The CFMEU can’t fix itself – just ask the banks, casinos and PwC

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The CFMEU can’tfix itself – just ask the banks, casinos and PwC

If union and Labor leaders really want to win back trust in the CFMEU, only an independent and transparent inquiry into the union will do. 

Jul 17, 2024

n the Hayne royal commission’s public hearings were in full swing, Australian Council of Trade Unions secretary Sally McManus wrote to the chief executives of union-backed industry super funds to demand they review their commercial ties to financial institutions.

“The retirement savings of working people should not be used to prop organisations that house rotten, corrupt and unethical behaviours like those revealed over the past weeks at the banking royal commission,” she thundered, declaring herself appalled by the “outrageous and illegal behaviour” revealed in the hearings.

Renovation rescue: CFMEU national secretary Zach Smith says the union is best placed to clean up its mess. David Rowe

Union leaders are often quick to pounce on corporate scandals. From the banks, to the casino giants Crown Resorts and The Star Entertainment Group, and PwC and Qantas, corporate Australia’s missteps have been far too frequent in the past decade.

But as McManus and other union leaders attempt to navigate the scandal engulfing the CFMEU and the wider Labor movement, they would do well to remember one of the big lessons from this string of scandals: trying to fix yourself never works.

CFMEU national secretary Zach Smith again insisted on Tuesday there was no need for an independent inquiry or further government intervention to root out what Victorian Premier Jacinta Allen described as a “rotten culture” within the union.

“The union movement is more than capable of dealing with allegations in their own ranks and responding appropriately,” Smith told ABC Radio.

Now, where have we heard that before?

In 2014, Commonwealth Bank’s insurance division conducted an internal review of allegations concerning declined life insurance claims. Over the next few years, CBA would lose its CEO, face a governance review by the prudential regulator, and ultimately play a starring role at the banking royal commission.

In July 2019, Crown Resorts tried to bat away allegations about its conduct by insisting it had regularly reviewed the junket operators who brought Asian VIPs to gamble at its casinos. Over the next few years, two royal commissions and two government inquiries proved beyond any doubt those same junkets were backed by criminal gangs – and everyone in the sector knew it.

PwC had conducted internal reviews of its culture, accountability and decision-making (including in 2018 and 2021) before its tax leaks scandal broke in early 2023. The Australian business then conducted an independent review by former Telstra boss Ziggy Switkowski, but this failed to prevent a string of parliamentary probes. An internal view conducted by PwC’s global parent has controversially not been made public.

In all of these cases, the internal reviews – whether independent or not – badly failed to meet the community’s expectations for the sort of rigorous and transparent probe that these scandals deserved.

It’s not about whether an organisation is capable of reviewing itself or not. When a scandal is as deep as the CFMEU is facing, with multiple examples of criminals penetrating the union’s ranks, marking your own homework is simply not going to cut it.

To paraphrase McManus’ spray at the banks from six years ago, we have clear instances of “outrageous and illegal behaviour” that demand thorough and transparent investigation.

Late on Tuesday, reports emerged that the federal government would put the CFMEU under external administration. But there are no guarantees that will provide the investigation the public deserves.

James Packer was rightly forced to explain his actions as a Crown director in front of several public inquiries, and Crown ultimately had to blow itself up to save itself.

It’s hard to understand why the CFMEU is any different. If Smith, McManus and other Labor leaders really want to restore faith in the CFMEU, they should be willing to see former Victorian CFMEU secretary John Setka face the same scrutiny Packer did.