Yesterday, the DPP made the very rare decision to abandon the prosecution of a serious crime, before it had even finished calling evidence at the committal hearing. I had been following the case closely, but it still took me by surprise.
I was less surprised by the strongly-worded press conference given by the defendants’ lawyer, Peter Gordon, on the steps of the Magistrates’ Court. Here’s why I think his outrage is justified.
In April 2013, the CFMEU was locked in a bitter dispute with Grocon over safety issues — especially the need for independent health and safety representatives on dangerous construction sites. Part of that campaign involved organising a boycott of Grocon and its concrete supplier Boral.
It’s against that backdrop that Boral contacted the CFMEU and arranged a meeting with the union’s secretary, John Setka, and assistant secretary, Shaun Reardon. That meeting took place in April 2013.
More than a year later, Boral’s CEO, Mike Kane, wrote to Dyson Heydon’s anti-union royal commission (TURC) to “respectfully suggest” Setka be referred to the police for possible blackmail charges.
Kane also complained that he thought a Supreme Court case against the union had been too slow, and Heydon fawningly interjected to lead more evidence from him about it. “You’re making powerful points,” said Heydon, concluding:
If anyone within Boral does have ideas for the future regulation of institutions so as to avoid this happening in the future, we’d be interested in seeing that.
Heydon dutifully recommended blackmail charges, and also called for reform of Supreme Court processes to avoid the delay Boral had complained about.
The court subsequently established a new Employment and Industrial List, which hears anti-union cases and is headed by a judge who formerly represented Grocon in its high profile case against the CFMEU’s safety protest.
Meanwhile, Boral sued the CFMEU, with Kane claiming that its blockade cost the company $28 million. The more credulous journalists — such as the Herald Sun’s Stephen Drill — took this claim at face value.
Ironically, given Boral’s complaints about delays in the Supreme Court, it was ordered to pay part of the union’s costs after causing a six week delay by changing its case on the ninth day of the trial, after ten witnesses had already been heard. And despite being allowed to move the goal posts during the match, Boral settled for just $4 million in damages, a long way short of Kane’s fantasy.
But that was just one prong of Boral’s attack. It had also been working closely with the ACCC to have the union sued by the government for exactly the same blockade (despite the Boral settlement), as well as continuing a campaign in the media for criminal charges based on the April 2013 meeting.
The usual suspects in the press were (over-)excited by that prospect. In August, Stephen Drill published a report, including confirmation by eyewitnesses, about a Taskforce Heracles police raid in the CFMEU office — an exciting scoop but, unfortunately for Drill, completely false.
But in December 2015, two and a half years after the meeting, Setka and Reardon were arrested in front of their families and charged with blackmail.
They weren’t accused of threatening violence. They weren’t accused of seeking personal gain. They were accused of organising a boycott of building industry employers over an industrial issue — the appointment of health and safety representatives.
This was a big deal. It is very unusual for a purely industrial dispute to be treated as a criminal matter. In one of the many court hearings since then, Justice Weinberg (himself a former Commonwealth Director of Public Prosecutions) tried in vain to identify a precedent for blackmail charges in this context:
Perhaps they are a little experimental. An attempt to see how far the reach of the criminal law can go in this area.
Leading industrial law professor Andrew Stewart observed:
As long as you are not beating someone up or damaging property, criminal law hasn’t really had much of a role to play at all. If these guys are found guilty, and if the evidence does not show they were doing this for personal gain, that they were acting in the course of an industrial campaign, it sets a massive precedent and it’s just hard for me to see where the stopping point is.
Boral seemed unconcerned that its own behaviour might be criminal under this new expansive approach — for example, by threatening to sack employees if they don’t hold a vote to remove conditions from their lawfully made EBA.
For now, their campaign to attack the CFMEU by undermining the prevailing legal norms was bearing fruit.
But the thing about criminal law is that it adheres to strict rules of procedure and evidence, developed over centuries to protect fairness to the accused — a far cry from trial by media or the loose approach of Heydon’s TURC witch hunt.
Even before the committal hearing, the CFMEU’s lawyers began pulling on the threads that would see the case collapse.
For instance, Taskforce Heracles had obtained warrants for phone intercepts on Setka and Reardon, but when Magistrate Charlie Rozencwajg reviewed the affidavits used to obtain the warrants, he made the unusual decision to release them to the defence due to his concerns about the process.
When approving warrants, judges and AAT members are required to consider the interference with privacy and the gravity of the offences being investigated.
The first affidavit made a single reference to litigation brought by Boral and made no reference to privacy.
The magistrate said a telephone intercept could reasonably be expected to capture conversations between Setka and Reardon and their lawyers and other parties as well as “sensitive and confidential information”.
“Those are all matters that should have been placed before the tribunal members having regard to privacy.”
The implication here is that the police might have misled the AAT by omission, downplaying the fact they would be eavesdropping on privileged conversations between the accused and their lawyers.
(This parallels another case: an earlier TURC criminal case against the ACT branch of the CFMEU saw a warrant thrown out because of a “failure to disclose fully the circumstances that were required to be disclosed”. That case was a similar attempt to apply criminal blackmail charges to an industrial demand. That case also spectacularly collapsed.)
On the morning of the first day of the hearing, the union was also given access to a raft of documents the ACCC tried to keep secret. Rozenscwajg said their affidavit was weak and the documents showed a “cooperative relationship” the defence had a right to explore. The documents included emails between DLA Piper (lawyers for the ACCC) and Freehills (lawyers for Boral), and crucially, notebooks and draft versions of the Boral witnesses’ statements.
And when those witnesses took the stand, the wheels came off the prosecution case. As The Age’s Nick McKenzie put it:
It is inexplicable that no one who pushed for blackmail charges to be laid against Setka and Reardon applied the sort of blow-torch scrutiny to the central witnesses that they would inevitably face when the case reached a committal hearing.
So it’s hard not to wonder if a desire to bag the biggest union scalps in the country blinkered the judgment of those who sought to criminalise what the union movement always insisted was industrial conduct.
Their claims were never challenged by Heydon or his bumbling counsel assisting, but this was a different arena.
The two key witnesses were Paul Dalton, who arranged the 23 April meeting, and Peter Head, who had attended as a witness.
Their evidence did not seem to square up with the allegation that a threat to cause millions of dollars of damage was being made:
Peter Head told the Melbourne Magistrates’ Court union bosses John Setka and Shaun Reardon spoke passionately about their concerns for the safety of workers at builder Grocon’s city sites during the meeting.
“It was calm, it was pleasant. There was no overt aggression but certainly passion for the cause,” he said.
Dalton was similarly unfazed at the time of the meeting, and “repeatedly said he did not feel as though he had been threatened during the meeting, but later accepted he had been.”
He was so unconcerned by what had happened that he (perhaps criminally) destroyed his original notes of the meeting on the same day, after being told by Boral’s in-house lawyer they “did not contain any evidence” and were “irrelevant”.
In fairness, they might have been right, as Dalton “conceded his notes do not characterise his conversation with Mr Setka as being of a threatening nature.”
Other documentary evidence at the time suggests there was no perceived threat. Dalton’s notebook referred to briefing documents being sent to Tony Abbott and Eric Abetz — but those briefings don’t refer to any alleged blackmail, and neither politician mentioned any such allegation either.
(Dalton’s credibility surely took a hit here, as he claimed he “can’t recall” whether Abbott or Abetz were “militant about the CFMEU”… yeah, right.)
It was only later, when Boral was contemplating its approach to TURC, that the meeting was retrospectively deemed threatening. And when the ACCC failed in its bid to block draft witness statements being released, the defence team was given a window into Boral’s back-room operations in preparation for TURC.
At TURC, the similarity between the men’s statements was taken as a virtue. Counsel assisting, Jeremy Stoljar, wrote “Their accounts are consistent. Thus they corroborate each other.” But he had not questioned whether the similarities came as a result of collusion rather than corroboration.
And he had not questioned to what extent their statements — prepared more than a year after the event — had been massaged. There was certainly plenty of opportunity, as nearly 60 draft witness statements were prepared by Freehills:
The court heard one Boral executive witness statement was changed 18 times while the union said another was changed 41 times.
A key phrase, “cut off the supply lines”, alleged to be uttered by the union officials was not in the executives’ original notes and was only included in statements a year later, the CFMEU said.
A detailed comparison of the statements at various stages of preparation also threw up curious similarities. For instance:
Mr Head maintained the recollections in his first draft were his own, made without reference to Mr Dalton’s notes.
His first draft contained several almost identical quotes to those noted in Mr Dalton’s final statement.
The unorthodox process of drafting these witness statements was of such concern that after the DPP formally dropped the charges, Magistrate Rozencwajg commented:
It highlights [that] how police take statements is far more conducive to getting the facts as witnesses see them.
This just underscores that the blackmail case was never a real police prosecution — it was driven by Boral and its creative, anti-union lawyers, and given a push along by a creative, anti-union royal commission.
And they failed.
This is not the end of the matter. This was not the first attempt to bring a blackmail case against a union official making an industrial demand, and it won’t be the last. Professor Andrew Stewart warns:
Comments in the royal commission report and the initiation of this prosecution have now placed a very large question mark over the role of criminal law in relation to industrial action and union activities. Today’s decision has done nothing to resolve that.
They won’t stop attacking workers who stand up for themselves. We need to join our unions, turf out anti-union governments, change the rules to put a fair industrial relations system beyond doubt, and stand in solidarity when one of our comrades is attacked
Touch one, touch all.