Judge walks out on CFMEU charity amid ‘concern’ over audit red flag

Judge walks out on CFMEU charity amid ‘concern’ over audit red flag

11th January 2021 Off By adpublisher

The developments have dragged the foundation back into the spotlight after the trade unions royal commission in 2014-15 found potential fraud committed in relation to its accounts.

The CFMEU charity that runs Foundation House in Rozelle is once again at the centre of controversy. Credit:Louie Douvis

NSW executive director of the Master Builders Association Brian Seidler said his organisation was “most concerned”, given the millions of dollars the foundation receives from the building industry every year.

Mr Finnane quit the board earlier this year, saying “it was time for me to go”.

“I had views about future directions,” said the former District Court judge, who presided over the Bilal Skaf rape trial in 2002.

“The executive officer and the majority of the board had other ideas. I decided to leave them to pursue their ideas.”

The foundation was established in 2000 by the NSW division of the CFMEU, in partnership with the building industry. The charity operates Foundation House, a rehabilitation clinic at Rozelle.

It is funded by building industry employers, who pay a mandatory weekly levy of $3 per employee, via a clause in enterprise bargaining agreements (EBAs).

The Australian Financial Review first reported in 2012 that the foundation’s board members had quit en masse over concerns at least half a million dollars meant for Foundation House had been siphoned back to the CFMEU.

The royal commission later heard CFMEU officials had quietly changed the EBA clause to allow some funds to be directed towards union safety programs.

Brian Seidler, the NSW executive director of the Master Builders Association

Brian Seidler, the NSW executive director of the Master Builders Association Credit:Louie Douvis

However, Commissioner Dyson Heydon found the funds had ended up in the NSW CFMEU’s general trading accounts, and it was an “open question” as to whether it had committed fraud. Former boss Andrew Ferguson’s conduct had “fallen short of professional standards”.

The Herald has since obtained an audit report on the charity’s 2017/18 financial statements where a qualified opinion was issued.

“It is not possible for the foundation to maintain an effective system of internal controls over donations and industry contributions until their entry into the accounting system,” the auditors stated. “As such we were unable to confirm completeness of revenue and our audit was limited to the amounts recorded.”

Mr Seidler, one of the board members to quit over the “despicable” siphoning of funds, was alarmed at the audit’s finding.

He argued the qualified opinion was “not appropriate for a charity.”

“I would have thought in order to keep it in a charitable status you’d have to demonstrate exactly where all of your money comes from,” he said.

Mr Seidler said thousands of workers were covered by newly approved EBAs which saw “a lot of money coming to the foundation.”

Sarkis Elias is named as treasurer of the board in all of the foundation’s available financial reports, but it is unclear when he assumed the role because they only date back to 2014.

There is no evidence Mr Elias was involved in the issues investigated by the royal commission and he was not the subject of any adverse findings by Commissioner Heydon.

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However, Mr Elias was found by the Independent Commission against Corruption to have used fraudulent qualifications to obtain his builder’s licence in the mid-2000s.

ICAC did not make any corruption findings made against Mr Elias but the Department of Fair Trading cancelled his licence in 2005 following the probe.

Mr Elias was one of several parties who signed a deed for the construction of Sydney’s Mascot Towers, which were evacuated after they cracked in 2019.

Mr Elias, who runs a business selling safety nets for construction sites, has denied any involvement in the Mascot project “besides being a guarantee on the deed”.

The same financial year the auditors red-flagged the foundation’s accounts, there was a coup for the board as it secured Mr Finnane as its president.

Mr Finnane was not on the board when Mr Elias was appointed and said he “had no idea” whether Mr Elias disclosed the matter regarding the false qualifications.

“Since Foundation House was set up by the CFMEU, I am confident that the board at the time would have known,” he said.

Mr Finnane couldn’t recall the auditors flagging the issue with the accounts in 2018.

“The auditor had lengthy discussions with the board each year and satisfied me that the accounts had been properly kept,” he said. “I would not have signed off on them if it were otherwise.”

Mr Finnane said the board administered Foundation House without interference from unions.

“But from time to time, some of the union-nominated members would put forward proposals that originated with the unions,” he said.

The NSW CFMEU and Mr Elias did not respond to detailed questions.

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