Commissioner requests CFMMEU branch take remedial steps
21 December 2021
The following statement is attributable to a Registered Organisations Commission spokesperson.
On 21 December 2021 the Registered Organisations Commissioner served a notice on the Queensland District Branch (District Branch) of the Construction, Forestry, Maritime, Mining and Energy Union, Mining and Energy Division District Branch requiring remedial action by the District Branch, following the completion of an investigation completed by the Commission earlier this year.
The investigation arose from the qualification in an auditor’s report about a deficiency in the District Branch’s financial statement for the year ended 30 June 2016 relating to the inability of the auditor to:
“obtain sufficient appropriate evidence to verify that all of the credit card expenses ($721,116) that have been included as business expenses in the union’s annual financial statements have been incurred solely for business purposes.”
The investigation was commenced under the Fair Work (Registered Organisations) Act 2009 (the RO Act) which requires that the Commissioner must investigate serious defects, irregularities, deficiencies, failures or short comings identified in a qualified auditor’s report. It considered issues relating to potential systemic failures to keep proper records as prescribed by the RO Act as well as potential failures to have effective and appropriate policies in place, and the alleged misuse of District Branch funds.
At the conclusion of the investigation, the Registered Organisations Commissioner has considered recommendations regarding further regulatory action that should be undertaken.
As a result, the Commissioner has served a notice on the District Branch under section 336(1) of the RO Act on the basis of the Commissioner’s satisfaction that the District Branch contravened:
- section 252(1) by failing during the financial year ending 30 June 2016 to keep proper financial records in relation to credit card transactions and loan accounts
- rule 11(iii)(c) of the District Branch’s Rules by failing to comply with the District Branch’s Rules when making loans, grants or donations in excess of $1,000 and
- rule 24A of the CFMMEU’s National Rules by failing to develop and implement policies and procedures relating to District Branch expenditure.
The Commissioner was satisfied that:
- the District Branch failed to keep complete and proper documents in relation to credit card transactions during the financial year ended 20 June 2016 to demonstrate that all expenditure properly related to business activities of the District Branch or were properly authorised
- the District Branch failed to keep proper records in relation to a related party loan to the District Branch President Mr Stephen Smyth, as a result of which the Commission could not determine whether personal benefits received were repaid
- the Board of Management of the District Branch failed to approve numerous loans, grants and donations exceeding $1,000, particularly where made by lodges as required by District Branch rules and
- the District Branch failed to have in force or implement internal control policies and procedures relating to District Branch expenditure to ensure good governance and accountability to members as required by the CFMMEU’s National Rule 24A.
The Commissioner gave notice to the District Branch under section 336(2)(a) of the RO Act requesting that the District Branch take specified action, within a specified period, to rectify the above matters by:
- developing and implementing policies and procedures regarding District Branch expenditure in compliance with rule 24A of the CFMMEU’s National Rules and
- procuring an independent audit from an appropriately qualified financial auditor that the District Branch’s policies and procedures as implemented are in compliance with the FWRO Act and relevant CFMMEU rules.
Pursuant to section 336(1A), the Commissioner will make inquiries under section 330 as to whether the District Branch is complying with the provision and rules that the District Branch was notified it had contravened.
Separately, the Commissioner has commenced civil penalty proceedings against the District Branch’s President regarding alleged unauthorised expenditure exceeding $6,700 during the financial year (see separate statement).
The Commission’s investigation commenced on 14 March 2018 and concluded on 23 June 2021 (see separate statement).
Section 252 of the RO Act requires organisations to keep correctly recorded financial records and explain the transactions and financial position of the organisation, including any records that are prescribed by the Fair Work (Registered Organisations) Regulations 2009 and the RO Act.
The District Branch was at all relevant times governed by the CFMMEU National Rules, Division Rules and District Branch Rules. Rule 11(iii)(c) of the District Branch’s Rules requires the District Branch to seek approval from the Board of Management to make loans, grants or donations of amounts exceeding $1,000.
Under Rule 24A of the CFMMEU’s National Rules, the District Branch was required to have internal policies and procedures relating to its expenditure, to ensure that the District Branch is conducted in accordance with the principles of good governance and to ensure accountability to members of the District Branch.