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How we regulate

Adding value to organisations through regulation

The ROC aims and works hard to help organisations remedy unintended non-compliance. We have a stepped approach for assessment of probable contraventions that takes into account the nature and history of an organisation’s compliance, as well as any remedial actions undertaken by the organisation.

When the ROC commences an inquiry or investigation, we seek to work with the organisation and relevant persons to promote good governance. We consult with the organisation and assess whether any harmful conduct has occurred and, if so, whether it has, or can be, remedied. The extent of cooperation by an organisation and actions taken to remedy harmful conduct informs how we progress alleged non-compliance. The vast majority of our inquiries and investigations do not result in litigation. However, we will commence proceedings if, after considering all of the circumstances, it is warranted.

Inquiries

The Commissioner is able to make inquiries into compliance by registered organisations with financial obligations or into the application of civil penalty provisions.

The ROC takes a collaborative approach to inquiries - we aim to work with organisations to ensure compliance is achieved and any harms, so far as is possible, are remedied. Table 9 details the inquiries commenced in or continuing during the reporting period.

Table 9: Inquiries initiated and closed under chapter 11, part 4 of the RO Act in 2017-18

No. open as at 30 June 2017 No. commenced during 2017-18 No. concluded during 2017-18 No. open as at 30 June 2018
Inquiries 3 6 6 3

Table 10 details the inquiries undertaken during the reporting period.

Table 10: Inquiries under chapter 11, part 4 of the RO Act in 2017-18
Name  Type* Commencement date Issue Completion date or estimated completion date Outcome
Health Services Union, New South Wales Branch s.330 5 June 2017 Inquiry arising from TURC referral regarding conduct of former Branch Secretary
31 August 2017
No further action
Flight Attendants' Association of Australia, International Division s.336(1A) 23 June 2017 Follow-up inquiry 12 months after investigation to determine whether reporting unit has addressed compliance issue (related party transactions) found during investigation 30 August 2017 No further action
Transport Workers’ Union of Australia
s.336(1A) 28 June 2017 Follow-up inquiry 12 months after investigation to determine whether reporting unit has addressed compliance issues (record keeping) found during investigation  23 October 2017 No further action 
United Firefighters’ Union of Australia, Victorian Branch  s.330  13 July 2017 Inquiry arising from TURC referral regarding payments for Committee of Management member’s personal legal matters 17 October 2017   No further action 
Health Services Union, Tasmania Branch  s.330  15 September 2017 Inquiry in relation to payment received by former Branch Secretary when leaving office  8 January 2018  No further action 
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia, Electrical, Energy and Services Division, New South Wales Divisional Branch  s.330  8 December 2017  Inquiry as to whether financial records properly kept and whether statements of loans, grants and donations properly made  22 March 2018 No further action 
Australian Road Transport Industrial Organisation, Tasmanian Branch  s.330  8 May 2018  Inquiry considering circumstances surrounding appointment of unregistered auditor  Estimate: August 2018 In progress 
Master Builders Association of New South Wales  s.330  8 May 2018  Inquiry considering circumstances surrounding appointment of unregistered auditor  Estimate: August 2018  In progress 
Clubs Victoria Inc.  s.330  11 May 2018 Inquiry considering circumstances surrounding appointment of unregistered auditor  Estimate: September 2018 In progress

*Types: s. 330: inquiry as to whether contravention of financial obligations and/or civil penalty provisions, s. 336(1A): follow-up inquiry within 12 months of notification of contravention of financial obligations

Investigations

If satisfied there are reasonable grounds for doing so, the Commissioner is empowered to conduct investigations into compliance by registered organisations with their financial obligations, or to ascertain whether there has been a breach of a civil penalty provision. Table 11 provides an overview of investigations that commenced or were continuing during 2017-18.

Table 11: Investigations under chapter 11, part 4 of the RO Act in 2017-18

No. open as at 30 June 2017 No. commenced during 2017-18 No. concluded during 2017-18 No. open as at 30 June 2018
Investigations 2 4 3 3

As at 1 July 2017, the Commissioner was conducting two investigations into organisations regarding alleged contravention of financial and/or civil penalty provisions (under s. 331). During 2017-18, three further investigations were commenced under s. 331 and a further investigation was commenced under both s. 331. and s. 332 (an investigation arising from an auditor’s report). See Table 12 for details of investigations.

Table 12: Investigations under chapter 11, part 4 of the RO Act in 2017-18
Name  Type* Commencement date Issue Completion date or estimated completion date Outcome
Australian Workers' Union, Victorian Branch s.331 2 November 2016 Referral from the TURC; alleged breaches of s. 253(3) and s. 230 19 March 2018
Federal Court proceedings commenced 16 May 2018
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia, Electrical, Energy and Services Division, Victorian and Tasmanian Branches s.331 24 May 2017 Alleged inappropriate use of funds 16 February 2018 No further action
Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia s.331 22 September 2017 Failure to keep an accurate record of office holders and failure to notify changes to records 13 April 2018 Federal Court proceedings commenced 10 May 2018
The Australian Workers’ Union, National Office and Victorian Branch
s.331  20 October 2017  Alleged unapproved donations  On hold due to Federal Court action  On hold pending outcome of Federal Court action 
Australia Hotels Association, Queensland Branch s.331  20 October 2017  Elections not held over extended period  Estimate: 30 September 2018  Still under investigation 
Construction, Forestry, Mining and Energy Union (CFMEU), Mining and Energy Division, Queensland District Branch s.331 and 332  14 March 2018  Whether there has been inappropriate credit card usage and loans to officers and employees  Estimate: 31 December 2018  Still under investigation 

*Types: s. 331: alleged contravention of financial and/or civil penalty provisions, s. 332: arising from the auditors’ report

Investigations: whistleblowers

The Commissioner is required to investigate protected disclosures made by whistleblowers (s. 337CA). The whistleblower scheme, introduced in May 2017, expanded the categories of people protected when whistleblowing about potentially unlawful conduct by officers and employees of registered organisations. Criminal penalties for taking a reprisal against a whistleblower were also introduced.

The ROC co ordinates the regulatory approach (across Commonwealth agencies and law enforcement bodies) to whistleblower disclosures under the RO Act. The ROC aims to provide a safe method for ‘blowing the whistle’, while also working with the relevant organisation to address actual or potential harm. Depending on the nature of the allegation, the ROC will, if necessary, take appropriate enforcement action.

The ROC has consulted with stakeholders, including academics and representatives of whistleblower groups, and continues to refine its processes. In 2018-19, we aim to assist organisations to develop model internal whistleblower policies and a positive ‘speak-up’ culture.

Table 13: Protected disclosures under chapter 11, part 4A of the RO Act 2017-18
No. open at 30 June 2017 No. opened 1 July 2017 - 30 June 2018 No. closed 1 July 2017 - 30 June 2018 because ineligible disclosure No. closed - ROC did not consent to allocation No. allocated to authorised official external to the ROC No. allocated to the RO Commissioner  No. closed with no investigation conducted  No. closed with investigation completed  No. open as at 30 June 2018 
1 86 24 1 1 45 27 19 15

Royal Commission into Trade Union Governance and Corruption

The Royal Commission into Trade Union Governance and Corruption (TURC) was established in 2014 to inquire into alleged financial irregularities associated with union affairs. Thirty matters were referred to the FWC by TURC, 24 of which were subsequently transferred to the ROC.

One referral resulted in the FWC commencing civil proceedings against the TWU. These proceedings were transferred to the Commissioner in May 2017. The Commissioner alleged wide-ranging contraventions of the RO Act, including failing to remove unfinancial NSW members from its register, failing to keep a register in NSW and WA, and failing to keep a copy of the member register for a Queensland Branch election. The Federal Court did not find that the TWU had failed to keep a copy of the register of members for a Queensland Branch election, however all other alleged breaches were substantiated. The court imposed penalties on the TWU totalling $271 362, which the TWU appealed against. The hearing of the appeal is listed to be heard by the Full Federal Court on 23 August 2018.

On 16 May 2018, the Commissioner commenced civil proceedings against the AWU and Mr Cesar Melhem in response to 10 referrals from the TURC. The Commissioner seeks the imposition of civil penalties on the AWU and Mr Melhem alleging that their conduct constituted schemes in which the membership of the AWU was artificially inflated and the AWU Victorian Branch received payments that were not legitimately due to it. A case management conference in this matter was listed before Mortimer J on 9 July 2018, but as at 30 June 2018, the matter had not yet been listed for hearing.

In response to referrals from the TURC, the ROC concluded two inquiries with no further action, one in relation to the New South Wales Branch of the HSU and the other in relation to the UFUA (see Table 10).

Table 14: Status summary of referrals from the Royal Commission into Trade Union Governance and Corruption
Referred to the ROC Before the Federal Court (including appellate court) Closed by the ROC with no further action In abeyance, pending police investigations or criminal proceedings
24 11* 2 11

*Note: There are two matters before the Federal Court. The proceedings against the AWU is based on 10 referrals from the TURC.

Enforcing provisions of the RO Act

The ROC’s approach to enforcement is that it will proceed where there is evidence to support this. If the evidence leads the ROC to conclude that enforcement of compliance obligations is warranted and is in the public interest, we will commence proceedings. In 2017-18 two penalties were imposed as the result of ROC’s court actions, including penalties of $271 362 against the TWU (see Table 15) and $2000 in penalties imposed against Michael Mijatov, previously an officer of the Flight Attendants’ Association of Australia (FAAA). The allegations, orders sought and outcomes (if finalised) of legal action are detailed in Table 15.

Table 15: Alleged contraventions and orders sought under s.310(10(a) of the RO Act 2017-18
Name  Date Alleged contraventions Orders applied for Date of completion Outcome
Registered Organisations Commissioner v Australian Nursing and Midwifery Association & Mark Olson [WAD 470/2015]
21 August 2015 The Western Australian Branch failed to comply with its financial reporting obligations in 2009-10, 2010-11 and 2011-12  Declarations, civil penalties and any other order the Court deems appropriate  Ongoing (hearing concluded September 2017, judgment reserved)  Awaiting judgment 
Registered Organisations Commissioner v Transport Workers Union [NSD 2041/2016]  25 November 2016 

Failing to remove unfinancial NSW members from its register

Failing to keep a register in New South Wales and Western Australia

Failing to keep a copy of the member register for a Queensland Branch election (referral from the TURC) 

Declarations, civil penalties and any other order the Court deems appropriate  2 February 2018 (first instance) Under appeal

Penalties of $271 362.36 imposed on the TWU comprising $200 000 for failing to remove 20 907 unfinancial members from the register and $71 362.36 for failing to keep records

Unsuccessful regarding allegation of failure to keep register of members in Qld

The TWU have appealed the amount of the penalties 

Registered Organisations Commissioner v Michael Mijatov [NSD 2181/2016]  19 December  2016

Failing to discharge his duties with care and diligence in:

Failing to provide annual budgets as required under the FAAA's rules

Approving more than 12 weeks back-pay for himself

Declarations, civil penalties and compensation to the FAAA, costs and any other order the Court deems appropriate 22 June 2018 Civil penalty payment orders: $500 for failing to prepare annual budgets and $1500 for approving back-pay for himself (penalty mitigated on the basis that the Court accepted that Mr Mijatov genuinely believed that back-pay was owed)
Registered Organisatons Commissioner v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [NSD802/2018]  10 May 2018 

Failure to keep an accurate record of office holders

Failure to notify changes to records 

Declarations, civil penalties and any other order the Court deems appropriate  Ongoing   
Registered Organisations Commissioner v The Australian Workers Union & Cesar Melhem [VID583/2018]  16 May 2018 

Entering on the register of members 851 people who were not members

Failure to remove 2534 unfinancial members from the register

Receipt of payments by the Victorian Branch that were not legitimately due 

Declarations, civil penalties and any other order the Court deems appropriate  Ongoing   

Action taken against the ROC

On 20 October 2017, the ROC commenced an investigation into whether $230 500 of donations, including to a range of political campaigns, were properly authorised by the AWU. On Monday 23 October 2017, the ROC received information which gave rise to concerns that documents in the possession of the AWU may be being interfered with. On Tuesday 24 October 2017, the ROC applied to a magistrate and was granted search warrants to be executed by the Australian Federal Police. The AWU commenced court proceedings to quash the decision by the ROC to commence the investigation. The investigation is not being advanced while these proceedings continue.