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Joint Standing Committee on Electoral Matters - 16/07/2012 - Australian Electoral Commission analysis of the Fair Work Australia report into the Health Services Union

NASSIOS, Mr Terry, Director, Client Services, Fair Work Australia

Evidence was taken via teleconference—

Committee met at 12:32

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 third public hearing for this inquiry. On 3 July the committee heard from the General Manager of Fair Work Australia, Ms Bernadette O'Neill, and on 6 July the Australian Electoral Commission gave evidence. Today, the committee will hear from Mr Terry Nassios, the principal investigator of the Fair Work Australia report into the HSU national office. He will respond to questions on details of the conduct of the investigation and relevant findings of the Fair Work Australia report. The Australian Electoral Commission will also appear to answer further questions not covered at the last hearing.

The evidence today will be recorded by Hansard and will be covered by parliamentary privilege. I also draw everyone's attention to a resolution agreed to by the Senate on 25 February 1988, Procedures to be observed by the Senate committees for the protection of witnesses, which we operate under. It states:

A chairman of a 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.

We are restricted to matters to do with the reference by the minister regarding electoral matters and not in relation to other matters which might be taken up elsewhere.

I welcome Mr Terry Nassios from Fair Work Australia. Do you have anything to add on the capacity in which you appear?

Mr Nassios : I am not sure what my official title is anymore, but I was the principal investigator of the HSU national office.

CHAIR: That is fine. I advise that these hearings are legal proceedings of the parliament and therefore have the same standing as proceedings of the respective houses. The giving of false or misleading evidence is a serious matter and may be regarded as a contempt of parliament.

I thank you for appearing by phone today to assist the committee with its inquiry. I understand you had some difficulties in getting here personally. We hope to do as much of the evidence as we require today, but a lot of material has come in, as a result of some questions at the last hearing, that we might need to explore. If necessary I will get your availability from you at a later stage. Do you have any opening remarks that you wish to make to the committee in relation to your investigation on the electoral side of the equation with the HSU?

Mr Nassios : No, Chair.

Mrs BRONWYN BISHOP: Mr Nassios, you were first employed by, I think, Mr Doug Williams, the Industrial Registrar, prior to the establishment of Fair Work Australia by the Fair Work Act. Is that right?

Mr Nassios : No, I have been employed with the commission and its forerunners since 1985.

Mrs BRONWYN BISHOP: Then Mr Doug Williams would have been your boss, would he?

Mr Nassios : During the period 2006 to 2009, correct.

Mrs BRONWYN BISHOP: Mr Williams recommended that you refer matters concerning the HSU investigation to the police. Is that right?

Mr Nassios : He issued an email to me in late in 2009, correct.

Mrs BRONWYN BISHOP: Could you tell me why you did not do that.

Mr Nassios : I do not have a role in referring any matters to the police. That is the simple answer to that question.

Mrs BRONWYN BISHOP: I am sorry; I did not quite follow that answer.

Mr Nassios : I had no role in terms of referring any matter to the police. Up to 30 June 2009 I was assisting Mr Williams in the conduct of the inquiry at that stage of the No. 1 branch of the HSU and the national office. After 30 June, the next day being 1 July, I had no functions or role in relation to the HSU matter as a result of the Fair Work Act.

Mrs BRONWYN BISHOP: What was the date that you first had any involvement with the HSU matter? Was it when you were working for Mr Williams?

Mr Nassios : It would have been at the time the inquiry started.

Mrs BRONWYN BISHOP: This is a terrible line. Can we do anything about this? It is very hard to hear.

CHAIR: I have mentioned it to Broadcasting. We will just keep going but if Broadcasting can try and fix the voice levels that would be good.

Mrs BRONWYN BISHOP: Mr Nassios, where physically are you?

Mr Nassios : At home.

Mrs BRONWYN BISHOP: Where is that?

Mr Nassios : In Melbourne.

Mrs BRONWYN BISHOP: And you are going overseas tomorrow, are you?

Mr Nassios : Yes, I am.

Mrs BRONWYN BISHOP: When will you be back?

Mr Nassios : In early August.

Mrs BRONWYN BISHOP: Was there any reason you could not come today?

Mr Nassios : My grandchildren, who are twins who were born three months premature, had their welcome home party yesterday and, given that there was a severe chance that they were not going to survive, I have to say that my priority was them.

CHAIR: That is all right, Mr Nassios—

Mrs BRONWYN BISHOP: I hope you are telling us they are going to survive. That is very good news.

Mr Nassios : I am very happy to say that, yes, they have pulled through very well and it was a great occasion yesterday.

Mrs BRONWYN BISHOP: What date in August will you be back?

Mr Nassios : My recollection is 1 or 2 August.

Mrs BRONWYN BISHOP: Okay. I think we might need to have a second hearing, Mr Chairman.

CHAIR: Okay. If we do, we will work that through.

Mrs BRONWYN BISHOP: So you began working for Mr Williams, and Mr Williams was investigating the HSU prior to the introduction of the Fair Work Australia Act.

Mr Nassios : He was inquiring, shall we say.

Mrs BRONWYN BISHOP: What was the date precisely of that email in which Mr Williams said, 'You should refer this matter to the police'?

Mr Nassios : That would have been 30 June, the final day that we had power to do anything in relation to the HSU.

Mrs BRONWYN BISHOP: Why do you think he sent you the email to refer this matter to the police if you say you had nothing to do with it?

Mr Nassios : At that point I was assisting him in terms of the inquiry in terms of the Fair Work Act transitional provisions.

Mrs BRONWYN BISHOP: So you just chose to ignore that instruction, did you?

Mr Nassios : No. From 1 July onwards I had no powers. I had none of the functions that I originally had as a deputy industrial registrar. Being a deputy industrial registrar comes with a discrete set of duties in relation to registered organisations. From 1 July those duties could only be given to me by way of delegation from the general manager. Up to 13 July—in other words, 13 days later—I had no delegation to undertake any functions in relation to registered organisations.

Mrs BRONWYN BISHOP: When did you first have the opportunity to have things to do with the registered organisations?

Mr Nassios : That would have been on 13 July.

Mrs BRONWYN BISHOP: So you could have referred it to the police on 13 July?

Mr Nassios : I have made it very clear to the committee every time I have appeared that I maintained a strict separation between my function as investigator and the function of the general manager in terms of referring matters to the police et cetera.

Mrs BRONWYN BISHOP: Don't you think it is a bit odd that we can have government agencies that will not refer things to the police?

CHAIR: You are not saying that, are you, Mr Nassios? You are saying that you did not see it as your role as to refer the matter to the police. From what you are saying, I gather that you felt it might have been up to others to refer it. I do not want to verbal you.

Mr Nassios : The material that was a part of the inquiry as at 30 June would have been made available to the acting general manager, as it was at that time. That material would no doubt have incorporated the email referred to. It would have been a decision for the acting general manager. From my perspective, it was not until 13 July that I was given any delegation to deal with any matter in relation to registered organisations. One of those matters was in fact the inquiry into the HSU.

Mrs BRONWYN BISHOP: There seems to be a little bit of confusion about advice that was given about speaking to the police. There seems to be some disagreement as to whether or not the Australian Government Solicitor's view was that Fair Work Australia was not obliged to cooperate with the police, yet there are other statements that Fair Work Australia and Ms O'Neill in particular were forbidden from dealing with the police. Which was it?

Mr Nassios : I am not able to answer that question. It was never a position for me to determine what the functions or the powers were of Fair Work Australia to refer matters to the police.

Mrs BRONWYN BISHOP: Were you ever given an instruction not to talk to the police?

Mr Nassios : I was not.

Mrs BRONWYN BISHOP: So you never discussed with anybody else Mr Williams's advice to you that you should talk to the police?

Mr Nassios : The email of 30 June at the outset refers to a teleconference that Mr Williams would have had with me on that day. At that teleconference I would have indicated to Mr Williams that I felt that his conclusions that he had drawn on that particular day would not have stood up to the scrutiny that those conclusions would no doubt have been subject to.

Mrs BRONWYN BISHOP: Mr Nassios, the questions I have been asking you about the police are questions that ask why you did not yourself initiate something with the police. Did the police ever contact you?

Mr Nassios : Directly, no police have ever contacted me.

Mrs BRONWYN BISHOP: Did you say, 'indirectly'? It is a very bad line.

Mr Nassios : I said 'directly'. I am obviously aware that phone calls and correspondence have been forwarded to Fair Work Australia from at least two police forces—but not to me.

Mrs BRONWYN BISHOP: But you are aware of requests that came through.

Mr Nassios : Yes.

Mrs BRONWYN BISHOP: I want to go quickly to an appraisal given in the parliament by Mr Thomson of your work.

CHAIR: Hang on. I have said this before: this needs to relate to the terms of reference of this inquiry.

Mrs BRONWYN BISHOP: Yes.

CHAIR: You need to be specific in relation to that. I am not trying to rule it out. I am just putting it on the record.

Mrs BRONWYN BISHOP: I am being very specific about the AEC's appraisal of the Fair Work Australia Act.

CHAIR: That is fine.

Mrs BRONWYN BISHOP: Let me give you an example.

Under 'Observations by the delegate to the general manager: referral to the Director of Public Prosecutions', you said:

I also consider that, by denying to me at interview that he ever used his HSU credit cards to procure escort services, Mr Thomson—

CHAIR: Hang on.

Mrs BRONWYN BISHOP: Wait a minute. I will use this other one.

CHAIR: Use the other one. That is not relevant.

Mrs BRONWYN BISHOP: You said:

I also consider that, by stating to me at interview that he would return cash with vouchers and receipts as part of the complete reconciliation of cash withdrawals, Mr Thomson has provided me with information that is false or misleading.

Mr Thomson said:

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. Mr Nassios had an outcome that he wanted to achieve and he was trying to link assertions. There was no body of evidence that supported his position.

That is what Mr Thomson said of you under parliamentary privilege. Do you consider that the investigation you conducted was forensic and without bias?

Mr Nassios : Yes.

Mrs BRONWYN BISHOP: And you stand by that statement that the evidence he gave you with regard to return of cash with vouchers and receipts as part of a complete reconciliation was false and misleading.

Mr Nassios : Yes.

Mrs BRONWYN BISHOP: Mr Nassios, I might say at this point that we only received this morning—or I only received this morning, because, as I think the chairman has dealt with, there was such a download of information—the transcripts of your interviews with various people, which—

CHAIR: They are not public. They have not been made public, so just be careful.

Mrs BRONWYN BISHOP: Okay. I am saying to you, Mr Nassios, that I think that when you come back from your time overseas we might need to talk to you again when we have established the status of that material, because I think it is very pertinent to the AEC's approval. One of the things that seem to become obvious is that, when we are dealing with the AEC, the relevant reporting time concerning gifts to Mr Thomson is after his endorsement—that is, 13 April 2007. In much of the material that you deal with, you do not seem to make a distinction—I cannot find a point where you do—between payments and so on made before and after that date. Would I be right on that, or should I be searching a little more assiduously?

Mr Nassios : I am not sure what the significance of that date is.

Mrs BRONWYN BISHOP: The significance is that, when Mr Thomson became the endorsed candidate, the reportable period for gifts and donations is relevant for reporting to the Australian Electoral Commission.

Mr Nassios : Okay.

Mrs BRONWYN BISHOP: In particular, it is relating to Ms Stevens. I think the total amount you found that was spent by the HSU on the authorisation only of Mr Thomson was $154,000. Can you recall that?

Mr Nassios : Yes.

Mrs BRONWYN BISHOP: Because of the significance of 13 April, I disaggregated the amount spent after that date, and some $31,000 was spent on Mr Thomson's campaign, as authorised by Mr Thomson, relating to the employment and expenses of Ms Stevens. The thing that is of concern to me is that the Australian Electoral Commission has simply said, 'Oh, well, the HSU disclosed the $154,000, so that's enough,' when its responsibility began on 13 April. So I just wanted to check with you that you had not broken it up and that it is up to us to do that.

Mr Nassios : I cannot recall. I have to say to you that the date, as advised by my answer to the question initially, is of no particular significance.

We were looking at whether the expenditure was authorised and that was our main avenue of inquiry.

Mrs BRONWYN BISHOP: The other question is: when expenditure was made by Mr Thomson, where you specifically found that there had been no authorisation made, either by the national executive or under the rules under which they operate, the money that he has spent is either misappropriated or it is fraud or it is theft.

Mr Nassios : In my conclusions in the final chapter of the report I raise those issues for consideration by someone—

Mrs BRONWYN BISHOP: Can I find that?

Mr Nassios : It is in the final chapter. There are five or six issues that I particularly focus on in relation to my recommendations relating to the Director of Public Prosecutions and the expenditure that I find is unauthorised; they are the issues that are raised in that particular section of the report. They are in the last few pages.

Mrs BRONWYN BISHOP: The Electoral Commission makes a contention which to me makes no sense at all: that the National Office of the HSU is not an associated entity because it is registered under the registered organisations act. I do not understand that at all. Could you perhaps shed some knowledge—

Mr Nassios : No. I am unable to help you. I do not know the point that they are making there.

Mrs BRONWYN BISHOP: So what are the criteria for being registered under the registered organisations act?

Mr Nassios : In very broad terms, you need to have a minimum number of members and you need to have a rule book et cetera which provides for elections and various financial requirements et cetera. That is very, very broad, but those are, in essence, the criteria.

Mrs BRONWYN BISHOP: So are trade unions themselves registered under the act?

Mr Nassios : I am sorry—what was that?

Mrs BRONWYN BISHOP: Are trade unions registered under the act?

Mr Nassios : They can be. Not all would be but, yes, they can be.

Mrs BRONWYN BISHOP: And are some? Could I find a list somewhere of those?

Mr Nassios : Yes. The Fair Work Australia website has a list of registered organisations.

Mrs BRONWYN BISHOP: Perhaps we could find that. So what then flows from it? If you are registered under that act, what does that mean?

Mr Nassios : You get corporate status. You obviously can sue and be sued. You have the right because you will have an eligibility for membership rule to recruit members and enrol them in accordance with that rule. With those rights you have the obligations, as I have said before, of having elections conducted regularly and having your returns lodged with Fair Work Australia to look at.

Mrs BRONWYN BISHOP: I will just recap that because it is such a bad line. You get corporate status?

Mr Nassios : Correct.

Mrs BRONWYN BISHOP: Does that mean that you are treated as a corporate under the corporations law?

Mr Nassios : No, it will be treated under the Fair Work Act, the registered organisations act.

Mrs BRONWYN BISHOP: I see. And you can recruit members?

Mr Nassios : Yes.

Mrs BRONWYN BISHOP: And you have elections, did you say?

Mr Nassios : Yes. You must have elections.

Mrs BRONWYN BISHOP: How can you have elections for a national office?

Mr Nassios : I am sorry but I did not hear that.

Mrs BRONWYN BISHOP: How can you have elections for a national office?

Mr Nassios : You must have them, yes.

Mrs BRONWYN BISHOP: But how would that work?

Mr Nassios : For just about every registered organisation—there are exemptions but they are very few—one of my functions would be that an organisation would seek to have an election when it was due and, if I believed it was due, we would arrange with the Electoral Commission for that election to be conducted.

Mrs BRONWYN BISHOP: So who would be elected in the National Office of the HSU?

Mr Nassios : Their national officers. Those national officers would be found in the actual rule book, as to who they are.

Mrs BRONWYN BISHOP: Have you any evidence that there were ever any elections?

Mr Nassios : Yes. There were definitely elections. Those, again, would be part of the registered organisations file that is accessible yet again from the FWA website.

Mrs BRONWYN BISHOP: So who would vote in that election for a national office?

Mr Nassios : All of the members of the union.

Mrs BRONWYN BISHOP: So that would include HSU east?

Mr Nassios : We need to be careful here to distinguish between the federally registered branch of the Health Services Union which is known as HSU east and also the New South Wales state registered body which goes under the same name. In terms of whether the members of those two organisations are exactly the same, I think that would be the case but I am not going to say that with certainty. If so then they would be voting for national office, yes.

Mrs BRONWYN BISHOP: So there is a federally registered branch of the HSU?

Mr Nassios : Yes.

Mrs BRONWYN BISHOP: So that is registered under the Registered Organisations Act?

Mr Nassios : They established under the rules themselves. Those rules are the rules that are registered under the Registered Organisations Act. It is up to an organisation how it structures itself; it may decide to have no branches, but in this case there is a branch which is known as the HSU east branch.

Mr GRIFFIN: Where are we trying to go with this?

Mrs BRONWYN BISHOP: I am trying to establish whether or not the national office is a related entity, which it seems to me to be. If it has elections then presumably it is owned by the union. If the union is a related entity then the national office must be a related entity under the Electoral Act.

Mr GRIFFIN: My worry there, though, is that Mr Nassios, who obviously has had a lot of involvement in the investigation, is by no admission an expert in the Electoral Act.

Mr Nassios : Correct.

Mr GRIFFIN: I think it is a bit difficult to ask him questions about the operation of the Electoral Act given that that is not his area of expertise.

CHAIR: The commission has already given evidence in relation to this.

Mrs BRONWYN BISHOP: I do not accept their evidence.

CHAIR: The problem is Mr Nassios is not qualified on his own admission. I am not trying to stop you, but Alan has asked where this is going. The witness cannot give evidence outside his expertise.

Mrs BRONWYN BISHOP: I am asking about the elections.

CHAIR: Okay.

Mrs BRONWYN BISHOP: I now has a list of registered organisations. It says here that the Health Services Union is 'U' type. Presumably that is a union. It has an abbreviation and a code. So the Health Services Union itself is a registered organisation under your act.

Mr Nassios : Correct.

Mrs BRONWYN BISHOP: We have been told all along that it was the national office of the Health Services Union that was registered under act and it was not an associated entity—I think I said 'related' entity before, but I meant associated entity—whereas it clearly shows in this list that the Health Services Union itself is registered. I am at a loss to know whether there was ever to your knowledge a distinction made between the registration of the union and the national office.

Mr Nassios : Again, I am going to struggle. I do not understand the Electoral Act at all. I do not know how that operates. As best as I can assist you, in terms of the Health Services Union and the Registered Organisations Act, the easiest way to explain this is if we presume that there is an overriding national body and each state has a branch in its own name. The way the Registered Organisations Act works is that each of those branches—in other words, each of the states—are referred to as reporting units. It has to report on its finances as a component part of the whole national body. The HSU has a number of branches, most of which are based in the various states, and there are a number that are based in Victoria.

Mrs BRONWYN BISHOP: Yes, I can see that.

Mr Nassios : Our finding in terms of HSU is that the national office itself—this is a unique situation; it is certainly not common amongst most organisations—is also a reporting unit for the purposes of financial reporting. Hence the reason we had an inquiry and investigation into the national office.

Mrs BRONWYN BISHOP: I see.

Mr Nassios : It is important to make the distinction that we did not investigate the Health Services Union as a whole. We did not look at, for example, Tasmania's branch reports. That is a different entity in terms of the Registered Organisations Act.

Mrs BRONWYN BISHOP: I see. So you would have treated the national office like a branch—as a reporting entity.

Mr Nassios : Correct.

Mrs BRONWYN BISHOP: I see. So—I cannot ask you to comment on this—I would say that if the various branch offices are associated entities then the national office itself should be an associated entity because it has to have elections by branch members.

Mr Nassios : I can only answer that one in very general terms and say—I do not know what I can say, to be truthful. There is a particular meaning you are giving to the words that I do not know.

CHAIR: And that is a matter for the Electoral Commission.

Mr Nassios : Yes. I am not able to comment on it.

Mrs BRONWYN BISHOP: No, but they did have elections?

Mr Nassios : Yes.

Mrs BRONWYN BISHOP: And the people who voted in those elections were?

Mr Nassios : They would have been the members as a whole.

Mrs BRONWYN BISHOP: Does that mean all the branches?

Mr Nassios : Yes.

Mrs BRONWYN BISHOP: So all branch members would have voted.

Mr GRIFFIN: They would have had the right to vote.

Mr Nassios : Yes.

Mrs BRONWYN BISHOP: Yes—it is not compulsory. So all branch members would have voted. When was Mr Thomson elected?

Mr Nassios : In 2002.

Mrs BRONWYN BISHOP: Was Kathy Jackson, when she took over from Mr Thomson, acting or elected?

Mr Nassios : My recollection is that initially she would have been acting but at some point after that—I may need to correct one thing here. I am not strictly certain, I must admit. There is also a capacity at some levels for collegiate elections to take place. Unfortunately, I cannot recall whether that has been the case in this instance. By collegiate elections what I am suggesting is that membership as a whole votes for a number of delegates to a council, shall we say, and it is the members of that council who vote for the various officials within that body. Unfortunately, I cannot recall whether that is the case here. So I just need to make that clear. I could have misled you in some respects.

Mrs BRONWYN BISHOP: That is all right. Do you think somebody could find that out for us?

Mr Nassios : It should be fairly easy to find on the website that I am referring to. We would have broken that website into the context of elections et cetera.

Mr GRIFFIN: The rules and constitution of the union should make it clear how they elect their national officials.

Mr Nassios : Yes.

Mrs BRONWYN BISHOP: The collegiate system works a bit like the way the Americans elect their president. Is that what you are saying?

Mr GRIFFIN: I personally do not have any knowledge of the HSU, but my personal experience of other bodies is you might elect them via a national conference or from a national executive. It would depend, but delegates elected through state branches may come together through some mechanism to elect national officials. But I am pretty out of date with this stuff.

Mrs BRONWYN BISHOP: But, whichever way it goes, they get elected.

Mr GRIFFIN: They get elected. I guess the argument is that there is an election by franchise of the membership and then there is an election—effectively, appointment—by representatives within the union.

Mrs BRONWYN BISHOP: Yes. Perhaps, Mr Nassios, when we meet again you might find us the details of that particular election—who did vote—as your Fair Work Australia supervises that.

CHAIR: We might be able to get that from Fair Work Australia.

Mr GRIFFIN: We ought to be able to establish that ourselves pretty easily, frankly.

Mrs BRONWYN BISHOP: All right.

CHAIR: We will get the secretariat if we need any assistance on it. We will get that information.

Mrs BRONWYN BISHOP: Okay. We have also only just received the BDO Kendalls report. I understand we have not made that public either. Is that right?

CHAIR: No, it has not been made public.

Mrs BRONWYN BISHOP: But perhaps I could ask a generic question. How important was that report to you in your deliberations?

Mr Nassios : It certainly was a significant matter that we looked at and gave us a lead as to in what way the investigation should take place.

Mrs BRONWYN BISHOP: All right.

CHAIR: Have you looked at the Electoral Commission's report in relation to this matter we are looking at?

Mr Nassios : I looked at it briefly when I got your correspondence at the beginning of last week.

CHAIR: Are there any comments you want to make in relation to that? It really looks at different areas, I think.

Mr Nassios : The report of the Electoral Commission itself makes it fairly clear. I certainly did not look at my investigation in terms of how it may impact on the Electoral Act. To that extent I can only agree with the views expressed in the Electoral Commission's report.

CHAIR: Thank you.

Mrs BRONWYN BISHOP: I would like to go to the reporting responsibility that being registered gives you. That is to furnish returns. What are they required to put in the return that they furnish to you under the Registered Organisations Act?

Mr Nassios : I am not sure what you may be referring to. Could you be more specific?

Mrs BRONWYN BISHOP: You said the branch and the national office were reporting entities.

Mr Nassios : Right. They are required to file their 'financial statements' as the easiest way to describe them.

Mrs BRONWYN BISHOP: Are those financial statements freely available? Could we get a copy of those?

Mr Nassios : Yes. They are also included as part of the page that you would have been looking at previously. You will have a link to financial returns. As they are lodged and dealt with by Fair Work Australia, they are included on the website.

Mrs BRONWYN BISHOP: Thank you. In the final letter—this has been made public—which is a four-page letter from Slater & Gordon, who called in BDO Kendalls, their final paragraph says:

It is also worth noting (as the AEC report into these issues dated 16 May 2012 does) that as National Secretary of the HSU until 14 December 2012, Mr Thomson failed in his responsibility to ensure that the Donor Annual Returns for the 2006-07 financial year and the Annual Return Relating to Political Expenditure for the 2006-07 financial year were lodged on time … Mr Thomson was of course best placed at the time to identify which transactions were of an electoral nature.

In failing to lodge those returns, did he in fact lodge the returns under the Registered Organisations Act on time?

Mr Nassios : He did not, no.

Mrs BRONWYN BISHOP: Have they subsequently been filed?

Mr Nassios : The returns were subsequently lodged in August of last year by Ms Jackson.

Mrs BRONWYN BISHOP: August 2011?

Mr Nassios : Correct.

Mrs BRONWYN BISHOP: So they are four years late?

Mr Nassios : Correct.

Mrs BRONWYN BISHOP: What powers do you have to make somebody comply and file their returns?

Mr Nassios : The investigation looked at the issue of the failure to lodge these on time, and I recommended that action in relation to civil penalty offences be taken against both Mr Thomson and Ms Jackson.

Mrs BRONWYN BISHOP: So civil penalties. What are those civil penalties?

Mr Nassios : Under the Fair Work (Registered Organisations) Act there are a number of offences. They are referred to as civil penalty offences.

Mrs BRONWYN BISHOP: But what happens? What do they get if they are found guilty?

Mr Nassios : I cannot recall the exact figure. They talk in penalty units. My recollection of the penalty units is that they equate to about $1,200.

Mrs BRONWYN BISHOP: So it is not really a big penalty.

Mr Nassios : I guess in financial terms it is not. In terms of impact and deterrence it may have on other organisations, that is a matter open to conjecture.

Mrs BRONWYN BISHOP: If it is only a small financial penalty, does it have any other implications?

Mr Nassios : I would have to think about that. I cannot think of a specific implication.

CHAIR: Is there a disqualification from office penalty? It certainly has no penalties in relation to members of parliament, because it is a civil penalty? Is there no disqualification from office or is that in relation to other penalties for other matters?

Mr Nassios : Off the top of my head I have to say I do not believe so.

CHAIR: And this has been consistent in your time in the organisation and the previous organisation? The penalties have roughly remained the same for many years other than slight increases?

Mr Nassios : Yes, that would be the case. There is no doubt that the biggest issue that I have faced in terms of financial reporting of organisations—this is from both an employee and employer side—is lodgement of returns on time. We have tried various proactive responses to try to ensure that those returns are lodged as they ought to be lodged. Our purpose in doing that is so that members themselves can be aware of what the organisation is actually doing.

Mrs BRONWYN BISHOP: Have there been many other registered organisations that have failed to lodge their returns like this?

Mr Nassios : On time? As I have just indicated, it is the most common failing that we encounter each year.

Mrs BRONWYN BISHOP: Do you go in and do audits of these people?

Mr Nassios : We do not audit. The audits of accounts are conducted by private sector auditors. They are the approved auditors under the act, so we do not audit any accounts that come into us. We try to ensure as best we can that they meet the requirements of the act and the reporting guidelines that have been issued under that act.

Mrs BRONWYN BISHOP: The thing that is of such grave concern to me is your finding that Mr Thomson certainly gave false and misleading evidence to you and the fact that there was so much money you found was unauthorised and, therefore, it was just Mr Thomson authorising money to be spent on himself. I drew the analogy at an earlier hearing to the position of Admiral Smith, who was made head of Sydney Ferries. He was given a credit card and used that credit card to pay school fees and for private personal expenditure which, all up, I think was not dissimilar in some of the amounts that Mr Thomson has spent. But what happened to Admiral Smith is that he went up before ICAC, and he is facing criminal prosecutions. It is very difficult to make a distinction between what Admiral Smith did and what Mr Thomson did or the way Sydney Ferries reacted and the way the HSU has reacted.

CHAIR: I put on the record that some of us would say there is a bit of a difference. Mr Thomson, as I understand it, spoke to you voluntarily and did not have to be subpoenaed, Mr Nassios?

Mr Nassios : That is correct.

CHAIR: Was his evidence on oath?

Mr Nassios : I do not think we swore him in.

CHAIR: That is okay. Let me say the gentleman that Ms Bishop talks about gave evidence before ICAC and there was a particular finding to his evidence on oath. That is one difference. I do not want to go fully into it; I know where you are coming from.

Mr GRIFFIN: The other thing is we are not in a position here to actually consider that; I know nothing about that other case.

CHAIR: And I am not going to endorse it.

Mrs BRONWYN BISHOP: No. The point I was making is that Sydney Ferries is a body that found that there had been fraud, dishonesty, misappropriation or whatever and took action, and we have a Fair Work Australia finding where unauthorised payments have been made which must amount to misappropriation, fraud or theft and nothing happens.

Mr GRIFFIN: Nothing of this has anything to do with the Electoral Act, so I really do not understand why we are trying to do a half-assed investigation of it at this time.

Mrs BRONWYN BISHOP: I am sorry but it does. It comes right to the point that, if the money is misappropriated, stolen or fraud, it cannot be lawfully disclosed by the HSU as the AEC has said that money was. That is why it is relevant for us.

Mr GRIFFIN: We are going way outside of anything related to this inquiry now. This is just getting crazy.

CHAIR: I tend to agree with that. I have been tolerant, but I think you are drawing a long bow. The position we are looking at is that there has been an Electoral Commission report in relation to certain matters. They have come to findings. They arise out of the Fair Work report. What we are looking at are some recommendations from the Electoral Commission, Mr Nassios. What I have asked Ms O'Neill with a question on notice—and she has answered that—is if there is anything in other acts relating to unions that might assist us for changes that would assist in disclosure and timely disclosure. The answer we got is 'not in relation to the particular act that you administer'. I am interested in your view on that, and you should stick to that. I know where Mrs Bishop is coming from and I want to give some latitude, but I think it is going into an area that is very speculative.

Ms O'Neill did not think that there was anything in the Act. Is there anything from your experience and examination that might assist the committee in terms of making some recommendations in relation to your act that would assist for future disclosures by unions who are involved in the electoral process? There are actually two things here: disclosure under your act and then disclosure to the Electoral Commission under the Electoral Act.

Mr Nassios : In terms of the Electoral Act I can only agree with Ms O'Neill. I just do not have the expertise to be able to make a meaningful comment as to how it may assist the Electoral Act.

CHAIR: What about your act?

Mr Nassios : I am aware, having read her evidence to the committee, that she did refer to the recent amendments to the Fair Work (Registered Organisations) Act. Certainly, in terms of disclosure under that act, each of those amendments will immensely improve.

CHAIR: Is there anything further that you can think of in terms of requirements that might be placed on officials of unions under your act that would assist with disclosure?

Mr Nassios : Not in terms of the Electoral Act, no.

Senator RYAN: I want to turn to your experience conducting this investigation. There are some similarities in the regulation of trade unions and political parties in the sense that we are often dealing with federal or multilayered structures, different disclosure requirements and so on. Do you think that, given your experience with this investigation, some specific legislative clarity upon an investigator to have a duty to disclose evidence of potential lawbreaking to police would have made your job easier or be beneficial to the overall regulatory environment?

Mr Nassios : My understanding is that that capacity is what has been introduced in terms of the registered work—

Senator RYAN: I appreciate that, and that is still being discussed. I am trying to move away from specific legislation here because one of the reasons you and Fair Work Australia was called was to look at your experience with this investigation itself and to see if there are any lessons we can learn from regulatory regimes we have in other areas. Do you think a specific legislative clarity would have benefited your work?

Mr Nassios : There were some fundamental issues, and I certainly do not intend to go into great detail here. The issue of expenditure was simply in relation to whether it was authorised. If expenditure is authorised then it would seem that it cannot be in any way a criminal activity. If it is not authorised then, as I have indicated in my report, there are issues that need some sort of decision from a person who can make that decision. I have recommended that those sorts of issues be forwarded to the Director of Public Prosecutions. That is my recommendation. Certainly in terms of assessing evidence and information, my powers were limited to persons who were either officials, employees, ex-officials or ex-employees. There were materials that subsequently I was able to obtain as a result of the settlement in the Fairfax proceedings which I believe were crucial for me making conclusions in terms of expenditure on escort services. So, to the extent that I would be invested with greater powers than I had then, yes, they would be of assistance.

Senator RYAN: To turn to the documents that you had access to following the Fairfax settlement: do you think that a regulatory regime for an organisation like this would be strengthened if you as an investigator did not depend upon third-party legal activities and the subsequent discovery and disclosure of documents—if you could have gained access to that by right or on your own initiative?

Mr Nassios : It would certainly assist, yes.

Senator RYAN: Given the lessons you have learned from this inquiry, which everyone agrees has been somewhat less than satisfactory in terms of the time it has taken to complete, do you think it would be a necessary element of any legislative reform?

Mr Nassios : Yes.

Senator RYAN: Do you think that some legislative clarification around your duties, potential resourcing and the preparation of briefs of evidence for the DPP should be included in similar regulatory regimes? I ask that because of the subsequent illumination that the Fair Work Australia report did not constitute a brief of evidence for the purposes of the Commonwealth DPP.

Mr Nassios : The answer to that question would be a qualified yes. I think it would be the case, but I am not able to really comment as to the tendering of a brief to the Director of Public Prosecutions.

Senator RYAN: Yes. I am conscious that part of this would be, would it not, about resourcing your agency with both funds and expertise to prepare such a brief.

Mr Nassios : As I say, that was not part of my role, so I am going to have difficulty in saying whether resourcing is part of the issue.

Senator RYAN: Would you agree that, if you were undertaking an investigation where you have agreed that it would be better if you did not have to wait for a court case with another party to present you with evidence, if you were undertaking that investigation and if you came across activity that should be considered by a DPP, it would be a better regulatory regime if that were part of your job? At the moment we have a situation where you present a report that is of no use to the DPP.

Mr Nassios : It would certainly be better, yes.

Senator RYAN: Okay. Because of the length of time that this particular report took, do you have a view about the sunset clause for pursuit of potential offences? I am not sure of the correct legal term. I am using the Electoral Act here as an example because it is the one I am familiar with. I appreciate that you are not. There is in this example a three-year rule.

Do you think that, if we were going to have a time limit on the pursuit of activities that might be illegal, that time limit should be either longer or be met by the commencement of an investigation rather than the commencement of a legal action? I think we would all agree that not pursuing potential criminal or civil offences purely because of the effluxion of time based on a long investigation is less than ideal for public faith in the law.

Mr Nassios : As you have indicated, there are issues as to the length of time it has taken. When Senator Abetz asked me back in February of this year if I agreed that it has been an unreasonable time I did not agree. I still am of that view. I believe that, when you look at the chronology of the inquiry investigation, it was a proper investigation taken to the appropriate period of time. In terms of the issue that you have raised in relation to effluxion of time and any prosecution that can take place, I was very conscious of any issues that may arise. My legal advice was that those issues do not arise in this instance.

Senator RYAN: If they did arise, presumably that would disappoint an investigator, wouldn't it? If you had found out during the course of the investigation that it was simply impossible for you to complete the investigation by the time required by an act to pursue an offence, that would not be ideal. Would you agree with that?

Mr Nassios : Correct.

Senator RYAN: Do you have a view—this is more generally, again, based on your experience here—with respect to the seriousness of sanctions that are applied for breaches of what you might call regulatory regimes for recognised organisations? Political parties are some under the Electoral Act; trade unions are some under the various Fair Work acts.

Mr GRIFFIN: Mr Nassios, are you aware of what the penalties are under the Electoral Act?

Mr Nassios : No, I am not.

Mr GRIFFIN: I do not know that we should be going into the question of other acts. You are taking a very wide bow, Scott—

Senator RYAN: No, I'm not, Alan. The question I am asking is actually very general. He has completed an investigation, for which there are a number of offences. Mr Nassios is familiar with the various potential courses of action for any potential offences contained in his investigation. The question I am asking is more general. Does—

Mr GRIFFIN: You have asked him whether he thinks the penalties that currently available are in fact sufficient in a situation where he has just admitted he does not know what the penalties are—

Senator RYAN: Alan, what I am asking is: does Mr Nassios have a view on penalty provisions for organisations like trade unions, which he is familiar with—I am trying to draw a comparison with other registered organisations like political parties. They are generally set at a relatively low level. Does he think that there needs to be a much higher level of potential sanction or a different regulatory regime in order to encourage compliance.

Mr GRIFFIN: Once again, Mate, it is your opinion that they are relatively low. We can argue the toss about that one way or the other—

Senator RYAN: How about then we say—

Mr GRIFFIN: You cannot ask him whether he thinks the penalties are sufficient in a situation where he does not know what the penalties are.

Senator RYAN: Alan, I am not asking whether they are sufficient. I am simply asking: does he have a view on the role of sanctions and how big they need to be in order to encourage compliance.

Mr GRIFFIN: Once again, in a situation where he is not aware of what the penalties are in relation to the act that we are actually responsible for, I think it is a bit rich.

Senator RYAN: I think, Alan, that the point I am making is: he is familiar with the Fair Work acts, and I am asking what the role of sanctions is in encouraging compliance and whether or not they need to be significantly larger. It is not an unreasonable question—

Mr GRIFFIN: It is not an unreasonable question in the broader sense—

Senator RYAN: That is how I am asking it.

Mr GRIFFIN: The question here is: we are supposed to be looking at the Electoral Act. We are supposed to be looking at the Fair Work Australia report that is done by the AEC. That is the key for us.

Senator RYAN: Alan, we are trying to draw lessons from an investigation—

Mr GRIFFIN: This is another situation where the coalition once again tries to expand things into a situation where you want to inquire into something which has already been inquired into.

CHAIR: I have listened to the submissions. The question is admissible in terms of being asked. What weight we give to it is another matter, given what the witness has told us. Can you just give us your view, Mr Nassios, if you have a view. If you do not want to give us a view in relation to it, please do not.

Mr Nassios : I have the report in front of me. The maximum penalty was $2,200. I have to say that I do not know what the maximum penalty is proposed under the amendments.

I am just not familiar with what they are. Certainly you would think, as a general proposition, that the higher the penalty, the more likely you would be to have compliance. Again, my experience is that while this is the most common failure of registered organisations to meet their obligations under the registered organisations act—that is, the failure to lodge on time—it is more than likely as a result of insufficient care being placed regarding their lodgement.

CHAIR: It is not the sort of conduct that is driven by wanting to be evasive; it is just being slack.

Mr Nassios : Correct.

Senator RYAN: Is it not fair to say that part of being slack is that there is no meaningful sanction?

Mr Nassios : I will try to give your question some sort of a meaningful response. I was in the Industrial Relations Commission, as it was, in 1998, or it may have been the workplace relations commission, and an investigation was conducted into an organisation at that point as to its failure to lodge returns on time. The investigation was conducted not by myself but by the senior person in the area at the time. I conducted a number of interviews in the investigation. Findings were made that those returns were not lodged on time. Briefs were prepared at that point for the Commonwealth Director of Public Prosecutions. It was a different regime in those days; it was the only way matters could be dealt with in those days. The DPP decided that a caution would be issued rather than any prosecution action take place.

Certainly it has been my view that since that time it has been better and more productive to adopt a proactive approach in hastening organisations to lodge their returns, reminding them at the outset and continually reminding them, in effect, to lodge them. That is a better use of public resources and a better outcome for members.

Senator RYAN: Surely that also consumes more regulatory resources. Is it not also fair to say that the threat of large financial penalties, even if they are administrative in nature, would also increase people's level of care about complying with this part of the law?

Mr Nassios : I could not disagree with you.

Mrs BRONWYN BISHOP: Could you tell me when the AEC first contacted you, if they in fact did that?

Mr Nassios : I do not have that information with me. My best recollection is that it would have been as a result of a Senate estimates process in which an officer of the Electoral Commission would have contacted one of my staff. But off the top of my head I do not recall when that occurred.

Mrs BRONWYN BISHOP: Perhaps when we next meet we might be able to get that information. Do you recall what they asked for? Did they ever ask you for the BDO Kendall report?

Mr Nassios : Not to my knowledge but, again, that telephone conversation would have taken place with my colleague Ms Carruthers. She would have a better recollection of what was asked.

CHAIR: It is your view, is it not, that you would not have handed it out even if it was asked for?

Mr Nassios : That is correct. My best recollection is that it arose as a result of a Senate estimates process where I understand Senator Ronaldson would have asked a particular question. I think it related to the progress of the matter and how far we had gone.

Mrs BRONWYN BISHOP: I am interested in those questions because if there are these sorts of investigations going on, and there is an inability for you to assist them with their job, then there is a deficiency in the system. I want to ask about Ms Carruthers. I did ask Ms O'Neill when we last met with regard to Fair Work Australia who else had worked with her.

Ms O'Neill replied:

The other officer who was principally involved was another senior employee of Fair Work Australia, who worked on the inquiry and investigation for its entirety and was assisted by solicitors—a particular solicitor in the main, but with assistance from the Australian Government Solicitor.

I asked whether she would take some of this on notice. She came back and said that you and Ms Carruthers were the main staff members involved in the Health Services Union investigation but other members were involved from time to time. She advised that Ms Carruthers said, on page 10 of Hansard—I am not sure which Hansardthat she worked on both investigations, at first part time and then full time in 2009. Then she advised that external legal assistance was provided. Can you tell me from whom the external legal assistance was provided?

Mr Nassios : It would have been from the Australian Government Solicitor.

Mrs BRONWYN BISHOP: It said there was another solicitor as well—external legal advice.

Mr Nassios : That would be the Government Solicitor.

CHAIR: External to your organisation, which means the Government Solicitor?

Mr Nassios : Yes, the Australian Government Solicitor, AGS.

Mrs BRONWYN BISHOP: Ms O'Neill said, 'The investigation for its entirety was assisted by solicitors'—plural—'a particular solicitor in the main,' and I would like to know who that was, 'but with assistance from the Australian Government Solicitor.' I would like to know who the particular solicitor in the main was.

Mr Nassios : I know the name. There may be some reason why I should not mention it but, certainly, it was one particular individual.

CHAIR: I think there is a reason why you should not mention it—it is called legal professional privilege. But if you could take it on notice and if you are able or if Ms O'Neill is able to tell us, then tell us. You do not have to nominate who the solicitor is; that falls under the category of professional privilege. The question has been asked. We are not trying to evade it. If it is possible for Mrs Bishop to have the answer, that would be great. But not today.

Mrs BRONWYN BISHOP: Not today. I am interested in what advice was ongoing with regard to the preparation of the brief of evidence and because you had this assistance I am assuming—and I may be wrongly assuming—that you are not legally trained?

Mr Nassios : I am a lawyer.

Mrs BRONWYN BISHOP: You are?

Mr Nassios : Yes.

Mrs BRONWYN BISHOP: So you could have prepared a brief of evidence?

Mr Nassios : As I said, it was not my role to do so as part of this investigation.

Mrs BRONWYN BISHOP: Who could have told you to prepare a brief of evidence? Had you been instructed to do it, you would have done it, presumably?

Mr Nassios : That is correct.

Mrs BRONWYN BISHOP: Who would have been in a position to instruct you to do that?

Mr Nassios : The general manager.

Mrs BRONWYN BISHOP: Ms O'Neill?

Mr Nassios : Yes.

Mrs BRONWYN BISHOP: Just tell me one other thing: can you tell me what section 287 of the RAO Schedule says.

Mr Nassios : I do not recall off the top of my head. It deals with fiduciary duty but—

Mrs BRONWYN BISHOP: It is a requirement for people to comply with—

Mr Nassios : It is a fiduciary duty section but, off the top of my head, I cannot recall which specific one that is. Do you have any detail in front of you that can help me?

Mrs BRONWYN BISHOP: This is a document I cannot quote from. Some people believe—

CHAIR: Can you quote the section again.

Mrs BRONWYN BISHOP: Section 287 of the RAO Schedule.

Mr Nassios : I am going to the report; it will certainly be in the report. I am trying to work out exactly where it is.

CHAIR: We will have that followed up.

Mrs BRONWYN BISHOP: Mr Nassios, thank you for your help today. There are lots more questions I would like to ask but they relate to documentation that we still have not made public. Therefore, I cannot deal with it. I am delighted that your twins are in good health.

Mr Nassios : Thank you.

Mrs BRONWYN BISHOP: I hope that continues and that you have a nice break. I look forward to resuming with you on your return.

Mr Nassios : Thank you.

CHAIR: Thank you for your assistance today. If there is additional material that you have been asked to provide, if you could do that as soon as possible that would be appreciated. You will be sent a copy of the transcript where you can make some corrections. Given that you are on the end of a telephone, it is important for you to have a look at that transcript. Whilst Hansard are good, indeed, very good, there is a chance that the inflections might be incorrectly transcribed. I wish you all the best with your holiday and it is likely that we will contact you when you come back.

Mr Nassios : Thank you. You do not require me any further today?

CHAIR: No, not for today. You can do a runner or go back to your housework!

Mr Nassios : I will start packing.

CHAIR: Thank you very much.