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Joint Standing Committee on Electoral Matters
Australian Electoral Commission analysis of the Fair Work Australia report into the Health Services Union
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Joint Standing Committee on Electoral Matters
CHAIR (Mr Melham)
Bishop, Bronwyn, MP
Ryan, Sen Scott
Somlyay, Alexander, MP
Birmingham, Sen Simon
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Content WindowJoint Standing Committee on Electoral Matters
Australian Electoral Commission analysis of the Fair Work Australia report into the Health Services Union
NASSIOS, Mr Terry, Director, Client Services, Fair Work Australia
Committee met at 09:58
CHAIR ( Mr Melham ): I declare open this public hearing of the Joint Standing Committee on Electoral Matters inquiry into the Australian Electoral Commission's analysis of the Fair Work Australia report on the Health Services Union National office.
This is the fourth public hearing for this inquiry and today the committee will hear again from Mr Terry Nassios, the principal investigator on the FWA report. We heard previously from Mr Nassios on 16 July. He has agreed to appear again to respond to further questions on details of the conduct of the investigation and relevant findings in the FWA report.
The evidence given today it will be recorded by Hansard and will be covered by parliamentary privilege. I also want to read the section of the parliamentary privilege resolution agreed to by the Senate on 25 September 1988, which this committee operates under. It is resolution 9, the first part:
A chairman of the committee shall take care to ensure that all questions put to witnesses are relevant to the committee's inquiry and that the information sought by those questions is necessary for the purpose of that inquiry.
I want everyone to bear in mind that that is how I will be ruling. This is not a general inquiry and it is not a fishing expedition on everything to do with Fair Work Australia; it is to do with the report and the Electoral Commission's response to it. Thank you, Mr Nassios, for your personal attendance today. It is very much appreciated. Have you got an opening statement that you wish to make?
Mr Nassios : No.
CHAIR: Mrs Bishop.
Mrs BRONWYN BISHOP: Mr Nassios, I want to begin by thanking you for coming today. On the last occasion, you had compassionate leave. I hope the family is well.
Mr Nassios : They are indeed. I am still actually on leave. I just place that on the record because there may be a slight misunderstanding as to my attendance patterns. I am certainly happy to turn up whenever I can assist any committee. It is just that I ask committees to bear in mind that I am also trying to arrange trips all over the place as well.
Mrs BRONWYN BISHOP: Thank you for doing that. We are obliged to you for being here with us today.
Mr Nassios : My pleasure.
Mrs BRONWYN BISHOP: I think the chairman described you as the principal investigator. Were you the delegate or the principal investigator?
Mr Nassios : I was the delegate.
Mrs BRONWYN BISHOP: Yes, I thought you were the delegate. And the principal investigator was?
Mr Nassios : The KPMG report describes Ms Carruthers as the lead investigator. I still believe I was the principal investigator, but in terms of the official title—
Mrs BRONWYN BISHOP: You are the delegate.
Mr Nassios : I am the delegate, yes.
Mrs BRONWYN BISHOP: You were holding a delegation then for Ms Bernadette O'Neill?
Mr Nassios : I do not think I am currently, because the—
Mrs BRONWYN BISHOP: But you did for the purpose of the inquiry?
Mr Nassios : Yes, I did indeed.
Mrs BRONWYN BISHOP: When the reference was given to this committee to look at the Fair Work Australia report—your report—part of that report that you produced was the Slater & Gordon advice and the BDO Kendalls forensic accounting report. Is that not correct?
Mr Nassios : I did not produce it.
Mrs BRONWYN BISHOP: No. It was an annexure to your report.
Mr Nassios : I believe it would have been, yes. In terms of the material that has been forwarded to, I think, the Senate estimates committee, as I had proceeded on leave two days after my completion of that report, I do not have specific knowledge of exactly what was forwarded, but I would be surprised if it was not.
Mrs BRONWYN BISHOP: You had access to the Slater & Gordon report and the forensic accounting report of BDO Kendalls?
Mr Nassios : Yes.
Mrs BRONWYN BISHOP: Did you place a lot of reliance on that report?
Mr Nassios : As I think I answered last time, certainly that was the basis of the commencement of the investigation. It detailed a number of the issues that we needed to look into.
Mrs BRONWYN BISHOP: The AEC has given evidence that the report they were given did not contain the Slater & Gordon and BDO Kendalls reports. So the AEC's analysis—not, as Mr Thomson referred to it in his speech in the parliament, an investigation; the AEC deliberately said it was not an investigation; they said it was an analysis—did not have access to that highly important report on which you based your report. Did that surprise you? Would that surprise you?
Mr Nassios : As I said to you before, I cannot answer where that report has gone. As I say, unfortunately—or fortunately, from my perspective—two days after I completed the report I proceeded on leave. So I do not know.
Mrs BRONWYN BISHOP: But the Slater & Gordon and BDO Kendalls reports are fundamentally important to your view?
Mr Nassios : They were certainly important. As I have explained, they were the catalyst, so to speak, of a number of the issues—not all of the issues but certainly a number of the issues, yes.
Mrs BRONWYN BISHOP: As I said, the AEC did not have that. Therefore, although they did an analysis of the report, they really did not have the complete report, so they could not really do a proper analysis. So, when KPMG brought out their report last night, I was interested to know whether they had access to it, because it seems to be a very protected report and many people do not want lots of the report to go onto the record, including this committee—not me, I might add.
CHAIR: That is a little bit unfair, Mrs Bishop. If you are going to misrepresent the committee's position, then I will tell you what my position is publicly. Anything that is relevant to the terms of reference to this inquiry can be released publicly. Anything that is broader than that will not be. People can go elsewhere for their fishing expedition. Continue.
Mrs BRONWYN BISHOP: Of course, Mr Thomson did not get access to this report either. I made an inquiry through the staff of the committee to find out whether KPMG had access to this report, because they seem to have left you hanging out to dry in a rather unfair manner, it seems to me. I am going to ask you in a moment who it was that was responsible for your being allocated resources. The answer came back from Ms O'Neill, the FWA general manager, that KPMG did have all the material, including the annexure J and the BDO Kendalls report—those two documents. However, she did qualify that this was a high-level review. I am not quite sure what that means, but she seemed to indicate that they may not have reviewed all of the details of the specifics. I think what we are hearing is that the details of the KPMG report—which certainly shows that there was far too long taken—are criticising reviews and things that you did not look at. I think it is fair that you are allowed to answer what you looked at and who it was that decided what resources you got and what you were entitled to do.
Mr Nassios : The decisions in terms of resources were my decisions and mine alone, so there is no issue of any other person being involved in that aspect of the investigation. Certainly, come September last year, when the quantity of material was very clearly of a far greater nature than I had anticipated, the general manager assisted with certain resourcing, and that resourcing largely involved the use of the Australian Government Solicitor to assist with the write-up of the report.
Mrs BRONWYN BISHOP: This report is very critical of the way in which records failed to be kept by the union and by Mr Thomson as the national secretary in particular. For instance, on page 16, in paragraph 45 it says: 'The rules provide that all expenditure of the union must ultimately be provided by either the council or the executive. The rules also provide that cheques drawn by the union must be approved by several signatories. The CBA MasterCard was linked to a CBA business account. The authority signatory from this business account as provided to us by CBA states that three of the four listed signatories must authorise operations of the account. It is clear from our review of the minutes of the executive, and based on the advice from Thomson, that approval of specific expenditure was not done.' So he is in breach of the rules. It also says they were satisfied that Mr Thomson was the sole cardholder of the CBA MasterCard.
In our inquiry, we are asked to look at what is relevant to the disclosure period, and that period, for the purposes of our inquiry, is from 13 April 2007 to the election on 24 November 2007, and any expenditure that was made in that time. There is much correspondence concerning the failure of the HSU East to put in its political expenditure returns, particularly for the year 2009-10, but that is an ongoing issue. The bottom line is that, in this report by BDO Kendalls and Slater & Gordon, they state that expenditure made, of some $34,000, should have been disclosed as a donation from the HSU to Mr Thomson, in the reportable period after his endorsement as a candidate. When you were doing your inquiry, did you note those recommendations and were you concerned at all about advising the Australian Electoral Commission as to whether or not they should be pursuing these matters?
Mr Nassios : My investigation dealt with the Fair Work (Registered Organisations) Act. That act, in dealing with the expenditure by Mr Thomson, largely revolved around whether that expenditure was authorised in accordance with the rules. That was the essence of my investigation, not whether it did or did not comply with any aspect of the Electoral Act.
Mrs BRONWYN BISHOP: Except that Mr Ken Fowlie from Slater & Gordon wrote to you on 16 June 2009 and said: 'Please find enclosed the report on the suspected irregularities. The report contains the findings of an independent investigation undertaken by Slater & Gordon lawyers and accountants of BDO Kendalls. I was yesterday instructed by the national executive of the union to provide a copy of the report to you. This followed a briefing given to the national executive by me and BDO on the contents of the report. I have also been instructed to provide a copy of a resolution passed by the executive, which is in the following terms: "National Executive directs Slater & Gordon to provide a copy of the findings to the Industrial Registrar and a copy of the relevant findings of the investigation to the Australian Electoral Commission as soon as practicable, under cover of a letter providing a copy of this resolution and indicating to both that the union is prepared to cooperate with whatever further investigation and inquiries those entities wish to make into the matters the subject of the investigation."'
The AEC has continued to give evidence to this committee, virtually under oath, that they have never received this particular report. Yet, the national executive instructed part of that report to be given to the Australian Electoral Commission. Were you given a copy of that national executive directive?
Mr Nassios : I believe I would have been, yes.
Mrs BRONWYN BISHOP: Because this letter is addressed—
Mr Nassios : Yes, correct.
Mrs BRONWYN BISHOP: So you had it?
Mr Nassios : I am certain it would have been there. Yes.
Mrs BRONWYN BISHOP: Did you express any concern or did you try to ascertain whether or not it had also been given to the AEC?
Mr Nassios : Again, my responsibilities were to deal with the Fair Work (Registered Organisations) Act. To the extent that that resolution speaks of the Australian Electoral Commission it seems to be a responsibility of the HSU.
Mrs BRONWYN BISHOP: Did the AEC ever contact you and ask for a copy of this report?
Mr Nassios : Again, I cannot specifically recall the contact that we had with the AEC. I attempted to answer the last time you asked me this question. I can recall that we had some contact with Mr Pirani. I think that contact was with Ms Carruthers. Again, my recollection of that contact is that it was as a result of a question that Mr Pirani had been asked by Senator Ronaldson. That is my recollection. I do not have a specific recollection that the Australian Electoral Commission would have asked for a copy of that report. If they did, as I indicated to Senator Ronaldson during the early stages of this inquiry and investigation, I would not have been prepared to give that report to the Australian Electoral Commission.
Mrs BRONWYN BISHOP: Despite the fact that the national executive said that they should have the relevant findings?
Mr Nassios : Again, that is a responsibility of HSU. If that was responsibility of HSU then that is what they should have done.
Mrs BRONWYN BISHOP: The BDO Kendalls report finds that payments made on 12 July 2007 to Australia Post, Long Jetty for $7,253 should have been disclosed as a donation. It found that payments made on 12 November 2007 to the Central Coast Radio Centre for amounts of $2,895, $4,493, $1,540, $1,996 and $3,722 should also have been reported as donations, and that the amount paid to the ALP New South Wales branch, which was reimbursed by the HSU, of $12,511 should also have been reported as donations. They are way over the threshold requiring it. At no stage has any such declaration been made. The report also finds that Mr Thomson was in breach of the RAO schedule in the Act, and that he had in the terms of that section breached it because he had a personal advantage. Are you familiar with that finding?
Mr Nassios : Each of the items of expenditure you referred to are dealt with within my report. I could be mistaken because there are so many items of expenditure, but my belief is that each and every one of those items of expenditure that I found were not authorised.
Mrs BRONWYN BISHOP: Were not authorised?
Mr Nassios : Not authorised.
Mrs BRONWYN BISHOP: So we have a situation where this important report has found that the evidence that Mr Thomson gave to Slater & Gordon directly—that is, not the evidence given to you in the transcript—was that he had set out a system whereby vouchers and receipts and everything were presented to be ticked off by the financial controller, and then they found that none of that happened. You also have found that they were never authorised.
So it is Mr Thomson authorising payments, for the benefit of his election to the seat of Dobell during the disclosure period, that he has either misappropriated or fraudulently dealt with. He has taken that money and used it to his benefit. Going back to your responsibility with Fair Work Australia, section 7 of the RAO schedule provides that the Federal Court may order a person to compensate an organisation for damage suffered by the organisation if the person has contravened a civil penalty provision in part 2 of chapter 9. Are you familiar with that?
Mr Nassios : I cannot say I am familiar with the exact section but I certainly am familiar with the general import, yes.
Mrs BRONWYN BISHOP: It says that the damages resulted in the breach. Sections 286 and 287 of the RAO schedule are within part 2 of chapter 9. They provide that an officer of an organisation must exercise his or her powers in good faith and for proper purpose, and also that an officer may not improperly use his or her position to gain an advantage for himself or herself, or cause detriment to the organisation. This report finds that that is what Mr Thomson did.
It then shows that section 309 provides that section 307 has effect, in addition to rather than in substitution for other rights which the organisation might have in relation to a person because of that person's office or employment. Section 310 provides that various persons can apply for compensation order under this part of the schedule, including the industrial officer and the minister. As a result of your report, is it within your capacity to recommend that the industrial registrar take action in the Federal Court to reclaim the money that was unauthorised and improperly used?
Mr Nassios : Again, I suggest it is now the general manager rather than the industrial registrar—at the time that would have been the case, but with Fair Work Australia that power would have moved across to the general manager.
From my perspective, my report makes it very clear that I have found a number of contraventions of those two fiduciary duty obligations within the act. It is a matter for the general manager to determine what action they will take from that point onwards.
Mrs BRONWYN BISHOP: I am sorry, I did not quite follow that. I have a copy of the schedule and it seems to me to say it is the responsibility of the industrial registrar and, certainly, the minister. The minister has not changed.
Mr Nassios : With the commencement of the Fair Work Act the industrial registry ceased to exist, so that powers were transferred across to the general manager.
Mrs BRONWYN BISHOP: That would be Miss Bernadette O'Neill, would it?
Mr Nassios : Correct.
Mrs BRONWYN BISHOP: It would be her responsibility to take that action?
Mr Nassios : Correct.
Mrs BRONWYN BISHOP: Would you have advice to give as a result of your report?
Mr Nassios : I believe the substance and the totality of my recommendations are serious recommendations. I certainly did not go to the extent that you are asking of me. I did not consider the issue of compensation along the lines you are referring to.
Mrs BRONWYN BISHOP: The KPMG report has been very critical of you because it says that you did not look at various records of emails and other information, which they think you might have been able to do. Did you, in fact, pursue any of that information?
Mr Nassios : I have to say, I got a copy of the KPMG report for the first time last night—
Mrs BRONWYN BISHOP: We all did.
Mr Nassios : so to that extent I have looked at the report. I am not going to pretend that I read every single word of that report. It seems to me that the issues they raised in terms of electronic communication were things like looking at phones and computers of persons. The notice that we issued to the Health Services Union very clearly indicated that we wanted records on a number of matters. We asked for those records on many occasions and during interviews where the witnesses had records. I am not certain what the electronic communications that KPMG are referring to would have assisted. I am not certain what benefit I would have gained by specifically asking for the electronic records rather than records, which we asked for.
Mrs BRONWYN BISHOP: Mr Nassios, there is of course the elephant in the room. Why on earth did this inquiry take so long?
Mr Nassios : That is an excellent question and I have been expecting that question. Again, in reading the KPMG report I have been criticised for not keeping documentary records of basically the administrative process of the investigation. This was an investigation involving three persons and we dealt with each other on a day to day basis. Again, I am not convinced that failure to keep documented records of what we discussed each and every day in any way impacted on the speed of the investigation, whether it slowed it down or whether it would have sped it up. In fact, I cannot help but read what the KPMG report itself says. On page 23 of that report in terms of one of the findings, KPMG say:
KPMG did not identify anything in the inquiry or investigation process which indicated that these matters would have progressed more quickly …
They go on and give a couple of examples. That statement is repeated several times in this report. It seems to me that KPMG have looked at two particular periods, one period at the end of the process in which I indicated to Senator Abetz at the February Senate estimates the quantity of material was such that, yes, we took longer to draft the report of possible contraventions that we were going to forward to the persons whom I believed had contravened the legislation. I acknowledged that at the time. That was a period of, say, six weeks.
There was another period at the outset where KPMG looked at an issue—and this was in late 2009—and they believed that there was a possibility that we could have gone to the investigation stage quicker than what we did. Again, I see that period of being no more than a few weeks. It seems to me that KPMG are saying that I took no more than a few months longer than I should have. If that is the case, I accept that.
Mrs BRONWYN BISHOP: Tell me, just so we remind ourselves: when did you first receive instructions to carry out this inquiry?
Mr Nassios : Officially, on 13 July 2009.
Mrs BRONWYN BISHOP: What was the first thing you did?
Mr Nassios : Unfortunately, again, we had already planned to interview the auditor. In terms of planning what the processes were, there was one step of the plan already in place. At that point we had had the BDO Kendall report. That had been lodged in the middle of June 2009. So we started looking through the report and devising the sorts of questions we were going to ask and the sorts of records that may be relevant. Again, bear in mind, that all witnesses and all persons that we spoke to acknowledge that the records, certainly in part, are missing.
CHAIR: Let me go back to something that relates to this as well in terms of evidence that you gave at the beginning of the hearing. In terms of extra resources, did you at any stage ever ask for extra resources in terms of your investigation?
Mr Nassios : I did not.
CHAIR: You were never denied extra resources?
Mr Nassios : I was not.
CHAIR: So, in other words, your investigation proceeded on the basis that you had sufficient resources to proceed at the pace you wanted to?
Mr Nassios : Yes, it did. I say that with a slight qualification. I say that in the sense that I had—have, in fact— a dedicated officer, an officer that goes well beyond what is required of that officer. That officer conducted the work that, yes, would have been the work that two or three other persons would have conducted but, in my mind, she did the work, completed the work within a satisfactory time frame. So to answer your question, in September last year, yes, it was very clear that the quantity that was going to be required to draft this report was way beyond what I had envisaged. Certainly, at that point, I am very grateful that the general manager did allow me to expend a considerable amount of money on the assistance of the Australian Government Solicitor.
Senator RYAN: Did you at any time request not extra resources but specialist or technical assistance—for example, someone who might have been able to assist you with electronic records?
Mr Nassios : Certainly not in relation to electronic records, no.
Senator RYAN: Did you request at any point any technical or specialist assistance that was outside the scope of the expertise of you and your staff?
Mr Nassios : In terms of financial expertise, we had access to a forensic accountant whom we already had on a retainer basis and that forensic accountant certainly assisted in relation to some of the investigation.
Senator RYAN: Did you request any other technical or specialist expertise?
Mr Nassios : No.
Senator RYAN: Amongst the people you described earlier whom you dealt with on a day-to-day basis for which no records were kept, did you at any time discuss with those people or consider requests for extra resources or specialist or technical assistance?
Mr Nassios : I cannot recall specific instances. Again, I would be surprised if there was not, but I certainly cannot recall specific examples.
Senator RYAN: Whilst you said earlier you cannot foresee how keeping records of those meetings would have made the investigation quicker, given the level of public concern about the time taken for this investigation and what you yourself have said was an extraordinary workload placed upon one person, do you now concede that having records of those meetings would actually be helpful to people like us in determining whether or not sufficient resources were dedicated to the investigation to allow it to be expedited?
Mr Nassios : I do not think so. I have come up with a report that is of extraordinary length. It details every single matter that we dealt with. It is a very extensive chronology. I am not convinced that keeping records along the lines of what KPMG have suggested would have assisted you any further.
Senator RYAN: Would extra resources have expedited it?
Mr Nassios : I do not think so.
Senator RYAN: More people? You are the only person coming before a committee who says that having more resources for an investigation would not allow it to be undertaken more quickly.
Mr Nassios : If that is the case, then that is the case. Again, I am very conscious of what we did. I am very conscious that what we did was to be a proper process—a process that I cannot kid myself and think that if I were to come up with conclusions that I have come up with would not subject me to all sorts of scrutiny. Nevertheless, I believe that the process we adopted was the proper process—
Senator RYAN: I am not asking you about the appropriateness or proper process or your view of that. I am simply asking you: are you telling us now that extra resources would not have made this investigation any quicker? Therefore, there was no way to make this investigation any quicker?
Mr Nassios : I do not believe in any substantial way, no.
Senator RYAN: Given that the KPMG report has been raised, my last question is: do you believe that the KPMG report 'exonerates' Mr Thomson?
Mr Nassios : It does not appear to talk about Mr Thomson at all.
Mrs BRONWYN BISHOP: What was that?
Mr Nassios : It does not appear to speak of Mr Thomson at all.
Mrs BRONWYN BISHOP: Perhaps it does in one part. It deals with that part in their report where they are talking about interference with your review. They asked you to give a definition of what you meant by 'interference' and so on. They cannot say it is interference. The report states:
… the … Industrial Registrar stated that he did receive a telephone call from the Minister’s Chief of Staff during April 2009, “in April 2009 when one evening, after I’d got home, it was around 7/7.30 in the evening, I got a telephone call at home and, counterintuitively, unexpectedly, on my home landline phone from the Minister’s Chief of Staff”
The former Industrial Registrar stated that the Minister’s Chief of Staff had inquired whether he was involved in the HSU matters and whether [the HSU’s former National Secretary’s name—
And there is a footnote:
For the purposes of this report detail of the recipient’s name has been excluded—
But of course it is Mr Thomson. It goes on:
… you’re looking at the HSU”, or something to that effect. “Yes, I am”.
“Has the name—
Thomson, but, again, with the funny words—
come up” and to which my answer was no. And that, by and large, was the end of the conversation.”
As shown here, there are inconsistencies in the version of events relating to alleged communication between the former industrial registrar and the minister's chief of staff. That is the only mention of Mr Thomson in the entire report. But I go back to the BDO Kendall report and I go to the schedule where they set out all the cash that Mr Thomson has withdrawn over the period, which is what they call 2002 to 2007, but because the earlier part, prior to 13 April 2007 is not pertinent to our inquiry, I would simply refer you to your memory. I will perhaps let you have a look at it later. It shows, starting on 13 April 2007—that is the date of his endorsement—that he withdrew $400 and then, within three days, another $500—
CHAIR: Hang on. If it is page 9 it is not public. I do not know what copy you have got there but that stuff is not public.
Mrs BRONWYN BISHOP: But I think it is very pertinent.
CHAIR: It might be pertinent but it is not public. We had this debate.
Mrs BRONWYN BISHOP: I will put it this way: under standing order 37.2 of the Senate standing orders, it says that any member may utilise evidence taken in camera or not published for the purposes of a dissenting report.
CHAIR: You are not into dissent yet.
Mrs BRONWYN BISHOP: I am placing on record that I will be preparing a dissenting report and I will be outlining the amount of money— $500 every few days—that is being withdrawn by Mr Thomson, who quite clearly was the subject of your report in chapter 7. Would you have some comments about all the money that was withdrawn? I think it totalled, over the period of time, an enormous amount of money.
Mr Nassios : My recollection of the total is about $100,000. I have made findings in relation to those withdrawals. Those withdrawals I found were not authorised in accordance with the rules and in terms of whether there is any interest in relation to those payments for the Commonwealth Director of Public Prosecutions I included that into my final chapter in terms of the matters that may be of interest to the director.
Mrs BRONWYN BISHOP: Slater & Gordon found that there were no records concerning where this money went after I think July of 2007. That of course was the immediate lead-up to the election. There is no explanation as to where or how this money was used. One alarming statement that Mr Thomson has made in giving evidence is that this was usual union practice—that all unions just take money and do not account for it properly. Have you any experience of that?
Mr Nassios : I certainly do not. It seems unusual but I have no experience of it.
Mrs BRONWYN BISHOP: It will not be a surprise to you that other people who were members of that union and still employed there do not agree with that. However, Mr Thomson certainly said that it is union practice—everybody just takes the money. That gives a concern to me that, with all the electoral provisions that we have in the Electoral Act—very pertinent to our inquiry—you can similarly get around it all by just having a credit card and taking the dough, and spending it as you will and there is no accountability anywhere. What recommendations would you make with regard to just taking thousands and thousands of dollars and it not being accountable? How would you deal with that?
Mr Nassios : It really is a matter for unions themselves. In this I include employer organisations, who are subject to the same rules. I would accept that it is an unusual way of doing business and the accountability that such expenditure should normally require would be missing. I accept that, but again it is really a matter for the organisations themselves. If that is the way they wish to do business and they vote, and their rules allow for that sort of expenditure, there is nothing much I can do about that.
Mrs BRONWYN BISHOP: But their rules do not allow for that.
Mr Nassios : That is correct.
Mrs BRONWYN BISHOP: So they are in breach. Somebody should be taking action, shouldn't they?
Mr Nassios : In terms of the cash that has been withdrawn, I have found that it was not authorised. I have found that certain matters can potentially lead from that. I have even gone so far as to say it may be an issue for the Commonwealth Director of Public Prosecutions.
Mrs BRONWYN BISHOP: The concern is that at every turn we seem to come to a blockage. We have this excellent report which is still not public in total, and it is very serious in the information that it discerns. It is a report that was given to a Senate committee. They did not publish it. It was a report not given to the Australian Electoral Commission and it was not until I demanded it at a public hearing in Melbourne from Ms O'Neill that we finally got it, but it is only published in part.
Mr SOMLYAY: And the transcripts.
Mrs BRONWYN BISHOP: And the transcripts of evidence taken from Mr Thomson himself, and other officers who were concerned, important evidence that you took. Would you like to comment on whether it was difficult to get those people to give testimony to your inquiry?
Mr Nassios : It was not difficult. There was one witness that would not voluntarily come along and that witness required a notice to be issued. That was not Mr Thomson and it was not a witness that in any way I have made any findings against, so I make that clear, that I am not in any way impugning the veracity of that particular witness. But no, I did not encounter difficulties in interviewing witnesses. I have mentioned one. The only other person that I can possibly suggest in terms of any sort of difficulty is locating one particular witness, but once we located that witness there was no hesitation in that witness making themselves available.
Mrs BRONWYN BISHOP: There seems to be a difficulty in having accountability for unions and the ACTU sends around a circular from time to time suggesting how disclosure requirements should be met. It said, with regard to the 2007 election, that expenditure incurred by unions connected with the Your Rights at Work campaigning was probably a matter that, taking the cautious view, should be declared as political expenditure. Slater & Gordon agrees with that but says that must be distinguished from expenditure directly contributed to the electoral campaign or to a political party and union staff working directly during working hours on the campaign of a particular candidate for election or political party. These would be gifts warranting disclosure under section 305A and/or section 305B.
I take you to the employment of Mr Bourke and Ms Stephenson. Both were employed by Mr Thomson without any authorisation. Is that correct?
Mr Nassios : That is what I have found, yes.
Mrs BRONWYN BISHOP: So he just employed them and he just drew the money to pay them and none of that expenditure was authorised?
Mr Nassios : That is what I have found, correct.
Mrs BRONWYN BISHOP: Ms Stephenson Mr Thomson describes as having a job that was almost experimental. It was her job to work with community groups. That was true before he was endorsed, so it is not relevant to our inquiry, but it was also true after he was endorsed. Some $32,000 paid to Ms Stephenson was paid to her or used on her HSU credit card during the period of disclosure, 13 April till 24 November. Could you just confirm that the entire amount expenditure for Ms Stephenson was not authorised?
Mr Nassios : You have referred to chapter 7 of that report. I believe that chapter deals both with Mr Bourke and Ms Stephenson, and, yes, I found that the expenditure by both of them in terms of whatever they expended in credit cards and their salaries was not authorised.
Mrs BRONWYN BISHOP: Mr Thomson said he had to hire Mr Bourke by the HSU so that he would be available later to be employed by Senator Hutchins during the campaign. So without authorisation Mr Bourke was paid for?
Mr Nassios : Yes.
Mrs BRONWYN BISHOP: And Mr Bourke indeed left the employ of the HSU, although doing work in that period that was relevant to Mr Thomson's campaign, the week before Mr Thomson's endorsement? Or the week before the election? I think it was 6 April. Probably before his endorsement.
Mr Nassios : I cannot recall.
Mrs BRONWYN BISHOP: He went to work for Senator Hutchins but he still kept his HSU card. Is that correct?
Mr Nassios : Correct.
Mrs BRONWYN BISHOP: So he was making payments which seemed to be relevant to Mr Thomson's campaign on his HSU card which was unauthorised payment?
Mr Nassios : That is what I found, correct.
Mrs BRONWYN BISHOP: So how do we describe this money? Is it misappropriated? Fraudulently dealt with? What sort of words can put around it?
Mr Nassios : They are part of the issues that I have considered would be of interest to the Commonwealth Director of Public Prosecutions.
Mrs BRONWYN BISHOP: Let us come to that. Did anyone at any time ask you to prepare a brief of evidence?
Mr Nassios : No, but I expect at that stage, given that I was going to go on leave in two days time, it probably was not best to ask me to do so.
Mrs BRONWYN BISHOP: I think it is fair to put on the record again just why you were on leave, because it was not as if you had just suddenly gotten sick of doing the job and wanted some leave. You had a really serious and good reason for that leave, didn't you?
Mr Nassios : There was a leave for this year always contemplated. My wife, if I may get her onto the Hansard, is a schoolteacher and as part of her employment with the Victorian education system, they have a system where they can get the fifth year on the pay that they would have otherwise have got because they forgo pay during their previous four years. That is this year. So to that extent, it was always my intention to have a substantial leave during the course of this year. Certainly that pales in significance, regrettably, I would rather the leave had far greater significance, but that investigation was something that needed to be completed. I was very conscious that, as you say, it had taken a long time. I am very conscious of that. I do not believe it was an unreasonably long time but certainly it was a long time and it was my intention always to try to finalise it prior to this year, and unfortunately that did not happen and we had a three-month delay in terms of finalising it. My leave was always a planned leave of some description during the course of this year, yes.
Mrs BRONWYN BISHOP: So you might have expected that somebody else might have prepared a brief of evidence?
Mr Nassios : The way the act works, my role from that point as the investigator ceases. I only have one specific function, which is to write to the reporting unit, in this case the national office of the Health Services Union, in terms of any contraventions that I found committed by the reporting unit. I did that on 28 March.
Mrs BRONWYN BISHOP: Could we have a copy of that?
Mr Nassios : It should be somewhere in the report, I say to you, or part of the documentation you have got. That document is a letter that paraphrases in many ways what is in the report.
Mrs BRONWYN BISHOP: So it basically says you are in breach.
Mr Nassios : Correct. But that is to the national office. My responsibility is limited to the reporting unit. I have no responsibility to do anything in terms of other persons that I find may have committed any—
Mrs BRONWYN BISHOP: So if on reading the report the general manager had found that there were in her view sufficient findings that could in fact amount to criminal behaviour then it would have been her decision to instruct someone to prepare a brief of evidence?
Mr Nassios : The act makes it very clear that she is the person to refer such a matter, yes.
Mrs BRONWYN BISHOP: At any time did she tell you to hurry up the report?
Mr Nassios : It is fair to say that from September, yes, she was concerned about the time that it had taken.
Mrs BRONWYN BISHOP: So the time the pressure was being put on her she passed it on to you?
Mr Nassios : I am not saying what pressure she was under but yes, it was very clear that she wanted to try to get it completed as quickly as possible. I am grateful that, in terms of the preparation of the report, I was able to expend a considerable amount of money on the Australian Government Solicitor to have that report finalised.
Senator RYAN: At any point did the general manager have a discussion with you or your staff about the prospect about preparing a brief of evidence? You have outlined it is not your responsibility. You have a responsibility to write a particular report and format. It is clear that that is not a brief of evidence; the DPP has said so. There was a lot of public discussion around the potential for action to be taken and Mrs Bishop has highlighted that there is an accountability gap here. So at any point was there a discussion about the suitability of the format of the report or the collection of evidence or its collation to allow the preparation of a brief of evidence?
Mr Nassios : You are asking from the general manager?
Senator RYAN: From anyone to you.
Mr Nassios : No.
Senator RYAN: No-one at any point raised the prospect or highlighted that if this evidence is being collected it needs to be done in a manner and collated in a format that is suitable for the DPP?
Mr Nassios : No. When the three persons who comprised the team were finalising the report, and particularly the last chapter which contains the recommendations, we had a great deal of discussion amongst ourselves as to what ought to be made.
Senator RYAN: Would it be fair to say to you: do you have a view as to whether or not there is a flaw in the legislation or an accountability gap in the law where we have a large report that identifies a lot of issues that potentially could be pursued by the Director of Public Prosecutions, that the format of the work you have undertaken and produced does not allow that to be pursued by the DPP, and secondly, there is no direction for you from within this statutory authority to prepare the evidence in such a way? Is that a gap in the accountability of these organisations?
Mr Nassios : Certainly the Commonwealth Director of Public Prosecutions believed so.
Senator RYAN: What do you believe, Mr Nassios? You are the one most intimately familiar with this material.
Mr Nassios : The recommendation from KPMG is that the investigator somehow should deal with that issue. Again, I am not convinced. From a personal perspective I would certainly hope that the general manager did not consider that my recommendations were not worth the paper they were written on but the reality is that it is a general manager who determines what the actions ought to be after that report is handed down.
Senator RYAN: Given that that is her responsibility, and given that a lot of people were surprised that the DPP so quickly said, 'None of this is of any use to me', it would strike me that it would be the general manager's responsibility to speak to you through the course of the process because she or he has to keep in mind that this might need to be of use for some legal process. None of that instruction was ever given to you?
Mr Nassios : No.
Mrs BRONWYN BISHOP: Going back to the KPMG report, which they described as a 'high level' report—I am just having a look through and it does have a lot of what we might call 'literary analysis' of documents—I am interested in their disclaimer at the beginning:
Pursuant to the engagement contracts on 20 March, KPMG has prepared this report for the purposes set out. Accordingly, KPMG accepts no responsibility in any way whatsoever for the use of this report for any purpose other than that for which it has been prepared. No party other than Fair Work Australia may rely on this report. If you are a party other than Fair Work Australia, KPMG owes you no duty, whether in contact tort under statute or otherwise with respect to or in connection with this report or any part thereof, and, we have no liability to you for any loss or damage suffered or costs incurred by you or any other person arising out of or in connection with this provision to you of this report or any part thereof however any such loss or damage is caused, including but not limited to as a result of negligence but not as a result of any fraud or dishonesty on the part of KPMG.
It is critical of the work you did, Mr Nassios, and I think you, as the person who was the delegate and the lead investigator is entitled to respond to their criticism of the way they say there is other stuff you could have looked at. Then they say, 'We don’t know whether that would have (inaudible)'. I think it is fair that you tell us how you prepared your modus operandi.
CHAIR: Let me be very clear. You do not have a free licence. I am going to give you the latitude, Mr Nassios, subject to what I already said. So I have no problem in the breadth of a response. I do have a problem with it if it goes beyond that, okay?
Mr Nassios : Certainly, Chair.
CHAIR: So please feel free, if it is fair to you for Mrs Bishop to generalise that question, but there are limitations.
Mr Nassios : Mrs Bishop, it seems to me that what KPMG have done, as they indicate in their report, is that they have looked at what I did and they have come up with certain recommendations as to what they believe ought to happen in future. In terms of the recommendations they come up with for the future, again as the senator has mentioned now, given the interest, it certainly would have been better to have had the process of the investigation documented—every single process.
My response to that was that I do not believe that that in any way would have impinged on the timing of the investigation, nor do I think it took that into account. As I said, there were three of us dealing with this issue on a day-to-day basis. I am sorry for repeating myself, but to ask me to document every single thing we said to each other simply would have added time, not taken a shorter period of time. But certainly I understand a task force possibly traditionally would conduct such investigations, in the view of some people. It is important to have the documentation, so that people know what they are doing. I would acknowledge that that is a significant aspect of such an investigation.
It seems to me that the investigation by KPMG was instituted because of the belief it had taken too long to conduct the investigation. I have answered that I do not believe that it has taken too long in a substantial way. I acknowledge that there was a short period when it could have been curtailed to some extent, but that was a short period. I have to say in my defence it has now been over a year since the police forces of this country have been looking at these issues. I do not know what they are doing and I do not expect to know what they are doing, but if it has taken them over a year—with all of the information that was already on the table—it is in some way a partial defence of the time it took me to conduct this investigation.
Senator RYAN: The time taken by the police does not necessarily endorse time taken elsewhere. It could lead to similar criticism.
Mr Nassios : I accept that, but it does give me some succour to say if it has taken persons with far more experience than I had in investigating that gives me some benefit.
Senator BIRMINGHAM: You sound slightly frustrated with the response to the handling of your report.
Mr Nassios : I would not be human if I was not. But I say this genuinely: I have not taken this personally. I have tried not to become emotional about it and I think I have generally succeeded in that. I have looked at everything I did. As I say, there are a couple of aspects that could have been improved. Again, in terms of the issues that were dealt with and where we currently find ourselves politically, I think it was always going to be a very, very difficult task to undertake.
Mrs BRONWYN BISHOP: I think you are also entitled to respond to the words of Mr Thomson in his speech to the chamber of 21 May when he said:
As I said, it took four days for the Commonwealth DPP to say that this report was not forensic, that there was not a body of evidence.
It did not say that at all; it said it was not a brief of evidence. He should have said that there was not a brief of evidence but he said there was not a body of evidence. He went on:
Rather than forensic, Mr Nassios, the delegate, was selective and biased. He was so biased, in fact, that I had to write to the general manager last year asking for his removal from this position.
Did he so write?
Mr Nassios : I understand he did. I have never seen that documentation, but Ms O'Neill indicated that such documentation was received at some point, yes.
Mrs BRONWYN BISHOP: What did she say to you about it?
Mr Nassios : She just mentioned the fact that the documentation had come in. I do not think she went into any detail. I cannot recall any specific detail.
Mrs BRONWYN BISHOP: Did she express to you that she had formed the view that you were not biased?
CHAIR: I do not know that this is really within the terms of reference. Mr Nassios had something to say before the committee in the past on this. This is not an immediate matter; it has been on the record for a while. There are other forums in which you can pursue it. I have allowed the responses and questions to date.
Mrs BRONWYN BISHOP: I think the universal view is that it took too long and you have explained to us the methodology used. Would you like to tell us what experience you had prior to undertaking this inquiry, by giving us an example or whatever?
Mr Nassios : As I think I indicated last time, the only investigation that I am aware of—and when I say aware of I am trying to hedge my bets a little bit because it is possible that something has happened, but not likely. I have been there for such a long time. I certainly cannot recall any investigation other than one that was conducted in 1998. That investigation, as I think I mentioned, certainly I mentioned it to KPMG and I think I mentioned it to yourselves, resulted in the matter being referred to the Commonwealth director in those days and a caution was issued to the reporting unit. It was the Australian Workers Union in those days.
Mrs BRONWYN BISHOP: What did it do?
Mr Nassios : It was the failure to lodge their returns on time. That was the issue being dealt with.
Mrs BRONWYN BISHOP: We have got plenty here too in the HSU.
Mr Nassios : Absolutely. So that is the experience of Fair Work Australia. It is the experience of the Australian Industrial Relations Commission, the registry prior to it.
Mrs BRONWYN BISHOP: How long have you been in this, in its various forms?
Mr Nassios : I have been responsible for the registered organisations area since 1996.
Mrs BRONWYN BISHOP: I see. So you fairly experienced in the way it works?
Mr Nassios : I would have thought so. I am at least grateful in KPMG, certainly in terms of something that the former general manager did say that I have a considerable standing within the organisation. So, yes, with a bit of humility I say that my experience was the best that we had.
Mrs BRONWYN BISHOP: With the experience of this, if you are asked to do another investigation do you think it would be more speedy?
Mr Nassios : I think I would try to run away as quick as I could! Again, the answer to that question is, I have to say to you, no, with the powers that were available to me. If I had the capacity to seek information, just for argument's sake, from Fairfax, there would have been an aspect of the investigation we have not actually touched on today but it is a very fundamental aspect of the investigation, and if you watch our current affairs TV programs indeed it seems like the only aspect of the investigation they are interested in. Fairfax had a great deal of information that assisted me in relation to escort services. I have made a comment in the KPMG, which I think is slightly out of context, that if I was to look at simply the aspects of the investigation dealing with authorisation of expenditure, yes, it could have been completed earlier. But that was not the investigation; the investigation was of the totality of expenditure. It was the expenditure that related to escort services, and certainly when we asked Fairfax for that information, back in April—I accept that it was only in April last year—Fairfax did not give us that information; that information is not given to us until two months later. So, in the absence of those powers, I say to you that, yes, certain aspects of the investigation would have been completed earlier but not the totality.
Mrs BRONWYN BISHOP: Do you have coercive powers?
Mr Nassios : I do, but only in relation to officials and employees or former officials and employees.
Mrs BRONWYN BISHOP: So you could summon them to come and give evidence if they tried not to do so.
Mr Nassios : Correct.
Mrs BRONWYN BISHOP: Did you have to use those powers?
Mr Nassios : Well, we used the coercive powers once we went into investigation, yes.
Mrs BRONWYN BISHOP: In this investigation?
Mr Nassios : Yes.
Mrs BRONWYN BISHOP: Which party was that in respect of?
Mr Nassios : It would have been most, except we invited Mr Thomson and Mr Thomson came of his own volition.
Mrs BRONWYN BISHOP: And the other ones? Ms Christie Robinson?
Mr Nassios : Mr Bourke, Ms Stephenson.
Mrs BRONWYN BISHOP: Stephenson, I mean.
Mr Nassios : Yes. From the investigation onwards, my memory is such that Mr Thomson would have been the only person we actually invited, rather than issued a notice to attend.
Mrs BRONWYN BISHOP: I see. Just to recap, the Slater and Gordon and BDO Kendalls report were essential ingredients of your investigation and an important part of your finally published report. Were you amazed at the conclusions the AEC made of your report?
Mr Nassios : I have to say I actually read it prior to the last time I appeared. I actually cannot recall what the conclusions now are, so I have not looked at it since then.
Mrs BRONWYN BISHOP: Did you know that they had not had the BDO Kendalls, Slater and Gordon material?
Mr Nassios : It didn't surprise me, no. As I indicated to you earlier, for many months I rejected Senator Ronaldson's requirement to make that report available. For the same reasons I suggested to Senator Ronaldson, I would have suggested the same reasons that the AEC should not have got that report as well.
Mrs BRONWYN BISHOP: Thank you, Mr Nassios.
CHAIR: I thank you for your evidence today, Mr Nassios. The committee very much appreciates your cooperation and willingness to come before us and also for your evidence on the last occasion.
Resolved (on motion by Mrs Bronwyn Bishop):
That the committee authorise publication, including publication on the parliamentary database, of the proof transcript of the evidence given before it at the public hearing today.
Committee adjourned at 11:00