A construction executive authorised false invoices to disguise payments of $100,000 a year to the Australian Workers Union under an agreement started by now federal Labor leader Bill Shorten, a royal commission has heard.

Julian Rzesniowiecki, the former head of human resources on the Thiess-John Holland joint venture that built Melbourne’s EastLink freeway, told the trade union royal commission he reached an agreement in 2005 with former Victorian AWU assistant secretary, Cesar Melhem, on how to pay money to the union as part of a deal to secure favourable industrial conditions.

“Some 24 of the 28 invoices relate to us sponsoring things or buying advertising in their magazine which is … a way of making a donation or providing money to the AWU,” Mr Rzesniowiecki said.

“The main purpose was to, you know, disguise the fact that we were funding an organiser.”

Mr Rzesniowiecki said his understanding, on starting his job in late 2004, was that his predecessor, Stephen Sasse, and Mr Shorten, then head of the Victorian AWU, had discussed funding an AWU organiser on the EastLink project.

“I believe that there was an agreement in principle around providing some sort of support or dealing with that issue of organiser representation on the project,” he said.

While there was agreement about assistance, the terms and level of support “had not been settled between them”, Mr Rzesniowiecki told the commission.

“Mr Melhem and I had a discussion at some point where we settled on the deal.”

He and Mr Melhem agreed that the funding the organiser, at $100,000 a year for three years, should “remain a private matter between ourselves and the AWU,” he said.

The commission heard Mr Rzesniowiecki authorised payment of invoices for services including $33,000 of advertising in a union magazine and $36,000 for research on back strain.

He agreed that a $9,000 payment for 20 tickets to a 2005 AWU population forum was “an instalment” on the $100,000 to be paid that year.

Asked about a $33,000 invoice for advertising in the Australian Worker magazine, Mr Rzesniowiecki agreed it was inflated and did not “correctly describe what we were paying for”.

Counsel assisting the commission, Jeremy Stoljar SC, asked if it was a false invoice.

Mr Rzesniowiecki replied: “Yes”.

He agreed a $36,000 invoice for training was also false.

Asked what the joint venture got out of the deal, Mr Rzesniowiecki said they wanted to make sure the AWU was resourced to “deliver the project successfully”.

Mr Rzesniowiecki’s evidence follows testimony from Mr Sasse, who told the commission Mr Shorten suggested during negotiations in 2004 that John Holland pay for the salary and car of an organiser for three years.

Mr Sasse said he had a figure of $100,000 a year but could not recall who suggested that amount.

Mr Shorten told the commission in July he did not recall any discussion with Mr Sasse about funding an organiser and he repeated his denial.

“I did not strike any agreement of the nature which you are raising, full stop,” the Labor leader told reporters in Canberra.

Mr Melhem’s barrister, Kristine Hanscombe QC, questioned Mr Rzesniowiecki over his evidence that Mr Melhem wanted the payments kept quiet.

“My instructions are that there was no intention to keep this secret. The AWU was pleased with this agreement,” Dr Hanscombe said.


By Peter Trute