Last week in Melbourne, disgraced former union official Kathy Jackson was ordered to refund $1,406,538.16 for misappropriating Health Services Union (HSU) members’ money on herself. With interest and costs, the final figure is likely to be more than $2 million.
Jackson was slammed by Australia’s Federal Court judge Richard Tracey for misappropriating Health Services Union members’ money into a secret slush fund, overpaying herself and funding a self-indulgent lavish globetrotting lifestyle. It included lavish banquets running into tens of thousands of dollars, showering herself with luxury items, extravagant family holidays including.more than 40 weeks of trips interstate and to overseas locations including New York, Hong Kong, London, Paris and Geneva. It even paid for her divorce settlement.
Your union dues at work
Many HSU members are among the lowest-paid workers in the country, delivering essential services and caring for the most vulnerable members of our community.
Scam Arrangements
Justice Tracey found the former national secretary had cashed cheques from union accounts, transferred HSU money into a slush fund without authorisation and claimed holidays as work trips, effectively stealing from the union’s members.
Jackson is accused of using $660,000 of members’ funds for personal use.
Barrister Mark Irving, for the union, said Jackson had moved $284,500 of union money into a Gillardesq slush fund set up in 2003 known as the National Health Development Account without authorisation. It held union funds entirely under her control. She used the funds for personal discretionary spending despite swearing in an affidavit that such accounts were commonplace and vital to maintaining influence as a “factional player” within the ALP. “She treated the money, in that account, as being available to her for whatever purpose she deemed appropriate,” he said.
Just more than $100,000 went into her personal accounts, with an equal amount spent on her divorce settlement with fellow union official Jeff Jackson. About $80,000 went on political expenditure, while nearly $56,000 was withdrawn as cash just prior to her holidays.
Kathy Jackson allegedly withdrew “vast wads” of cash to avoid being caught misusing its funds, a court has heard. Irving alleges Kathy Jackson cashed cheques, distributed some money among branch committee of management members and pocketed the rest.
He told the Federal Court Jackson was trying to avoid accountability for “straight out” misappropriation. “There’s only one rational reason for withdrawing such vast wads of cash.”
Justice Tracey found Jackson had used the union’s credit cards “substantially for her own personal purposes”, spending $175,154 on travel-related expenses, $101,792 on retail goods, $20,864 on entertainment, $14,639 on food and alcohol and $5237 on health and fitness.
Justice Richard Tracey said: “It is difficult to imagine the HSU stood in need of $20,000 worth of goods of a kind normally sold in major department stores. “Equally difficult to appreciate is why the union would have need of cameras and electrical goods or babywear.”
He said she had shown a “pervasive sense of entitlement”, keeping her actions secret so she did not have to explain her lavish spending to HSU management.
Aristocratic Lifestyle on Union Dues
- From 2003 to 2011, Jackson blew more than $300,000 on personal expenses without union authorisation.
- From 2004 to 2009, she transferred $284,500 of union money into an account only she could access, again without authorisation.
- She regularly withdrew from the account to pay for personal expenses.
- She set up the unauthorised fund in 2003, with $250,000 paid from the Peter MacCallum Institute.
- When she wanted a holiday, she jetted overseas — claiming the trips were for work. Sounds like what politicians, like Tony Burke, do.
- In 2004, Jackson went on a three-month long holiday with then husband Jeff, traipsing around the US, staying at some of the country’s best hotels and dining at top restaurants. It took her from New York, Boston and Washington to Las Vegas, where she stayed at the Bellagio, one of the world’s most exclusive hotels.It cost the union more than $28,000 and saw her withdraw hundreds of dollars from union accounts while in the casino capital of the world, Las Vegas. It cost the union, whose members include paramedics, nurses and medical administrative staff, $67,912.
- Justice Tracey said the overseas and interstate jaunts totalled about 40 weeks. In total she spent more than $175,000 on holidays. Jackson tried to argue the frequent jaunts were either work-related or approved by the HSU. But Justice Richard Tracey said there was no evidence to back her claims.
- During these absences from the office, Jackson continued to be paid her normal wages and accrued annual leave.
- On a number of occasions she even “cashed out” accrued annual leave and authorised days-off entitlements.
- The judge also found the union lost over $410,000 because of a deal appointing factional ally Rob Elliott to a post guaranteeing him $150,000 a year for 75 days’ work.
- Jackson spent more than $300,000 of union money on food, alcohol, luxury items, and retail goods without authorisation. More than $20,000 was spent on entertainment including dining at renowned restaurants.
- Over $100,000 was spent shopping including buying artworks and spending thousands of dollars during repeat trips to David Jones, Apple and other high-end stores. Jackson bought electrical goods, computer wares, babywear, furniture and party goods.
- She spent almost $8000 on liquor from stores near her Balwyn home and more than $5000 hiring gym equipment and attending day spas.
- She also spent more than $15,000 at luxury car dealerships and at a store selling up-market watches and pens.
- Jackson maintained that all the expenses were work-related and approved.
- But the court ruled Jackson had used union credit cards “substantially for her own personal purposes”.
- Of almost $400,000 in credit card bills racked up between 2003 and 2011, $305,828 was found to have been used on personal expenses.
- The court also found Jackson had cashed cheques to herself worth more than $240,000
Kathy Jackson spent more money on just one overseas jaunt than some of her union’s lowest-paid members could hope to earn in a year.
Criminal Charges Pending
The union has referred about $900,000 worth of Jackson’s expenditure to Taskforce Heracles, set up to follow up on cases arising from the Royal Commission into Trade Union Governance and Corruption.
Police are apparently weighing up criminal charges against fallen union whistleblower Kathy Jackson have received fresh ammunition from a court finding that she illegally spent more than $1 million of members’ money to finance her factional battles and luxurious lifestyle.
It could now be ‘hasta la vista‘ for Jackson, who blew the whistle on ex-HSU bosses Michael Williamson and Craig Thomson, since convicted of stealing the union’s funds.
Now Jackson herself faces the prospect of jail time if she is charged by detectives who have spent months probing her case.
The case is now with Taskforce Heracles, a joint venture between Victoria Police and the Australian Federal Police, set up to probe referrals arising from the royal commission into trade union corruption.
Detectives have been given a 4000-page dossier of evidence outlining allegations against Jackson.
Jackson goes Bankrupt to avoid liability
The union faces an uphill battle to claw back the money after Jackson abruptly declared bankruptcy on the eve of the trial in June. She has already moved to put her main asset, a $1.3m property at Wombarra, 65km south of Sydney, into the hands of her partner, Fair Work Commission vice-president Michael Lawler.
Just two weeks earlier, Jackson had signed court papers detailing assets worth more than $275,000 including equity in a $1.3 million property, a $15,000 Mercedes, and $20,000 in jewellery.
Current HSU secretary Chris Brown has said, “We will now work with the bankruptcy trustee to look at what of Jackson’s funds can be recovered. We’re reasonably confident, just on what we’ve looked at so far, that there’s a reasonable amount of money that can be recovered.”
Kathy Jackson has not appeared in court for the trial, instead writing to say she could not afford to be represented and that the matter was now a claim against her estate. She said she did not believe she was entitled to further participate in the proceedings, and did not intend to do so.
They’re all in the till
Jackson rose to prominence for publicly speaking out against former HSU president Michael Williamson and her predecessor, Craig Thomson, both of whom have since been convicted, for fraud and theft offences respectively.
In October 2013 Williamson pleaded guilty to two charges of fraud totaling nearly $1 million, one charge of fabricating invoices and another charge of recruiting others to hinder a police investigation. An earlier independent report commissioned by the union detailed that companies associated with Williamson and his family had allegedly fraudulently received more than $5 million from the union in period from 2006 to 2011. The same day that he pleaded guilty, Williamson declared himself bankrupt.
In the NSW District Court in March 2014, Williamson was sentenced to seven–and–a–half years of imprisonment; with a non–parole period of five years
In March 2014, union official Craig Thomson was sentenced to 12 months’ gaol for 13 counts of theft from Health Services Union for for personal benefit, including paying for sex during his term as national secretary between 2002 and 2007. Part of the prosecution’s evidence revealed Thomsons driver’s licence number noted on the credit card vouchers issued by Keywed Pty Ltd, a Surry Hills brothel. The vouchers also contained a signature in Thomson’s name.
Victorian magistrate Charlie Rozencwajg found Thomson guilty of charges related to using union funds ($5793) for sexual services, of making cash withdrawals ($103,000) with his union-issued credit card, of buying cigarettes and firewood for his then wife, Christa, and for some charges related to paying for travel for her.
But thanks to Gillard Labor funding really expensive lawyers (ahem, taxpayers’ money), Thomson had nine months suspended, then eventually walked free from court on bail after lodging an appeal. Thomson was fined just $25,000 and got off.
Lesley Taylor SC, for the prosecution, had said Thomson should have been jailed because of his extreme breach of trust.
Judge Carolyn Douglas condemned Thomson for his “flagrant and self-indulgent’’ spending and observed that Thomson had shown no remorse for his crimes. “I consider his behaviour appalling,’’ she said. “It’s greedy to be putting his hand in the pot of the people he represented.’’
Thomson was only found not guilty on the other 49 charges of obtaining a financial advantage by deception (fraud) because of really expensive lawyers arguing a technicality – that the prosecution’s wording of the charges was incorrect. The prosecution was wrong in alleging Thomson deceived credit card lenders, as was alleged in the charge sheets.
Judge Douglas said, “I find it regrettable the prosecution decided to charge the accused in such a way. That is an error that cannot be changed,” she said.
When The Sydney Morning Herald political correspondent Mark Davis revealed in April 2009 that Craig Thomson was being investigated for using his union credit card to pay for escort services and to withdraw cash, the response was swift. “I am confident that both the independent audit and the Industrial Registrar will find no basis for these allegations,” the Labor MP and Health Services Union secretary said. So confident, in fact, that he issued a writ against the Herald for defamation a week later.
Thomson would have been made bankrupt had the Gillard Labor government paid his legal fees of $150,000.
Once hailed for exposing fraud within the Health Services Union, Kathy Jackson is now exposed for rummaging through the union trough herself.