Royal Commission Into Trade Union Governance and Corruption

Royal Commission Into Trade Union Governance and Corruption

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Royal commission into trade union governance and corruption

Transport workers union of australia,western australian branch

Counsel assisting’sopening statement – 11 May 2015

  1. This case study concerns the Western Australian Branch of the Transport Workers Union of Australia (“TWU”). Specifically, it concerns the purchase of two prestige motor vehicles, known as Ford F350s, at the cost of about $150,000 each, and a redundancy payment of about $370,000.
  2. Mr James McGiveron was the Secretary of the Western Australian Branch of the Union from 1993 until his resignation with effect from 31 December 2012. He was, in addition,elected president of the national Union in May 2012. The office of national president was an honorary one and elections were held annually.
  3. By at least mid-2012 Mr McGiveron appears to have been considering retiring as Branch Secretary but wished to see out his term as President of the national union. The Assistant Secretary of the Branch in 2012 was Mr Rick Burton. Mr Burton at this time aspired to hold the position of Branch Secretary. It would appear that, in a sense, at least so far as he and Mr McGiveron were concerned, Mr Burtonwas the natural successor to the position of Branch Secretary.
  4. Under the rules of the TWU the National President was required either to be an office holder of one of the State Branches or an employee in one or more specified industries. Thus, it was not possible for Mr McGiveron to remain national president and resign as Branch Secretary unless at the same time he became an employee.
  5. On 18July 2012 there was a meeting of the Branch Committee of Management (“BCOM”). The minutes record, amongst other matters, the following:
  6. First, Mr McGiveron gave a report on his role as National President and how it impacted on his role as Branch Secretary. He announced that he and Mr Burton would resign from their respective positions at a BCOM meeting on 26 September 2012, and that Mr Burton would take over the role of Branch Secretary.
  7. Secondly, Mr McGiveron gave a report regarding what was described as“the redundancy policy”. It is not clear whether there was a redundancy policy in existence at this time or whether this report was about the need for one. The minutes record that, following the report, the BCOM endorsed a redundancy policy. The terms of that policy included that redundant employees would be paid three weeks pay, inclusive of allowances, for each year of continuous service calculated to completed half years, plus 50% of their accumulated unused sick leave.
  8. Thirdly, the BCOM resolved that Mr McGiveron be “granted ownership of the union motor vehicle that he is driving at the time his employment ceases with the Branch”.
  9. One week after this meeting, Mr McGiveron authorised the payment by the Branch of $80,000 to Barbagallo motors, a car dealership in Perth. The $80,000 represented the deposits for the purchase of two Ford F350s. The cars were described as 2013 models and, as such, were not expected to arrive until 2013. Ford F350s are what might be described as luxury utilities. They were large four wheel drive vehicles that had to be imported from the United States, modified for Australian roads and fitted with various accessories. They ultimately cost about $150,000 each, about three times the usual cost of vehicles normally purchased for Branch use.
  10. Mr McGiveron’s report at the 18 July 2012 BCOM meeting foreshadowed his and Mr Burton’s resignations in September 2012. That occurred instead at a BCOM meeting of 9 October 2012. Amongst other matters, the minutes of that meeting record the following:
  11. First, the BCOM authorised a leave of absence for Mr McGiveron until the end of 2012. The leave appears to have been authorised on the basis that Mr McGiveron would continue his work on achieving alliances with unions across the globe, but in particular in the United States. In addition, the leave was to allow Mr McGiveron to organise members and promote the interests of the TWU in remote mining areas of Australia.
  12. Secondly, Mr McGiveron and Mr Burton resigned from their respective positions effective 31 December 2012.
  13. Thirdly, Mr Burton was appointed Branch secretary effective 1 January 2013. No election was necessary because, under the rules, Mr McGiveron had held the office of Branch Secretary for such a period of time as was necessary for his resignation to result in a casual vacancy.
  14. Fourthly, Mr McGiveron was appointed, from 1 January 2013, Special Projects Officer under the same terms and conditions as he was then employed as Branch Secretary. His responsibilities are described in the minutes as “ensuring that the TWU develops and implements the best possible strategies in the resources and mining sector of our economy, with a view to ensuring that the TWU’s membership interests are maximised in that sector”.
  15. Towards the end ofMarch 2013 the Ford F350s arrived. Mr Burton authorised the payment by the Branch of the balance of the amount owing on the cars, some $228,000.
  16. After the cars arrived, Mr Burton took possession of one, Mr McGiveron the other. There is a question as to how the cars were used after this time. Mr Burton seemsto have kept his F350 in a storage facility operated by the Branch and driven it himself from time to time. It is not clear to what use Mr McGiveron’s car was put.
  17. Elections for offices in the National Union were held in May 2013. Mr McGiveron did not stand for any position. His term as National President expired on 20 May 2013.
  18. Some 10days later, on 30 May 2013, Mr Burton, in his capacity as Branch Secretary, wrote Mr McGiverontwo letters. The first letter announced that Mr McGiveron’s position as Special Projects Officer had been made redundant, effective 12 July 2013. It quoted the redundancy policy that Mr McGiveron had introduced at the meeting of 18 July 2012 and attached calculations of the amount to be paid to Mr McGiveron under that policy. The amount calculated was $373,191, net of tax.
  19. The second letter that Mr Burton wrote to Mr McGiveron on 30 May 2013 referred to another resolution passed by the BCOM on 18 July 2012, the resolution regarding Mr McGiveron’s car. The letter informed Mr McGiveron that in keeping with that resolution he would be granted, on 12 July 2013, personal ownership of the Ford F350 currently in his possession.
  20. Most of the other members of the Branch Committee of Management appear not to have knownof the existence of either of the Ford F350s until around April 2014. Mr Burton at some point fitted personalised number plates to his F350. Some witnesses will suggest that Mr Burton made representations that he had purchased the Ford F350 he was driving with his own money. Mr Burton of coursemay deny this.
  21. In June 2014 the Branch appointed the Honourable Wayne Haylen QC, as acting Ombudsman, to investigate and report on a variety of matters, including in relation to the purchase of the two Ford F350s. The Union referred Mr Haylen’s report and the materials with which he was provided to the Commission in November last year. Proceedings have been commenced by the Branch in the Fair Work Division of the Federal Court against Mr Burton seeking to recover the difference between the purchase price of his Ford F350 and the amount realised upon its sale in 2014.
  22. Broadly, the issues that arise in respect of the two Ford F350s cars include the following:
  23. First, did the Branch Committee of Management ever authorise the purchase of either car? At the very least, the Unionrules were not followed. Those rules required, relevantly, that the expenditure of Branch funds may only be made by resolution of the BCOM (see rule 75(d)). No such resolution was passed before the payment of the deposit and balance of the purchase price. The payments were, however, included in accounts approved at subsequent BCOM meetings. Other BCOM members who approved those accountsdo not appear to have appreciated that they contained payments relating to the purchase of the two Fords. It will be for the Commission to consider whether that was so, and, if so, what consequences follow.
  24. Secondly, so far as Mr Burton’s Ford F350 is concerned, did he attempt to conceal the existence of that car from the Branch, with a view to, in effect, adopting that vehicle as his own?
  25. Thirdly, so far as Mr McGiveron’s car is concerned, was adequate disclosure made to the BCOM by Mr McGiveron and Mr Burton at the time of the 18 July 2012 meeting and subsequently? It would appear that none of the other members of the BCOM contemplated that the resolution they were passing that day would result in Mr McGiveron being given a luxury utility of this nature.
  26. Fourthly, Mr McGiveron and Mr Burton received car allowances of approximately $10,000 per annum each. The Branch does not appear to have had any clearly defined car allowance policy at this time and it is not clear on what basis Mr McGiveron and Mr Burton received these payments. At any rate, it is not clear how they could have been entitled to such payments after taking delivery of the Ford F350s.
  27. In broad terms, the issues that arise in respect of the redundancy payment to Mr McGiveron include the following:
  28. First, was it a genuine redundancy? On one view of events, the creation of the position of Special Projects Officer and its subsequent redundancy were no more than devices to ensure, amongst other matters, that Mr McGiveron received a generous payment (with favourable taxation treatment) on his retirement. The Commission will need to investigate whether that view, or something like it, is correct.
  29. Secondly and relatedly, was adequate disclosure made to the BCOM at the time the redundancy policy was approved at the meeting of 18 July 2012? That redundancy policy, as events turned out, conferred a very significant benefit on Mr McGiveron. There is a question as to whether that was something that Mr McGiveron and/or Mr Burton could or should have brought to the attention of the BCOM at the 18 July 2012 meeting or at some subsequent time.
  30. Thirdly, Mr Burton made Mr McGiveron redundant, and arranged for the payment to him of about $370,000, prior to any attempt to consult with the BCOM. The Commission will need to consider whether that was a proper exercise of Mr Burton’s powers as secretary.
  31. Fourthly, there is a question as to whether the redundancy payment was retrospectively endorsed by the BCOM.