CRIME AND THE CONSTRUCTION SECTOR. John Murray Master Builders Australia Inc. Presented by Guy Solling

Transcription

1 CRIME AND THE CONSTRUCTION SECTOR John Murray Master Builders Australia Inc. Presented by Guy Solling Paper presented at the conference Crime Against Business, convened by the Australian Institute of Criminology, Melbourne, June 1998

2 As part of the Royal Commission into Productivity in the Building Industry in NSW, Commissioner Gyles inquired into and reported on the extent of illegal activities in the construction industry. Whilst the phrase illegal activities has a wider meaning than crime, a vast majority of the illegal activities found to exist by Commissioner Gyles involved criminal conduct to some extent. His Report was released in Given the comprehensive nature of the Report this paper proposes to examine his findings and to analyse what changes have occurred since the release of his document. The Table of Contents for that part of his Report dealing with illegal activities included the following: physical violence and intimidation; corrupt, improper and irregular payments; fraudulent conduct; theft; extortion; taxation; stoppages, bans, boycotts and secondary boycotts; sabotage and bomb hoaxes; restrictive trade practices; unfair practices; engagement of reputed professional criminals ; and breach of safety and award provisions by employers. In reference to this table of contents Commissioner Gyles stated The table of Contents for this part of my Report gives the conspectus of the nature and extent of illegal activities that occur within or in relation to the building industry in NSW. Reference to it relieves me of the necessity to summarise the types of activity involved. They range from physical violence and a threat of physical violence at one end to petty pilfering of building materials at the other. In between there is a great variety of illegal activities, essentially economic in nature or effect, from collusive arrangements involving giant corporations and industry associations to labour-only sub contractors paying small amounts of graft to project managers. Those involved range from managing directors of large corporations to labourers on site. No sector of the industry has been immune. Commissioner Gyles specifically found that there was evidence of wide spread theft of building materials and plant and equipment. Scaffolding was one example that was followed up in other hearings. He concluded that in respect of scaffolding that there must be an active and well organised black market in operation. Commissioner Gyles also stated that there was strong evidence that members of trade unions in the industry were prepared to use and threaten the use of direct industrial action and the consequent economic harm inflicted on companies and individuals to achieve their objects for the time being regardless of and often in breach of the law. Perhaps most disturbingly he made the following conclusions in relation to employers in the industry. Commissioner Gyles stated 2

3 there is evidence of widespread lack of integrity and probity amongst the management of contractors and others involved in the industry...this is reflected, for example, in the offering of dishonest inducements to union officials, workers, council inspectors, Workcover inspectors and those able to procure work; soliciting or accepting dishonest inducements from those seeking work; involvement in collusive and anticompetitive behaviour, including surreptitious receipt and payment of special and unsuccessful tenders fees; the exploitation of the subsidy of a group apprenticeship scheme; the manufacturing and use of false documents to cover up illicit or unlawful payments; the obtaining of free or discounted work and materials, either in fraud of the employer or the revenue, or as a result of pressure on sub contractors and suppliers; the engagement of persons of ill repute to solve industrial or commercial problems by actual or threatened violence or other illegal means; continuing to trade whilst insolvent in fraud of creditors; and cutting corners and safety regulation legislation and industrial awards requirements. Commissioner Gyles went on to state that some of the behaviour listed above was explained by, if not excused by, the activities of trade unions. Commissioner Gyles also stated Observance of the law and law enforcement in general play very little part in the industry. The law of the jungle prevails. The culture is pragmatic and unprincipled. The ethos is to catch and to kill your own. Commissioner Gyles concluded this part of his Report by saying: The effect of illegal activities upon the culture of the industry and upon the commercial and industrial morality of participants in it is, in the long run, greater than the direct economic consequences. Once it becomes acceptable to break, bend, evade or ignore the law and ethical responsibilities, there is no shortage of ways and means to so. Those who pay and suffer the other consequences of disruption in the end are the public. It would be naive to believe that these comments only apply to the construction industry in the State of New south Wales. Similar activity in the construction industry exists, although perhaps to a lesser extent, in all other parts of Australia. Indeed an Economic Development Committee constituted as a part of the Victorian Parliament, in a Report entitled Inquiry into the Victorian Building and Construction industry, released in April 1994, found the existence of similar activity in relation to the industry in that State. It would be pleasing to be able to say that the problems identified by Commissioner Gyles in 1992 no longer exist. However that is not the case. Nevertheless there is reason to believe that the level of illegal activity in the industry identified by Commissioner Gyles and the Victorian Development Committee has been curtailed to a significant degree. The reasons for this optimism include: development of a Master Builders Association s Code of Conduct; the activities of various State and Federal Government Statutory Bodies; and changes in the industrial relations environment 3

4 National Code of Practice The Master Builders Australia National Code of Practice for the Building and Construction Industry was finalised in It was developed in co-operation with the Trade Practices Commission and followed a memorandum of understanding between the MBA and the Commission. The intention of the code is to establish standards of conduct for members engaged in the Building and Construction Industry. The code establishes an infrastructure for comprehensive standards of industry conduct and practice and ensures the accountability of members of the Australian Master Builders movement for breaches of acceptable standards of conduct and practice. The code does not deal with contractual rights and technical issues and is not a substitute for civil remedies any of the parties may have which will still be dealt with by whatever procedures are contained in various contracts. The code contains disciplinary procedures which relate to commercial ethics and behaviour. The code requires members of the MBA; To act at all times with honesty, integrity and responsibility and in the spirit of good faith and fair dealing; Not to engage in any conduct that is unfair, harsh or unconscionable; Not to engage in any practice that might tend to lower the standards applicable in the building industry; To observe both the spirit and letter of relevant laws of Commonwealth, States and Territories; To not be party to any collusive arrangement or understanding or engage in any conduct that is misleading or deceptive or is likely to mislead or deceive. The Code applies to all members of Master Builders Australia. Any client of a member, a member, State or Territory MBA and a government agency or body of the Commonwealth State or Territory may make a complaint. An independent board is established to ensure that complaints are dealt with properly and fairly. Activities of Statutory bodies The effective enforcement of the laws of the land in the building and construction industry requires the involvement of appropriately resourced statutory bodies. As Commissioner Gyles noted many of the illegal activities of the industry have their genesis in or are responses to the trade unions and their officials. As a result of the Gyles Royal Commission, a Building Industry Task Force was established in NSW which in our opinion was effective in introducing a cultural change to the industry in that state. Most participants in NSW would acknowledge now, that whilst there are still problems, there is a far greater deal of co-operation between unions and employers in the industry than in the late eighties and early 1990s. A Task Force is currently being very effectively used in Western Australia to police illegal activities in the industry and that Task Force has taken action against a union organiser for alleged breaches of the criminal code which occurred in December of last year. 4

5 It is also interesting to note that Federal Government bodies are now playing a more active role in the enforcement of legislation where there are breaches under the guise of industrial activity. The Australian Competition and Consumer Commission (ACCC) has filed an application in the Federal Court against the West Australian division of the CFMEU. The charges concern action by the union pressing contractors not to deal with a company that refused to sign a union pattern agreement. The ACCC is seeking that the union; Cease engaging in breaching secondary boycott provisions of the Trade Practices Act; Pay compensation to the contractor; and Implement a trade practices compliance program The Office of the Employment Advocate is also active in pursuing actions against union officials for breaches of Freedom of Association Laws which generally involve attempting to enforce employees, by way of actual or implied threats, to join trade unions. MBA has called upon the Minister for Workplace Relations to ensure that sufficient resources are provided to the Office of the Employment Advocate to provide effective enforcement of the Freedom of Association provisions under the Workplace Relations Act. Changes in Industrial Relations Environment The changes to the system of industrial regulation since the late 1980s has contributed to an improvement in the level of illegal activity in the construction industry. Prior to a movement towards a system of enterprise bargaining all conditions of employment were regulated by award. This system, coupled with the nature of the industry, led to a lack of identification on behalf of employees with the interests of their particular employer. Employees tended to regard themselves as part the industry. Any allegiance was owed to the Union. In this environment the impact of any illegal activity on the long term prospects of employment with a particular employer was negligible. The Union was able to look after its members to ensure that they retained a degree of continous employment. The move towards enterprise agreements, together with an award restructuring process which is based on career skills development with appropriate training provided, has led to a greater identification of the mutual interests of employers and employees. A significant amount of work is still required to be done in the construction industry and it must be said that the construction industry is somewhat lagging behind other industries in creating a system of negotiation of appropriate terms and conditions of employment at workplace levels. Nevertheless, loss of the us and them attitude, or at least its diminution gives optimism that an improvement in the level of illegal activities is occurring. Master Builders Australia May