Gunns Limited, the Launceston-based company that made a fortune turning Tasmanian forests into woodchips for Japanese papermakers, has had a long relationship with Tasmanian premiers and government ministers.
In 1989, the chairman of Gunns, Edmund Ruse, was convicted by a Royal Commission of trying to bribe Labor MP Jim Cox into crossing the floor to allow the pro-logging Liberal Party headed by Robin Gray to assume power.
The Royal Commission found that Gray had known of the bribery attempt and his conduct was grossly improper. Gunns’ managing director, John Gay, was cleared of involvement.
A decade after this debacle, Gray became a director of Gunns, a position he held for 10 years.
A Labor premier, Paul Lennon, an active supporter of Gunns’ operations, resigned in May 2008 after allegations of corruption that included having his home renovations carried out by a Gunns subsidiary.
In 2012, Gunns became insolvent, owing creditors hundreds of millions of dollars. The company had been in serious financial trouble since February 2010, when a director’s report detailing its falling revenue was made public and its share price collapsed.
Gay, by then Gunns chairman, used his inside knowledge of the company’s precarious position to trade Gunns shares worth $3 million in December 2009, two months before the director’s report was made public. Instead of being caught by the falling share price, he avoided a loss of $800,000.
The Tasmanian Supreme Court fined Gay $50,000 and banned him from running a company for five years after he pleaded guilty to insider trading last August.
Although the maximum penalty for the offence was five years in jail or a $220,000 fine, he avoided a custodial sentence because the court took into account his ill-health.
After his conviction, the Australian Federal Police received a proceeds of crime reference on August 28 that enables them to trace and confiscate money made through crimes and return it to the community.
Despite this, the AFP announced on January 27 it would “not proceed with any proceeds-of-crime action”. It gave no reasons for the decision.
Gay has also now been declared fit enough to apply to manage companies again — a move that is being opposed by the Australian Securities and Investment Commission.
This kid-glove treatment of employers found guilty of serious criminal offences contrasts sharply with front-page allegations of corruption against union officials and employers that appeared in the Sydney Morning Herald on January 28.
The building industry was subject to a wide-ranging inquiry, commonly known as the Cole Royal Commission, which sat from August 2001 to March 2003. It found no evidence of organised criminal activity, but plenty of militant union activity in an industry plagued by fly-by-night contractors whose poor safety record is matched only by the rate at which they go belly-up, taking their workers’ pay and entitlements with them.
The Royal Commission cost $60 million. Justice Terence Cole was made an officer of the Order of Australia in 2005 for his troubles, and the unions got the Australian Building and Construction Commission (ABCC).
The ABCC was given extraordinary powers that far exceeded those given to any police officer anywhere in the country. It could force people to answer questions in secret and to hand over documents relating to any of its investigations. A person brought before it could be compelled to give up personal phone and email records, report on private meetings and reveal membership of a political party or union. Failure to comply with any of these dictates was punishable by a six-month jail sentence.
This threat hung over Adelaide rigger Ark Tribe, who refused to answer the ABCC’s questions about his attendance at a job safety meeting in 2008. It took until November 2010 to clear his name.
The ABCC was established in 2005 and lasted until May 2012, when many of its functions were transferred to Fair Work Building and Construction. There is not one recorded incident of it ever finding corrupt behaviour by union officials or delegates.
Predictably, Prime Minister Tony Abbott used these latest allegations to urge Labor and the Greens to support legislation reinstating the ABCC. He will also use them to set up another Royal Commission, which will be a cover for a forensic legal attack on unions.
But don’t hold your breath for the government to act on the Australian Securities and Investments Commission’s call for tougher penalties for white-collar crime.