Australia: Abbott Government announces a Royal Commission into Trade Union Governance and Corruption

In brief

• On Monday 10 February 2014 a Royal Commission into Trade Union Governance and Corruption was announced.
• The terms of reference for the Royal Commission into Trade Union Governance and Corruption are expressed very broadly. The Prime Minister Tony Abbott has said the inquiry will be able to go wherever the evidence leads it.
• Companies and employers who have had dealings with unions are potentially within the scope of the inquiry, and should familiarise themselves with the terms of the inquiry and how they might become involved.
• This update provides an overview of the inquiry, including the powers of the Commissioner, and suggests some ways in which Herbert Smith Freehills may be able to assist you.

Following a joint announcement by the Prime Minister, the Attorney-General and the Minister for Employment, retired High Court Justice John Dyson Heydon AC QC is to be appointed to conduct a Royal Commission into Trade Union Governance and Corruption.

The terms of reference for the inquiry require the Commissioner to investigate and report upon:

• bribes, secret commissions or other unlawful payments or benefits arising from arrangements between unions or their officers and any other party,
• governance arrangements of any separate entities established by unions purportedly for industrial purposes or for the welfare of their members,
• alleged activities relating to the establishment or operation of such entities,
• circumstances in which funds are sought from any third parties and paid to such entities,
• the extent to which union members receive benefits from, or have control over, the entities,
• conduct which may amount to a breach of law, regulation or professional standard by any union officer:
  • in order to procure an advantage for themselves or another person, association or organisation or cause a detriment to a person, association or organisation, or
  • who holds, by virtue of their position, a position of responsibility in relation to any such entities,
• adequacy and effectiveness of existing systems of regulation and law enforcement in dealing with the above conduct, and
• any issue or matter reasonably incidental to the above.

Whilst not limited to particular unions, the inquiry will focus on activities involving the AWU, CFMEU, ETU, HSU and TWU.

Mr Abbott has said that the inquiry will be able to go wherever the evidence leads the Commission and that the actions and practices of union officials, employers and any other persons involved will be subject to equal scrutiny.

What is a Royal Commission?

In short, a Royal Commission is a public inquiry into issues of public concern that relate to the ‘peace, order and good government of Australia’. Unlike a judge in a court proceeding, the Commissioner is given extremely broad powers under the Royal Commissions Act 1902 (Cth) to conduct inquiries in any manner that he sees fit. 

Amongst other things, the Commissioner has the power to:

• hold hearings in public and/or in private,
• direct that particular evidence and/or documents not be published,
• authorise designated persons to apply for search warrants in particular circumstances, and
• appoint or authorise legal practitioners to examine or cross-examine witnesses.

The Commissioner is not bound by the rules of evidence and can receive evidence in whatever form he considers appropriate, including hearsay evidence. The Commissioner also has extensive coercive powers, including to:

• summon a person to appear before the Commission to give evidence and/or produce documents,
• require a person to produce a document or thing at a particular time and place, and
• inspect, retain and make copies of documents relevant to the inquiry.

A failure by a person to comply with any of the coercive powers can result in fines and/or imprisonment (for up to 6 months). Furthermore, if a person intentionally gives evidence that is false or misleading they may be liable to pay a fine of up to $20,000 or be liable to a term of imprisonment of up to 5 years.

However, the Commissioner does not have the power to prosecute parties for unlawful conduct or activities.

What is likely to happen next?

Once his appointment is formalised, the Commissioner is likely to give directions and adopt practices for:

• the establishment of the Commission, including the appointment of staff and assisting counsel,
• invitations to be given to parties to provide relevant information, and
• the conduct of hearings.

What are some of the issues employers may face?

Issues that will have to be confronted quickly by those invited by the Commissioner to provide documents and to give evidence will include:

• whether your company has been involved in any activities that may be of interest to the Commission,
• the identification of documents that may be of interest to the Commission,
• the protocols that exist within your organisation regarding internal communications regarding matters that may be of interest to the Commission – noting that under the Royal Commissions Act 1902 (Cth) the Commissioner has powers to rule on claims to legal professional privilege,
• public relations/media issues that may arise, and
• any potential for claims to be made following the conclusion of the inquiry.

It is strongly advisable not to defer consideration of these and other issues until you receive a request from the Commission. This is because, in our experience, requests issued by Royal Commissions often allow very short response times. Your position needs to be considered ahead of receiving a request.

How can Herbert Smith Freehills help?

Herbert Smith Freehills has extensive experience in this area, having represented various clients in a number of Royal Commissions. We can assist by:

• providing advice concerning requests received from the Commission,
• assist in the preparation of evidence to be given to the Commission,
• liaising with staff of the Commission,
• representing parties in relation to document requests, subpoenas and witness interviews and,
• appearing for parties at hearings and making submissions.

This article was written by John Cooper, Partner and Peter Holloway, Partner, Melbourne