incidental goods incurred by staff members of the National Office on their credit cards ................................................ 315

Providing Mr Thomson’s CBA Mastercard to another person ....................................... 315 Evidence .................................................................................................................. 315 Mr Thomson’s submissions ...................................................................................... 317 Conclusions ............................................................................................................. 318 Findings 43 to 47 - Providing Mr Thomson’s CBA Mastercard to another person ..... 319

Specific payments which are contrary to the Rules ..................................................... 320 Authorisation of invoice from Marriott Hotel to be paid by the National Office ............... 320

Evidence .................................................................................................................. 320 Mr Thomson’s submissions ...................................................................................... 321 Conclusion ............................................................................................................... 321 Finding 48 - Authorisation of invoice from Marriott Hotel to be paid by the National Office ....................................................................................................................... 322

Authorisation of invoice from University House to be paid by the National Office .......... 322 Evidence .................................................................................................................. 322 Mr Thomson’s submissions ...................................................................................... 325 Conclusions ............................................................................................................. 325 Findings 49 and 50 - Authorisation of invoice from University House to be paid by the National Office ......................................................................................................... 327

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Authorisation of invoice from Hyatt Catering to be paid by the National Office .............. 327 Evidence .................................................................................................................. 327 Mr Thomson’s submissions ...................................................................................... 328 Conclusion ............................................................................................................... 328 Finding 51 - Authorisation of invoice from Hyatt Catering to be paid by the National Office ....................................................................................................................... 329

Payments outside the general administration of the Union ......................................... 329 Authorisation of payment to the Julie Williamson Fundraising Appeal by the National Office ............................................................................................................................ 329

Evidence .................................................................................................................. 329 Mr Thomson’s submissions ...................................................................................... 331 Conclusions ............................................................................................................. 331 Findings 52 and 53 - Authorisation of payment to the Julie Williamson Fundraising Appeal by the National Office ................................................................................... 333

Authorisation of expenditure relating to Ms Angela Humphries to be paid by the National Office ............................................................................................................................ 333

Evidence .................................................................................................................. 333 Mr Thomson’s submissions ...................................................................................... 336 Conclusions ............................................................................................................. 337 Finding 54 - Authorisation of expenditure relating to Ms Angela Humphries to be paid by the National Office ............................................................................................... 338

Travelling overseas and incurring expenditure while Mr Thomson was on approved annual leave ................................................................................................................. 338

Evidence .................................................................................................................. 338 Mr Thomson’s submissions ...................................................................................... 346 Conclusions ............................................................................................................. 346 Findings 55 and 56 - Travelling overseas and incurring expenditure while Mr Thomson was on approved annual leave................................................................................. 347

Incursion or purported authorisation of expenditure charged to Mr Thomson’s credit card on travel for Ms Alison Soutar ....................................................................................... 348

Evidence .................................................................................................................. 348 Mr Thomson’s submissions ...................................................................................... 348 Conclusions ............................................................................................................. 349 Findings 57 to 60 - Incursion or purported authorisation of expenditure charged to Mr Thomson’s credit card on travel for Ms Alison Soutar ......................................... 350

Payments to Emerald Tourist Railway Board, Sydney Wedding Music, Cairns District Soccer Association, Interat Immobiliare, Hawkesfords International and Comme Ci Comme Ca ................................................................................................................... 350

Evidence .................................................................................................................. 350 Mr Thomson’s submissions ...................................................................................... 357 Conclusions ............................................................................................................. 357

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Findings 61 and 62 - Payments to Emerald Tourist Railway Board, Sydney Wedding Music, Cairns District Soccer Association, Internat Immobiliaire , Hawkesfords International and Comme Ci Comme Ca .................................................................. 359

Mr Thomson’s decision to move to live in NSW and to open an office in Sydney ..... 359 Moving to NSW and opening a National Office in Sydney without seeking the approval of the National Executive or National Council ................................................................... 359

Evidence .................................................................................................................. 359 Mr Thomson’s submissions ...................................................................................... 364 Conclusions ............................................................................................................. 365 Finding 63 - Moving to NSW and opening a National Office in Sydney without seeking the approval of the National Executive or National Council ...................................... 367

Expenditure on accommodation in Melbourne during 2006 and 2007 ........................ 367 Incursion of expenditure on Mr Thomson’s credit cards on accommodation and travel related expenses in Melbourne during 2006 and 2007 ................................................. 367 Part A - Information about each of the 36 trips .............................................................. 368

Notes on methodology ............................................................................................. 368 Part B - Was expenditure incurred on any of the 36 trips excessive? ........................... 421

Analysis of each of the 36 trips in order to determine whether expenditure was excessive ................................................................................................................. 425 Mr Thomson’s submissions ...................................................................................... 439 Conclusions ............................................................................................................. 439 Findings 64 to 66 - Incursion of expenditure on Mr Thomson’s credit cards on accommodation and travel related expenses in Melbourne during 2006 and 2007... 445

Reporting to National Executive and/or National Council ............................................ 446 Failing to present the full report for year ended 30 June 2004 to the National Council meeting on 19 October 2004 ........................................................................................ 446

Evidence .................................................................................................................. 446 Mr Thomson’s submissions ...................................................................................... 448 Conclusions ............................................................................................................. 448 Finding 67 - failing to present the full report to the National Council meeting on 19 October 2004 ...................................................................................................... 449

Signing the committee of management statement for year ended 30 June 2005 knowing that the resolution set out in that statement had not been passed ................................ 449

Evidence .................................................................................................................. 449 Mr Thomson’s submissions ...................................................................................... 451 Conclusions ............................................................................................................. 451 Finding 68 - Signing the committee of management statement for year ended 30 June 2005 knowing that the resolution set out in that statement had not been passed ..... 453

Failing to present financial reports for year ended 30 June 2006 to the committee of management meeting on 13 September 2006 .............................................................. 453

Evidence .................................................................................................................. 453 Mr Thomson’s submissions ...................................................................................... 455

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Conclusions ............................................................................................................. 456 Finding 69 - Failing to present financial reports for year ended 30 June 2006 to the committee of management meeting on 13 September 2006 .................................... 456

Failing to prepare financial documents for year ended 30 June 2007 and to present them to a meeting of National Council or National Executive before 14 December 2007 ....... 456

Evidence .................................................................................................................. 456 Mr Thomson’s submissions ...................................................................................... 459 Conclusions ............................................................................................................. 460 Findings 70 and 71 - Failing to prepare financial documents for year ended 30 June 2007 and to present them to a meeting of National Council or National Executive before 14 December 2007 ....................................................................................... 460

Chapter 6 - Expenditure of National Office funds for Mr Thomson’s personal benefit ......................................................................................................................................... 463

Introduction .................................................................................................................. 463 Escort Services ............................................................................................................... 463

Purported authorisation of expenditure incurred on Mr Thomson’s credit cards for escort services ........................................................................................................................ 463

Introduction .............................................................................................................. 463 General evidence about expenditure of HSU funds on escort services .................... 464 Specific transactions ................................................................................................ 474 Mr Thomson’s submissions ...................................................................................... 503 Conclusions ............................................................................................................. 504 Findings 72 to 75 - Purported authorisation of expenditure incurred on Mr Thomson’s credit cards for escort services ................................................................................. 505

Mr Thomson ‘s claim to have taken annual leave in 2007 ............................................ 506 Historical background .............................................................................................. 506

Mr Thomson’s claim to have taken six weeks’ leave prior to the 2007 federal election . 506 Mr Thomson’s submissions ...................................................................................... 522 Conclusions ............................................................................................................. 523 Findings 76 to 78 - Mr Thomson did not take annual leave during October and November 2007 ....................................................................................................... 524

Expenditure on accommodation in Sydney after Mr Thomson moved to the Central Coast of NSW .................................................................................................................. 525

Expenditure on accommodation in Sydney after Mr Thomson moved to the Central Coast of NSW ......................................................................................................................... 525

Evidence .................................................................................................................. 525 Mr Thomson’s submissions ...................................................................................... 546 Conclusions ............................................................................................................. 546 Findings 79 to 82 - Expenditure on accommodation in Sydney after Mr Thomson moved to the Central Coast of NSW ........................................................................ 547

Alternative findings relating to Mr Thomson’s expenditure on accommodation in Sydney - expenses were excessive ............................................................................................. 548

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Evidence .................................................................................................................. 549 Mr Thomson’s submissions ...................................................................................... 556 Conclusion ............................................................................................................... 556 Findings 83 to 85 - Alternative findings relating to Mr Thomson’s expenditure on accommodation in Sydney - expenses were excessive ............................................ 557

Expenditure on accommodation on the Central Coast during 2006 and 2007 ........... 557 Expenditure on accommodation on the Central Coast during 2006 and 2007 ............... 557

Evidence .................................................................................................................. 558 Mr Thomson’s submissions ...................................................................................... 560 Conclusions ............................................................................................................. 560 Findings 86 to 88 - Expenditure on accommodation on the Central Coast during 2006 and 2007 .................................................................................................................. 561

Hotel and accommodation expenses incurred by Mr Thomson during September and October 2005 ................................................................................................................... 561

Travel between Sydney and Melbourne during September 2005 .................................. 561 Evidence .................................................................................................................. 561 Mr Thomsons’submissions ....................................................................................... 567 Conclusions ............................................................................................................. 567 Findings 89 to 92 - Travel between Sydney and Melbourne during September 2005 569

Accommodation expenses incurred by Mr Thomson during October 2005 ................... 570 Evidence .................................................................................................................. 570 Mr Thomson’s submissions ...................................................................................... 577 Conclusions ............................................................................................................. 577 Findings 93 to 100 - Accommodation expenses incurred by Mr Thomson during October 2005 ........................................................................................................... 580

Expenditure by Mr Thomson on travel by his wife, Mrs Christa Thomson ................. 581 Expenditure by Mr Thomson on travel for his wife, Mrs Christa Thomson ..................... 581

Evidence .................................................................................................................. 581 Mr Thomson’s submissions ...................................................................................... 593 Conclusions ............................................................................................................. 594 Findings 101 to 104 - Expenditure by Mr Thomson on travel for his wife, Mrs Christa Thomson .................................................................................................................. 595

Dining and entertainment ............................................................................................... 596 Evidence .................................................................................................................. 596

Illustrative examples of expenditure on dining and entertainment ................................. 598 Expenditure while not travelling - the 14 large transactions ...................................... 599 Mr Thomson’s submissions ...................................................................................... 601 Conclusions ............................................................................................................. 601 Findings 105 to 112 - Expenditure on dining and entertainment when Mr Thomson was not travelling ............................................................................................................ 603 Expenditure while travelling interstate - the 8 large travel transactions ..................... 605

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Mr Thomson’s submissions ...................................................................................... 607 Conclusions ............................................................................................................. 608 Findings 113 to 116 - Expenditure using Mr Thomson’s credit cards on dining and entertainment while he was travelling interstate ....................................................... 609

Chapter 7 - Expenditure of National Office funds for the purpose of assisting Mr Thomson’s election to Parliament for the seat of Dobell ........................................ 611

Background: Decisions taken by the National Executive in relation to Work Choices and the 2007 general federal election campaign ................................................................. 611

Was expenditure in relation to the Your Rights at Work campaign and the 2007 federal general election authorised? .................................................................................... 621

The Dobell campaign ...................................................................................................... 632 Expenditure of National Office funds on Mr Thomson’s Dobell Campaign .................... 632

Mr Thomson’s decision to stand for election in Dobell .............................................. 632 Knowledge of Mr Thomson’s decision among the National Executive ...................... 632 Decisions of National Executive about whether to support Mr Thomson’s campaign 633 The Campaign Office ............................................................................................... 637 Other expenses which appear to be directly related to the Dobell Campaign ........... 640 Mr Thomson’s submissions ...................................................................................... 651 Conclusions ............................................................................................................. 651 Findings 117 to 124 - Expenditure of National Office funds on Mr Thomson’s Dobell Campaign ................................................................................................................ 653

Criselee Stevens ............................................................................................................. 655 Employment of, and authorising expenditure incurred by, Ms Stevens ......................... 655

The decision to employ Ms Criselee Stevens ........................................................... 655 The ACTU Organising Works Traineeship Program ................................................. 656 The nature of Ms Stevens' duties ............................................................................. 658 Knowledge of Ms Stevens' employment among other members of the National Executive ................................................................................................................. 661 Costs to the National Office of Ms Stevens’ employment ......................................... 664 Expenditure incurred by Criselee Stevens while employed with the HSU ................. 664 Other expenditure incurred by Ms Stevens .............................................................. 685 Mr Thomson’s submissions ...................................................................................... 686 Conclusions ............................................................................................................. 686 Findings 125 to 128 - Employment of, and authorising expenditure incurred by, Ms Stevens .............................................................................................................. 689

Coastal Voice .................................................................................................................. 690 Authorising expenditure of National Office funds on activities of Coastal Voice ............ 690

What was Coastal Voice? ........................................................................................ 690 Establishing Coastal Voice ....................................................................................... 692 Involvement of the National Office in Coastal Voice ................................................. 694 Expenditure on Coastal Voice .................................................................................. 696

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Launch of Coastal Voice .......................................................................................... 697 Mr Thomson’s resignation from Coastal Voice ......................................................... 700 Coastal Voice today ................................................................................................. 700

Mr Thomson’s submissions .......................................................................................... 700 Conclusions .................................................................................................................. 701

Findings 129 to 133 - Authorising expenditure of National Office funds on activities of Coastal Voice ........................................................................................................... 702

Matthew Burke ................................................................................................................ 704 Employment of, and authorisation of expenditure incurred by, Matthew Burke ............. 704

Mr Burke's duties while employed by the National Office ......................................... 704 Mr Burke's duties while employed by Senator Hutchins ........................................... 706 Expenditure incurred by Mr Burke ............................................................................ 708 Expenditure by Mr Thomson on airfares and accommodation for Mr Burke ............. 718 Mr Thomson’s submissions ...................................................................................... 719 Conclusions ............................................................................................................. 720 Findings 134 to 137 - Employment of, and authorising expenditure incurred by, Matthew Burke ......................................................................................................... 722

Central Coast Rugby League ......................................................................................... 723 Authorising payment to the Central Coast Rugby League by the National Office .......... 723

The Sponsorship Agreement ................................................................................... 723 Other documentary evidence relating to the Sponsorship Agreement ...................... 725 Mr Thomson’s submissions ...................................................................................... 735 Conclusions ............................................................................................................. 736 Findings 138 and 139 - Authorising payment to the Central Coast Rugby League by the National Office ................................................................................................... 739

Dads in Education Fathers’ Day Breakfast ................................................................... 740 Authorising payment of Dads in Education Fathers’ Day Breakfast by the National Office ..................................................................................................................................... 740

Evidence .................................................................................................................. 740 Mr Thomson’s submissions ...................................................................................... 744 Conclusions ............................................................................................................. 744 Findings 140 to 143 - Authorising payment of Dads in Education Fathers’ Day Breakfast by the National Office ............................................................................... 745

Golden Years Collectables ............................................................................................. 745 Authorising payment to Golden Years Collectables by the National Office ................... 745

Evidence .................................................................................................................. 746 Mr Thomson’s submissions ...................................................................................... 746 Conclusions ............................................................................................................. 746 Findings 144 to 147 - Authorising payment to Golden Years Collectables by the National Office ......................................................................................................... 747

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Central Coast Convoy for Kids ...................................................................................... 748 Authorising payment to the Central Coast Convoy for Kids by the National Office ........ 748

Evidence .................................................................................................................. 748 Mr Thomson’s submissions ...................................................................................... 749 Conclusions ............................................................................................................. 749 Findings 148 to 151 - Authorising payment to the Central Coast Convoy for Kids by the National Office ......................................................................................................... 750

Requirements of section 237 of the RAO Schedule in relation to donations ............. 751 Evidence .................................................................................................................. 751 Mr Thomson’s submissions ...................................................................................... 753 Conclusions ............................................................................................................. 753 Findings 152 and 153 - Subsection 237(1) of the RAO Schedule in relation to donations ................................................................................................................. 754

Chapter 8 - Mr Thomson’s management of the finances of the National Office ......... 755 Expenditure of HSU funds on Mr Thomson’s campaign for Dobell in priority to other activities of the National Office ..................................................................................... 755

How was the National Office funded? ...................................................................... 755 Financial Position of the National Office in 2002 ...................................................... 758 Position when Mr Thomson became National Secretary on 16 August 2002............ 758 National Office funding during Mr Thomson’s term as National Secretary ................ 767 Overview of National Office expenditure and liabilities between 2002 and 2008 ...... 774 Increase in National Office expenditure from 2005 to 2006 ...................................... 778 Increase in Motor Vehicle Expenses ........................................................................ 779 Maintenance of 2006 expenditure levels in 2007 and 2008 ...................................... 780 July 2006 to March 2008 - a closer examination ...................................................... 781 Priority given to payments on the Central Coast ...................................................... 805 Financial Position in early 2008 ................................................................................ 810 Mr Thomson’s submissions ...................................................................................... 813 Conclusions ............................................................................................................. 813 Findings 154 to 156 - Expenditure of HSU funds on Mr Thomson’s campaign for Dobell in priority to other activities of the National Office ..................................................... 817

PART 3: MATTERS CONCERNING THE NATIONAL OFFICE REPORTING UNIT, MS JACKSON, MR WILLIAMSON AND MR DICK ......................................................... 819 Chapter 9 - Contraventions by the National Office reporting unit ............................... 821

National Council ........................................................................................................... 825 Composition of National Council - Rule 20 ............................................................... 825 Powers of National Council ...................................................................................... 825

National Executive ........................................................................................................ 826 Composition of National Executive - Rule 26 ........................................................... 826 Powers of National Executive - Rule 27 ................................................................... 827

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Meetings of National Council ......................................................................................... 828 Evidence .................................................................................................................. 828 Submissions by the National Office .......................................................................... 833 Conclusion ............................................................................................................... 834 Finding 157 - Failure to hold meetings of National Council ....................................... 837

Failure to approve employment ..................................................................................... 837 Failure to approve employment of Mr Robertson, Ms Ord, Ms Rodgers, Ms Flavell, Ms Hall and Mr McLeay ................................................................................................ 838

Evidence .................................................................................................................. 838 Submissions by the National Office .......................................................................... 839 Conclusions ............................................................................................................. 840 Findings 158 to 161 - Failure to approve terms and conditions of employment of Mr Robertson, Ms Ord, Ms Rodgers, Ms Flavell, Ms Hall and Mr McLeay ................ 841

Failure to approve employment of Mr Burke and Ms Stevens ....................................... 841 Evidence .................................................................................................................. 841 Submissions by the National Office .......................................................................... 842 Submissions by Mr Williamson regarding the employment of Ms Stevens ............... 842 Submissions by Mr Thomson regarding the employment of Ms Stevens and Mr Burke ................................................................................................................................ 842 Conclusions ............................................................................................................. 843 Finding 162 - Failure to approve employment of Mr Burke and Ms Stevens ............. 843

Failure to appoint auditor ............................................................................................... 844 Evidence .................................................................................................................. 844 Submissions by the National Office .......................................................................... 846 Conclusions ............................................................................................................. 846 Finding 163 - Failure to appoint auditor .................................................................... 846

Making donations using National Office funds without the authorisation of National Council or National Executive ........................................................................................ 846

Evidence .................................................................................................................. 846 Submissions by the National Office .......................................................................... 847 Conclusions ............................................................................................................. 847 Finding 164 - Making donations using National Office funds without authorisation of National Council or National Executive .................................................................... 847

Failing to keep financial records in relation to expenditure by Mr Thomson ............. 847 Evidence .................................................................................................................. 847 Submissions by the National Office .......................................................................... 848 Conclusion ............................................................................................................... 848 Finding 165 - Failing to keep financial records in relation to expenditure by Mr Thomson ............................................................................................................. 849

Failing to keep financial records .................................................................................... 849 Evidence .................................................................................................................. 849

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Submissions by the National Office .......................................................................... 851 Conclusions ............................................................................................................. 851 Findings 166 to 168 - Failing to keep financial records ............................................. 852

Failing to prepare an operating report and committee of management statement for the year ended 30 June 2007 .......................................................................................... 852

Evidence .................................................................................................................. 852 Submissions by the National Office .......................................................................... 861 Conclusions ............................................................................................................. 862 Findings 169 and 170 - Failing to prepare an operating report and committee of management statement for the year ended 30 June 2007 ....................................... 863

Failure to lodge a statement of loans, grants and donations under subsection 237(1) of the RAO Schedule for the year ended 30 June 2007 ................................................ 863

Evidence .................................................................................................................. 863 Submissions by the National Office .......................................................................... 866 Conclusions ............................................................................................................. 866 Finding 171 - failure to lodge a statement of loans, grants and donations under subsection 237(1) of the RAO Schedule for the year ended 30 June 2007 .............. 867

Chapter 10 - Contraventions by Ms Jackson ................................................................ 869 Ms Jackson’s role as National Secretary ...................................................................... 872 Ms Jackson’s failure to produce a GPFR and an operating report for the 2007 financial year as soon as practicable .......................................................................................... 872

Finding 172 - Ms Jackson failed to produce a GPFR and an operating report for the 2007 financial year as soon as practicable ............................................................... 894

Chapter 11 - Contraventions by Mr Williamson ............................................................ 895 Mr Williamson’s role as National President of the HSU (National President) - Rule 30 . 896

Power to employ National Office staff and to fix remuneration and conditions .......... 898 Employment of Ms Stevens without National Executive approval .............................. 898

Evidence .................................................................................................................. 898 Submissions of Mr Williamson ................................................................................. 898 Conclusions ............................................................................................................. 900 Finding 173 - Employment of Ms Stevens without National Executive approval ....... 901

Authorisation of establishment of credit card accounts for staff of the National Office ......................................................................................................................................... 902

Credit cards issued to National Office staff ................................................................... 902 Evidence .................................................................................................................. 902 Submissions by Mr Williamson ................................................................................. 903 Conclusions ............................................................................................................. 903 Finding 174 - Authorisation of establishment of credit card accounts for staff of the National Office ......................................................................................................... 904

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Authorisation of expenditure incurred by Mr Thomson and National Office staff on their credit cards ............................................................................................................. 904

Evidence .................................................................................................................. 904 Submissions by Mr Williamson ................................................................................. 906 Conclusions ............................................................................................................. 907 Findings 175 and 176 - Authorisation of expenditure incurred by Mr Thomson and staff members of the National Office on their credit cards ................................................ 909

Payment to the Julie Williamson Fundraising Appeal by the National Office ............ 909 Evidence .................................................................................................................. 909 Mr Williamson’s submissions ................................................................................... 910 Conclusions ............................................................................................................. 911 Finding 177 - Payment to the Julie Williamson Fundraising Appeal by the National Office ....................................................................................................................... 912

Chapter 12 - Contraventions by Mr Iaan Dick, auditor of the National Office ............. 913 Legislative requirements placed upon auditors of reporting units .................................. 913

Australian Auditing Standards .................................................................................. 914 Mr Dick made false or misleading statements by signing auditors reports in 2004, 2005 and 2007.................................................................................................................. 916

Mr Dick’s compliance with Australian Auditing Standards and the RAO Schedule ... 916 Conclusions ............................................................................................................. 926 Finding 178 - Mr Dick made false or misleading statements by signing auditors reports in 2004, 2005, 2006 and 2007.................................................................................. 927

Failure to date audit reports in accordance with requirements of the RAO Schedule927 Evidence .................................................................................................................. 927 Conclusions ............................................................................................................. 931 Findings 179 to 181 - Failing to date audit reports in accordance with requirements of the RAO Schedule ................................................................................................... 932

PART 4 OTHER MATTERS WHICH I HAVE CONSIDERED DURING MY INVESTIGATION BUT REGARDING WHICH I HAVE NOT MADE FINDINGS OF CONTRAVENTION ....... 933

Introduction to Part 4 .................................................................................................... 934 Chapter 13 - Financial Reporting Requirements of the RAO Schedule ....................... 935

A reporting unit with no members ................................................................................. 935 Compliance with Part 3 of Chapter 8 of the RAO Schedule .......................................... 937

Year ended 30 June 2003 ........................................................................................ 937 Year ended 30 June 2004 ........................................................................................ 937 Year ended 30 June 2005 ........................................................................................ 940 Year ended 30 June 2006 ........................................................................................ 946 Year ended 30 June 2007 ........................................................................................ 950

Failure of Ms Jackson to produce a GPFR and an operating report for the 2007 financial year as soon as practicable .......................................................................................... 953

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Chapter 14 - Entitlements of National Office employees .............................................. 955 Entitlements paid out to Ms Walton at cessation of her employment by the HSU ......... 955 Payments made by the HSU National Office after Ms Walton ceased being an employee of the HSU National Office ............................................................................................ 957 Authorisation of expenditure relating to Ms Angela Humphries to be paid by the National Office ............................................................................................................................ 961

Chapter 15 - The Dental Campaign ................................................................................ 963 Consideration given by the National Executive to the Dental Campaign ....................... 963 Expenditure incurred by the National Office on the Dental Campaign ........................... 964

Chapter 16 - National Council Expenses ....................................................................... 975 National Council/Conference - September 2006 ........................................................... 975 Payments to ANU University House in 2007 ................................................................. 976

Chapter 17 - Requirements of the Rules ....................................................................... 979 Compliance with Rule 32 ................................................................................................ 979

Sub-rule 32(b) - summoning of meetings and the keeping of minutes .......................... 979 The Keeping of Minutes ........................................................................................... 979 The Summoning of Meetings ................................................................................... 982

Sub-rules 32(e) and (j) - the Keeping of Records .......................................................... 983 Internat Immobiliaire ................................................................................................ 988

Compliance with Rule 36 ................................................................................................ 989 The use of electronic facilities to undertake financial transactions ................................ 989

Contravention that was put to Mr Thomson .............................................................. 991 Mr Thomson’s submissions ...................................................................................... 991 Conclusion ............................................................................................................... 991

Sub-rule 36(g) - Statements of Loans, Grants and Donations ....................................... 991 Statements for years ended 30 June 2003, 2004 and 2005 ..................................... 991

Sub-rule 36(b) - expenditure on the general administration of the Union ...................... 993 Accommodation expenses incurred by Mr Thomson during November 2005 ........... 993 Mr Thomson’s submissions .................................................................................... 1002 Conclusions ........................................................................................................... 1002

Mr Thomson’s trip to New Zealand in March 2007 ...................................................... 1002 RAAF Edinburgh Rugby Sponsorship January 2007 .............................................. 1005 Open Channel Co-op ............................................................................................. 1007 Social Change Media ............................................................................................. 1008 Renewal of car insurance for Mr Thomson and Ms Katie Hall in November 2007 .. 1010 Postshop (other than Central Coast) ...................................................................... 1012 Nationwide news .................................................................................................... 1013

Payments to the NSW Union in respect of superannuation contributions for Mr Thomson .................................................................................................................. 1014

Wages and conditions of National Office employees .............................................. 1014

xvii

Reimbursement by the National Office of superannuation contributions that were made on Mr Thomson’s behalf by the NSW Union ........................................................... 1014

Chapter 18 - Campaign Expenditure ............................................................................ 1021 Katie Hall and the La Trobe campaign ......................................................................... 1021

Decision to employ Katie Hall ..................................................................................... 1021 Expenses relating to Ms Hall's employment ................................................................ 1023 Reimbursement of the costs of employing Ms Hall ..................................................... 1024

The costs of employing Ms Stevens and Mr Burke .................................................... 1030 Apparent reimbursement by the Branches of the costs of employing Ms Stevens and Mr Burke ..................................................................................................................... 1030 Were National Executive members aware of the costs to the National Office of employing Ms Stevens and Mr Burke? ........................................................................................ 1037

Employment of Ms Stevens without National Executive approval ............................ 1038 Chapter 19 - Failure of Ms Jackson to attend meetings of National Executive ........ 1039

Ms Jackson’s role as a member of the National Executive, as Senior National Assistant Secretary and later as National Secretary .................................................................. 1039 Alleged Contravention that was put to Ms Jackson ..................................................... 1043 Ms Jackson’s submissions ......................................................................................... 1043

No obligation to attend every meeting of the National Executive ............................ 1043 Subsection 285(1) limited by section 283 of the RAO Schedule ............................. 1044 Apology .................................................................................................................. 1047 Meeting of 22 August 2007 .................................................................................... 1047 Context of Ms Jackson's statement ........................................................................ 1048 Ms Jackson is entitled to the benefit of her full answer at interview ........................ 1048 The basis of Ms Jackson's personal differences with Mr Thomson ........................ 1049 Other general reasons for Ms Jackson's failure to attend the four National Executive meetings ................................................................................................................ 1049 Factual matters relevant to non-attendance at particular meetings ........................ 1050 Other submissions put by Ms Jackson ................................................................... 1052 Conclusions ........................................................................................................... 1053

PART 5 LIST OF CONTRAVENTIONS AND OBSERVATIONS BY THE DELEGATE TO THE GENERAL MANAGER ........................................................................................... 1055 Chapter 20 - List of Contraventions ............................................................................. 1057 Contraventions by Mr Thomson .................................................................................. 1057

Chapter 4 - Employment of staff of the National Office ............................................... 1057 Chapter 5 - Financial Management of the National Office ........................................... 1059

The absence of policies dealing with various financial issues ................................ 1059 Expending the funds of the HSU ............................................................................ 1061 The administration of credit cards .......................................................................... 1061 Specific payments which are contrary to the Rules ................................................ 1065

xviii

Payments outside the general administration of the Union ..................................... 1066 Mr Thomson’s decision to move to live in NSW and to open an office in Sydney ... 1068 Expenditure on accommodation in Melbourne during 2006 and 2007 .................... 1068 Reporting to National Executive and/or National Council ....................................... 1069

Chapter 6 - Expenditure of National Office funds for Mr Thomson’s personal benefit . 1070 Escort Services ...................................................................................................... 1070 Mr Thomson ‘s claim to have taken annual leave in 2007 ...................................... 1071 Expenditure on accommodation in Sydney after Mr Thomson moved to the Central Coast of NSW ........................................................................................................ 1072 Alternative findings relating to Mr Thomson’s expenditure on accommodation in Sydney - expenses were excessive ....................................................................... 1073 Expenditure on accommodation on the Central Coast during 2006 and 2007 ........ 1073 Hotel and accommodation expenses incurred by Mr Thomson during September and October 2005 ......................................................................................................... 1074 Expenditure by Mr Thomson on travel by his wife, Mrs Christa Thomson .............. 1075 Dining and entertainment ....................................................................................... 1076

Chapter 7 - Expenditure of National Office funds for the purpose of assisting Mr Thomson’s election to Parliament for the seat of Dobell ........................................ 1079

The Dobell Campaign ............................................................................................ 1079 Criselee Stevens .................................................................................................... 1080 Coastal Voice ......................................................................................................... 1081 Matthew Burke ....................................................................................................... 1082 Central Coast Rugby League ................................................................................. 1083 Dads in Education Fathers’ Day Breakfast ............................................................. 1084 Golden Years Collectables ..................................................................................... 1085 Central Coast Convoy for Kids ............................................................................... 1085 Requirements of section 237 of the RAO Schedule in relation to donations ........... 1086

Chapter 8 - Mr Thomson’s management of the finances of the National Office ........... 1087 Chapter 9 - Contraventions by the National Office reporting unit ............................. 1088

Meetings of National Council ...................................................................................... 1088 Failure to approve employment .................................................................................. 1088

Failure to approve employment of Mr Robertson, Ms Ord, Ms Rodgers, Ms Flavell, Ms Hall and Mr McLeay ......................................................................................... 1088 Failure to approve employment of Mr Burke and Ms Stevens ................................ 1089

Failure to appoint auditor ............................................................................................ 1089 Making donations using National Office funds without authorisation of National Council or National Executive ...................................................................................................... 1089 Failing to keep financial records in relation to expenditure by Mr Thomson ................ 1090 Failing to keep financial records ................................................................................. 1090 Failing to prepare an operating report and committee of management statement for the year ended 30 June 2007 ........................................................................................... 1090

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Failure to lodge a statement of loans, grants and donations under subsection 237(1) of the RAO Schedule for the year ended 30 June 2007 .................................................. 1091

Chapter 10 - Contraventions by Ms Jackson .............................................................. 1091 Ms Jackson’s failure to produce a GPFR and an operating report for the 2007 financial year as soon as practicable ........................................................................................ 1091

Chapter 11 - Contraventions by Mr Williamson .......................................................... 1092 Employment of Ms Stevens without National Executive approval ............................... 1092 Authorisation of establishment of credit card accounts for staff of the National Office . 1092 Authorisation of expenditure incurred by Mr Thomson and National Office staff on their credit cards ................................................................................................................. 1092 Payment to the Julie Williamson Fundraising Appeal by the National Office ............... 1093

Chapter 12 - Contraventions by Mr Iaan Dick, auditor of the National Office ........... 1094 False or misleading statements .................................................................................. 1094 Failing to date Auditor’s reports .................................................................................. 1094

Chapter 21 - Observations by the Delegate to the General Manager ........................ 1096 Observations to the General Manager ........................................................................ 1096 Notice to the reporting unit requiring rectification ........................................................ 1096 Contravention of civil penalty provisions ..................................................................... 1096

Observations regarding the (former) National Secretary - Mr Craig Thomson ........ 1096 Observations regarding the National Office ............................................................ 1099 Observations regarding the (current) National Secretary - Ms Kathy Jackson ........ 1100 Observations regarding the National President ...................................................... 1101 Observations regarding the National Auditor .......................................................... 1102

Referral to the Director of Public Prosecutions ........................................................... 1102 The use of Mr Thomson’s credit cards to procure escort services. ......................... 1103 Dobell Campaign ................................................................................................... 1103 Cash withdrawals by Mr Thomson ......................................................................... 1104 Dining and Entertainment expenditure ................................................................... 1104 Expenditure of monies after Mr Thomson’s resignation date. ................................. 1105

ANNEXURES

Annexure A - Cash withdrawals by Mr Thomson on his CBA Mastercard 2002 to 2007

Annexure B - Extract of information from memoranda submitted by Mr Thomson regarding amounts claimed by Mr Thomson as business expenses

Annexure C - Costs incurred by Mr Thomson in relation to accommodation in Melbourne during 2006 and 2007

Annexure D - Dining and entertainment expenses incurred by Mr Thomson between 2002 and December 2007

Annexure E - Costs associated with accommodation in Sydney in 2006 and 2007

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Annexure F - Expenditure by Mr Thomson on his Diners Club card at petrol stations between 2002 and 2007

Annexure G - Expenditure on Diners Club card at petrol stations in 2002 and 2007 by Criselee Stevens and Matthew Burke

Annexure H - Categorisation of expenditure by Mr Thomson on his CBA Mastercard in 2005 to 2007

Annexure I - Exit Audit produced by Mr Iaan Dick, 12 May 2008

Annexure J - BDO Kendalls Report - ‘Report on suspected irregularities in the expenditure of the National Office of the Health Services Union 2002 - 2007’

Annexure K - diagrammatic summary of timelines for financial reporting under the RAO Schedule

Annexure L - Timeline of ‘Relevant Events of 2002 to 2008’ that appeared as Annexure A to the response of Holding Redlich dated 2 March 2012 on behalf of Mr Thomson

Annexure M - Interim Report to the Acting General Manager dated 16 January 2012

PART 1:

BACKGROUND AND

COMPLIANCE FRAMEWORK

1

Chapter 1 - Introduction

Structure of this Report 1. This Report is set out in five Parts:

a. Part 1 sets out information about the power of Fair Work Australia (FWA) to conduct an inquiry and investigation, a chronological history of the conduct of the inquiry and investigation by the Australian Industrial Registry (AIR) and FWA and extracts from legislation and the Rules of the Health Services Union (HSU);

b. Part 2 sets out matters relating to the conduct of Mr Craig Thomson while he was National Secretary of the HSU;

c. Part 3 sets out matters relating to conduct by:

i. the National Office reporting unit;

ii. Ms Kathy Jackson, the former National Assistant Secretary of the HSU;1

iii. Mr Michael Williamson, National President of the HSU;

iv. Mr Iaan Dick, the former auditor of the National Office of the HSU,

while Mr Thomson was National Secretary.

d. Part 4 sets out matters which I have considered in conducting my inquiry and investigation but regarding which I have not made findings of contravention; and

e. Part 5 sets out a list of all of my findings and my observations to the General Manager.

Definitions 2. Various terms are defined throughout this Report. A list of defined terms used in this

report is as follows:

ABN Australian Business Number

Aboutoun Catering Aboutoun Catering North Sydney, which is identified in the website www.local.com.au as an Adult Service located at 5 Lavender St, Milsons Point, NSW 2061. See paragraphs 39 to 42 of chapter 6.

ACTU Australian Council of Trade Unions

AEC Australian Electoral Commission

AGS Australian Government Solicitor

1 Since Mr Thomson’s resignation as National Secretary on 14 December 2007, Ms Jackson has been the Nationtal Secretary of the HSU.

Chapter 1 - Introduction Definitions

2

AIR Australian Industrial Registry as established by subsection 62(1) of the WR Act

ALP Australian Labor Party

Amendment Act Workplace Relations (Registration and Accountability of Organisations) Act 2002

Anderson Anderson v Johnson (1990) 22 FCR 326

Annual leave period The period during which Mr Thomson was on annual leave between 20 May 2004 and 24 June 2004

ANU Australian National University

ASIC Australian Securities and Investments Commission

ATM Automatic teller machine

ATO Australian Taxation Office

BAS Business Activity Statement

BDO Kendalls The accounting and auditing firm that was engaged by Slater & Gordon in undertaking an investigation that had been commissioned by the National Office following the Exit Audit.

BDO Kendalls Report

The report produced by Slater & Gordon and BDO Kendalls entitled ‘Report on suspected irregularities in the expenditure of the National Office of the Health Services Union 2002 - 2007’. The BDO Kendalls Report, which had been commission by the National Executive, was provided to the National Executive of the HSU in or around June 2009 at the conclusion of an investigation by Slater & Gordon and BDO Kendalls. A copy of the BDO Kendalls Report appears as Annexure J to this report.

Boardroom of Melbourne

See paragraph 144 of chapter 6.

CA Corporations Act 2001 (Cth)