Union Was Offered Dubious $2bn Loan
Sydney Morning Herald
Saturday March 18, 1995
One of Australia's largest unions has been offered up to $2 billion in dubious overseas loans to invest in projects including a spaceport, steel mills and a workers' bank.
A union official involved in the negotiations had "no doubt it was a money-laundering operation and/or linked to drug money ... These guys definitely looked like mafia to me".
The offer - by unnamed US-based financiers - was never taken up by officials of the Federation of Industrial, Manufacturing and Engineering Employees' Union (FIMEE) because of their concerns about where the money might be from.
The loan offer followed an attempt by the union to finance a relatively modest debt of $5 million, which had arisen as the FIMEE grew through a series of amalgamations.
Before the amalgamation between the Australian Workers' Union and the Federation of Industrial, Manufacturing and Engineering Employees Union, FIMEE was already in debt over having to pay out redundancies and superannuation commitments as a result of mergers with other smaller craft-based unions.
In 1992, the secretary, Mr Steve Harrison, asked a firm of solicitors to make preliminary inquiries about offshore finance to "secure the union's future", with the rider that the union "be satisfied that the source of any overseas funds is reputable".
At the time, the union was changing banks and was happy to look for finance outside traditional sources.
The lawyers came back with the offer from the US sources and a meeting took place in Queensland between officials of the union and representatives of the financiers.
But Mr Harrison told the Herald he was not satisfied the source of the proposed loans was reputable. His suspicions grew when later the National Crime Authority contacted the union officials regarding the financiers.
The union's national executive had by then passed a resolution forbidding officials to have any further contact with the financiers.
The documents outline the proposal put to the union from the financiers and include:
* A refinancing of the union with a loan of $6 million - extended to $10 million;
* A proposal for a workers' bank with starting finance of $200 million;
* Investment capital of $650 million for a proposed Gladstone Special Steel plant, $850 million for Queensland Space Port Project and $300 million for the Tasmanian Steel Mill Project.
According to one source present at the meeting between the senior union officers and the US financiers, held on the Gold Coast in 1991, "it was a strange meeting from the start".
"These guys definitely looked like mafia to me and that seemed to be confirmed after calls received from the National Crime Authority."
The debt of the combined union has now grown to almost $17 million, according to a report prepared by consultants acting for Mr Harrison, and has precipitated a war between union factions.
At the meeting, held in a back suburb of the Gold Coast, business cards were offered by the union officials but that offer was not reciprocated by the American financiers, and the meeting was conducted on first-name basis only, the union source said.
PAGE 30: Unions apply for divorce.
© 1995 Sydney Morning Herald