PRUEBAS DE FUNCIONALIDAD DEL SISTEMA

24 As a result of that agreement to amalgamate the Funds, the following occurred: (a) Incolink Fund No.3 transferred $23 745 056 to Protect;11

(b) on 8 November 2000 Incolink Fund No.3 paid $582 484.14 to the ETU (Victorian Branch) Distress, Mortality and Training Fund;12_and

(c) approximately $12 million which remained in the EISS Fund was taken over by Protect;13

25 The $582 484.14 payment referred to above represented undistributed surpluses in the Incolink Redundancy Central Payment Fund Portable Sick Leave Scheme No.3 and was intended to be a payment to the beneficiaries of that Fund.14

26 On 8 November 2000 a payment of $819 352.89 was made from the Protect fund to the ETU (Victorian Branch) Distress, Mortality and Training Fund. That payment represented undistributed surpluses in Incolink Fund No.3 and was intended to be a payment to the beneficiaries of that fund.15

27 On 14 December 2000 Protect paid to the NECA Victorian Chapter the sum of $119 258. This was apparently a distribution from the ElecNet fund. On 21 June 2001 the NECA Victorian Chapter paid that sum to the ETU (Victorian Branch) Trust. The evidence is unclear as to why that payment was made.16

28 On 3 January 2001 Protect paid $237 742 to the ETU (Victorian Branch) Trust. This was apparently a distribution from Protect.17

29 On 12 February 2001 the ETU (Victorian Branch) Trust paid $202 560 for the purchase of a house in Tasmania. The contract for purchase showed the purchaser as the CEPU Electrical Division Victorian Branch and the contract was conditional upon a Mr Harkins receiving confirmation of his successful appointment as State Secretary of the ETU, Tasmanian Branch within 21 days of the date of the contract. Clause 10 of the contract enabled the purchaser to nominate another person to complete the contract. This was apparently done because the property was transferred to the ETU (Victorian Branch) Trust.18

30 Mighell gave evidence that one of the reasons for purchasing the house in Tasmania was that, ultimately, the trust wanted to make holiday accommodation available to the union members.19

31 On 9 July 2001 the ETU (Victorian Branch) Trust lent $611 051 to the ‘CEPU National Office’ to enable the National Office to pay off a loan on the National Office building. The ETU (Victorian Branch) Trust loan has been repaid.20

32 On 11 July 2001 the ETU (Victorian Branch) Distress, Mortality and Training Fund paid $969 551 to the ETU (Victorian Branch) Trust. This payment was made to put funds into the ETU (Victorian Branch) Trust and to bring its account back into credit after it became overdrawn when it made the loan referred to above.21

33 On 13 February 2001 the ETU (Victorian Branch) Distress, Mortality and Training Fund paid $63 500 to the ETU South Australian Branch. That amount was calculated as the South Australian members’ entitlements from the surplus generated by Incolink No.3 Fund.22

34 On 15 March 2001 Protect paid $225 853.00 to the National Electrical and Communications Association, Victorian Chapter. That money represented funds from the EISS Portable Sick Leave Scheme.23

35 In July 2001 Protect took out a $25 million annuity with Challenger Life Limited. A commission of $847 487.69 was paid to Professional Investment Services Pty Ltd in respect of that annuity.24

36 Professional Investment Services Pty Ltd then distributed most of that commission on 14 August 2001 as follows:

(a) $367 125.01 to Lawford Devin & Associates;25_and

(b) $367 125.01 to Southern Alliance Financial Services Pty Ltd.26

37 The shareholders of Southern Alliance Financial Services Pty Ltd are the CEPU Electrical Division Victorian Branch as to 65 per cent and Mr Tony Devin as to 35 per cent. Devin has an arrangement with Southern Alliance Financial Services Pty Ltd, whereby he normally takes 75 per cent of a placement fee and Southern Alliance Financial Services Pty Ltd takes 25 per cent. In this case, Devin offered Southern Alliance Financial Services Pty Ltd 50 per cent.27

38 Mighell then directed the commission received by Southern Alliance Financial Services Pty Ltd be paid to the ETU (Victorian Branch) Trust and this was done on 12 September 2001.28

39 On 6 August 2001 International Underwriting Services Pty Ltd (IUS) paid $1 004 590 to The Very Good Company Pty Ltd. This was the first instalment of the management or spotter’s fee earned by the CEPU Electrical Division Victorian Branch in respect of the IUS income protection insurance policy. That policy and the earning of the spotter’s fee are the subject of a separate case study. On 8 August 2001, The Very Good Company Pty Ltd paid that fee to the ETU (Victorian Branch) Trust.29

40 On 5 December 2001 Protect paid $240 023 to the ETU (Victorian Branch) Trust. This represented money left in the apprentice levy account when Incolink No.3 Fund was wound up.30

41 On 5 December 2001 Protect paid $38 025 to the ETU (Victorian Branch) Distress, Mortality and Training Fund. This was a payment of income protection and trauma scheme contributions (apparently the balance from the Incolink Redundancy Central Payment Fund Income Protection and Trauma Scheme No.3).31

Conclusions

42 The evidence analysed above shows that the ETU (Victorian Branch) Trust has received income of $1 371 715.

43 On 3 October 2002, IUS paid to the CEPU Electrical Division Victorian Branch $632 674.04 which was a further instalment of the spotter’s fee payable in respect of the IUS income protection insurance policy. The tax invoice which IUS received before that payment described the fees as payable to ‘ETU Distress, Mortality and Training Fund.’ Presumably, therefore, the CEPU Electrical Division Victorian Branch has arranged for this amount to be paid to the ETU (Victorian Branch) Distress, Mortality and Training Fund.32

44 A further amount of $627 325.96 is presently held in trust by IUS to be applied in payment of the third instalment of the spotter’s fee, together with any additional moneys which might be payable.33

45 The evidence shows that money paid by employers into a redundancy fund for the purpose of meeting redundancy payment obligations to employees, has been used to purchase a house in Tasmania which is used as a residence by the State Secretary of the Electrical Trades Union, Tasmanian Branch.34

46 This case study illustrates:

(a) The creation by a branch of a union of trusts by which funds might be quarantined from potential creditors of the union;

(b) The preparation by a branch of a union of financial accounts which failed to include the assets of a trust which it controlled;

(c) The receipt by a trust controlled by a branch of a union, of the proceeds of part of a commission earned on an annuity taken out by a trustee of an industry redundancy fund; (d) The receipt by a trust controlled by a branch of a union, of distributions from a trustee of an industry redundancy fund, the source of such distributions being moneys paid by employers.

(e) The need for a statutory requirement there be filed with the Industrial Registrar accounts of registered organisations, which accounts include:

(i) the accounts of all entities, trusts or other instrumentalities controlled by or associated with the registered organisation or officials; or

(ii) entities holding assets or deriving income from • the registered organisation;

• employee or employer organisations with which the registered organisations deals;

• entities providing products or services to the registered organisation or its members;

• a fund providing benefits to the registered organisation or its members from funds provided by employers or employees.

Persons involved

Name Position/Title

Mighell, Dean Secretary of the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia – Electrical Division, Victorian Branch.