Members will have seen the recent media reports regarding the Federal Court findings against former Branch Secretary, Kathy Jackson, for the misappropriation of some $1.4 million.
The current leadership of the VAHPA is of the view that members should be properly apprised of the facts of this matter and that it is our job to provide those facts as clearly and succinctly as possible.
On 19 August 2015, the Honourable Justice Tracey ordered former HSU Victoria No. 3 Branch Secretary, Kathy Jackson, to pay the Health Services Union the sum of $1,406,538.16.
Of central concern to this case is section 287 of the Fair Work (Registered Organisation) Act 2009. This section works to ensure that employees and/or officials of a union or a branch of a union do not improperly use their position to gain personal advantage or cause detriment to the union or to another person. Jackson was found to have contravened this section of the Act.
The sum of $1.4 million covers six specific matters as detailed below:
1. National Health Development Account
In September 2003 the Peter MacCallum Institute made a payment to the branch of $250,000 in settlement of an underpayment of wages issue pertaining to Research Technologists working within the institute. That money and other funds of HSU Vic No. 3 Branch totalling $284,500 was moved, between February 2004 and October 2010, without authorisation and in breach of duty, into an account controlled entirely by Jackson. The money was expended in various ways, including on Jackson’s divorce proceedings, on multiple holidays, on retail purchases, to fund HSU elections and even cash withdrawals. The court ordered Ms Jackson to pay the Union $284,500 in compensation.
2. Cheques made out to cash
Between July 2007 and May 2010 at least 398 cheques were drawn on the Victoria No. 3 Branch account authorising payment in cash. The total of the amounts drawn, using these cheques, was $239,837. A further $19,900 was drawn from the HSU East Branch account using two “cash” cheques between 24 May 2010 and 30 June 2010. None of the 40 “cash” cheques were properly authorised. Ms Jackson retained the bulk of the cash and used it at her discretion and in doing so used her position to improperly gain an advantage for herself and in some instances for her ex-husband. The court ordered Ms Jackson to pay the Union $238,937 in compensation.
3. The $63,000 Honorarium
On the eve of the amalgamation of the Victoria No. 3 Branch with other Branches to form the HSU East Branch, the Branch Committee of Management of the Victoria No. 3 Branch passed a resolution which, purportedly, authorised the payment of $63,000 to Ms Jackson. On 30 June 2010 Ms Jackson wrote a cheque for $63,000 payable to herself. The Branch Committee did not have the powers to authorise such a payment and Ms Jackson had no entitlement to this additional remuneration. The Judge ruled that the processes by which the improper authorisation was granted was ‘tainted with impropriety’. The court ordered Ms Jackson pay to the Union $63,000 in compensation.
4. The Elliott Memorandum
Mr Robert Elliott was the National Secretary of the HSU between 1996 and 2002. Between 2007 and 2010 he worked for the Victoria No. 3 Branch as a ‘consultant’. On 25 February 2010 the Branch Committees of Management of the NSW and Vic No. 3 Branch endorsed the amalgamation. In the course of that day Mr Elliott told Mr Williamson that he needed to be “looked after” following any merger. He wanted to be paid $150,000 per year. Mr Elliott then told Mr Williamson that the Vic No. 1 BCOM had not yet endorsed the amalgamation and would not do so until Mr Elliott had been “looked after”. Mr Williamson reluctantly agreed to enter into a contract but made it a condition that Ms Jackson had also to sign on behalf of the Union. What became known as the Elliott Memorandum was quickly prepared and executed.
We have seen no evidence that Mr Elliott performed any work for his salary. Further, Ms Jackson’s actions in relation to the execution and giving effect to the Elliott memorandum constituted a misuse of her position as National and Branch Secretary. The court ordered Ms Jackson to pay the Union $411,635.86 in compensation.
5. The Toomey Pegg Matter
Between 2009 and 2011 a delegate of the General Manager of Fair Work Australia conducted an investigation into various matters relating to the HSU. Following his investigation the Delegate contacted Ms Jackson to notify her that he had formed provisional views that the she had contravened provisions of the Fair Work (Registered Organisation) Act 2009. On 18 January Ms Jackson formally retained lawyers (at a firm of solicitors called Toomey Pegg) to act for her in this matter at the HSU’s expense. Ms Jackson did not seek or obtain authority for such expenditure and was found to have improperly used her position as National Secretary to commit Union funds in order to secure personal advantage. The court ordered Ms Jackson to pay the Union $34,725 in compensation.
6. Credit Card Expenditure
At various times in the course of her employment by the HSU Ms Jackson was authorised to operate three credit card accounts. During the time she held these cards she incurred the following expenses which were paid, save for the amount of $11,860, by the Union: Travel expenses – $175,154, Retail expenses – $101,792, Food and alcohol expenses – $19,639, Health and fitness expenses – $5,237, Entertainment expenses – $40,133.
There was no evidence to support Jackson’s assertions that the above listed credit card expenditure was properly approved. On the contrary, there was evidence tendered to the effect that Ms Jackson’s credit card statements were not provided to the Branch Committee of Management and were not examined by it. The Judge found that Ms Jackson used the credit cards substantially for her own personal purposes. The court ordered Ms Jackson to pay the Union $305,828.30 in compensation.
7. Overpayment of Wages
Between July 2003 and August 2011 Ms Jackson took twenty-four overseas and ten domestic holidays. During the period relevant to the Victoria No. 3 Branch, Ms Jackson spent 197 working days on holidays. Whilst on holidays Ms Jackson received her normal wage, as if she was at work, and did not draw down on her annual leave. Ms Jackson later had her accrued annual leave paid out. The court ordered Ms Jackson pay the Union $67,912 in compensation for this double-dipping.
Costs and Interest
There is also scope for the Union to recoup costs and interest. A claim in this regard will be made prior to 2 September. If this claim is successful, Jackson is likely to be ordered to pay the Union a further $600,000 or $700,000.
We must acknowledge that all members of the HSU Victoria No. 3 Branch incurred financial loss under Kathy Jackson’s leadership. This is incredibly disappointing and for many and very frustrating. We appreciate that members expect that some of this money that Jackson has been ordered to repay will make its way back to the branch. The fact is that legal proceedings are very expensive and we do not expect to do any better than break even.
I believe however that the decision of the National Executive to hold Jackson to account was the correct one. The issue is not simply one of money; it is a matter of principle—members must have confidence that those who wrong the union will face the full force of the law.