The gangsters, bikies and union antics exposed by Nine’s investigation into the CFMEU are the tip of the iceberg. Michael West investigates a $2.5B wage theft of mineworkers arising from arrangements between governments, insurers, mining corporations, lobbyists and the CFMEU.
“The mates, the cronies, the bikies … a sinister shakedown is about to go boom. The fall-out will shake Canberra!” Thus spake the voiceover man for 60 Minutes.
And it has. Union boss John Setka has fallen on his sword, and the Victorian branch of the union has gone into administration in the wake of the weekend’s expose by investigative journalist Nick McKenzie, Nine newspapers and 60 Minutes.
While an admirable story in exposing building industry corruption, it was a predictable Coalition media hit on the unions and only reveals the tip of the iceberg of systemic corruption: a cover-up which involves not only unions but governments, coal mining giants such as BHP and Glencore, mining lobby the Minerals Council of Australia, labour hire firms and insurers.
The story nobody wants to touch
There has been a wage theft of black coal miners of $2.5B or more stretching back to 2010. Rather than ‘shaking Canberra’, this imbroglio has been deftly buried by Canberra. It is too big. Its revelations suit neither the political agendas of Labor and the unions or the Coalition and their corporate sponsors. And neither do the revelations suit the agendas of the Coalition media duopoly News Corporation and Nine Entertainment.
Yes, the politicians in Canberra know about it. They know about it in NSW politics too. There have been successive court cases; and settlements with crusading coal-miners have come close, only to be defeated in eleventh-hour legal wrangles and subterfuge by coal industry vested interests. Court actions remain afoot for compensation for underpaid wages.
Later this week, we will tell the story of the men behind the crusade to bring justice to coal industry workers. Today, we will deliver the story in a nutshell.
The wage theft allegations are simple at their core. Casual labour is prohibited in coal mining, a sector where safety is paramount.
Yet, by deception and by using labour-hire firms to distance themselves legally, the coal sector multinationals have been able to pay miners below the award.
No casuals allowed … but …
The employment of a casual mineworker is illegal under the Black Coal Award, but they managed to do it. That much is simple. What is far more complex is the web of deceit spanning government, insurers, labour hire firms, mining corporations including BHP and Glencore and the CFMEU.
It is all about the money trail, the ownership, and the flow of rich coal mining revenues to all the parties involved.
MWM first twigged to this earlier this year when a source pointed out some anomalies in the political donations filings with the Australian Electoral Commission (AEC). These were smartly buried but so lumpy that they stuck out in the fine print.
It began with the discovery of an unusual disclosure that an entity called Abelshore which had had donated $39m to the CFMEU. Who was this ‘Abelshore’? As it turned out, company searches showed it was a subsidiary of Swiss coal mining leviathan Glencore. Why, then, was the mining company ‘donating’ such a large chunk of money to the union, and why was it disclosed in the category of ‘other’ payments?
Secret web of ownerships
The secret lies in the web of ownership. The big conflict of the CFMEU – bigger even than kick-backs and pay-offs by gangsters and other hangers-on to seal deals between the unions and construction companies such as Multiplex and Lendlease on worksites – is that the CFMEU owns large stakes in and operates joint ventures between government, the mining companies and insurance groups.
The political donations admissions were the tip of the iceberg. Interviews with former coal miners who discovered the rort will be published later this week. Simon Turner, who is about to file another lawsuit for compensation, told MWM that conflicts of interest meant the story of gross underpayment of coal workers had been buried until now, both legally and politically.
“[The contracts] were all done illegally. “I was living below the poverty line for over six years … my full pay under the Award should be $137k a year. I was being paid $400 a week!”.
Here are the findings of our investigation:
- The AEC transparency register shows $48m dollars in “cloaked” payments from Abelshore to Labor via the CFMEU which were labelled as “other receipts”.
- This is not the sole “cloaked” donation from a company to the CFMEU.
- Loopholes were created to cover up the multi-billion dollar wage theft conceived and condoned by the Commonwealth Government in the black coal mining industry.
- Protected rates of pay. In the coal industry, “casual” labour-hire workers are paid up to $47,000 less per annum than direct-hire full-time workers. This benefits the employers in keeping their costs down. Protected rates of pay seek to have labour-hire employees covered by the host mine’s enterprise agreement (EA) by using the “casual” base rate of pay if found in the site EA. If not found, then a 25% loading would be added to the full-time EA base rate of pay.
- The only way a labour hire employee can be misclassified as a casual is through an EA as the Award expressly prohibits their employment as it prescribes that mineworkers must be hired on a full-time or part-time basis only.
- Historically, the Mining and Energy Division of the CFMEU and CFMEU has been involved in the vast majority of EA’s (around 85%)
- Currently, large mining companies do not directly hire “casual mineworkers”.
A history of secrecy
- From 1993 to 2017, the CFMEU operated all functions of The Australian Government’s Coal Mining Industry (Long Service Leave Funding) Corporation(Coal LSL), including the application of a payroll tax on an illegal employment type (“Casual Mineworker”), under a series of secret contracts.
- During this period the Australian National Audit Office (ANAO) dutifully audited the sanitised as always presented records of Coal LSL ABN 12 039670 644 (from 2000 onwards) when the real records with all the real data and misinformation, underreporting and illegal income stream were held by Auscoal Services ABN 49 051 315 014.
- The CFMEU owns 50 percent of Auscoal Services.
- The CFMEU also has reps on the board of directors of Coal LSL
- The CFMEU was also instrumental in negotiating, recommending and endorsing the EAs that allowed the use of casual labour.
- The CFMEU has long fought off the attempts by the industry to include casual mineworker roles in the Award.
- In this 24-year period, Coal LSL had no direct employees of the Government.
The players and their conflicts
Corporations
BHP, Glencore, Yancoal, Anglo, Whitehaven.
The insurers
CMI: Coal Mines insurance is owned by 50% by the CFMEU and 50% by the NSW Minerals Council
The conflict of interest is that the union, which is supposed to stand up for the safety of mine workers owns the monopoly industry insurer *with* the mine owners. Why would they accede to a decent payout?
The labour-hire firm
Chandler Macleod is the labour-hire firm used by the corporations to deal with the workers – it delivers them legal distance. Chandler is Japanese owned by the ultimate holding company, Recruit Holdings. Conflicts include that the labour hire group has billions in Federal contracts including with the Department of Defence and Fair Work Australia. Chandler is used for payroll.
The government
Coal LSL (Long Service Leave) is the federal government corporation that raises the 2.7% wage levy. Casual employees never take their LSL so government just books that to consolidated revenue. The role is contracted out by Coal LSL to the union owned AUSCOAL Superannuation.
AUSCOAL Superannuation: the Coal LSL is 2.7% levy comes directly from the weekly wage of workers. But when the wage is illegal, everything else is wrong. Coal LSL has no employees. AUSCOAL pays the levy to to the government. An estimated 98 percent of casual workers never get to take non-service leave, so all that money is kept.
AUSCOAL is owned 50% by the CFMEU and 25% apiece by the industry lobby groups NSW Minerals Council and Queensland Resources Council
The lawyers
Fair Work Australia agreed in proceedings in 2018, “We can confirm the Award (Black Coal Mining award 2010) doesn’t have a casual rate for this level”.
Simon Turner is preparing a compensation case now which claims the deeds – for workers’ comp redemption, which cover lump sum payments up to retirement age – are illegal because the Certificate of Currency had him paid $28,000 a year and “they were paying me 80% of that when my full pay under the Award for 78 weeks is $137,000 a year”.
With conflicts of interest like these, it is no wonder that both the politicians, the lobby groups and the corporations want the story buried. The recent industrial relations reforms by Labor under Minister Tony Burke have gone some way, says Turner, to addressing the issues of underpayment but they have not fixed the past injustice.
Stay tuned for the Simon Turner story later this week.
The Setka Circus: get the gangsters out off CFMEU and the building industry for unions sake
Michael West established Michael West Media in 2016 to focus on journalism of high public interest, particularly the rising power of corporations over democracy. West was formerly a journalist and editor with Fairfax newspapers, a columnist for News Corp and even, once, a stockbroker.