COMMISSION OF INQUIRY INTO TRADE UNION GOVERNANCE AND CORRUPTION WITNESS STATEMENT OF CHRISTOPHER ANDERSON

Transcription

1 COMMONWEALTH OF AUSTRALIA Royal Commission Act 1902 COMMISSION OF INQUIRY INTO TRADE UNION GOVERNANCE AND CORRUPTION WITNESS STATEMENT OF CHRISTOPHER ANDERSON Date of document: 4 September 2014 Prepared by: Holding Redlich Lawyers Level Bourke Street MELBOURNE VIC 3000 DX 422, Melbourne Ref: Alexandra Tighe alexandra.tighe@holdingredlich.com I, CHRISTOPHER ANDERSON, of in the State of Victoria make the following statement: A. INTRODUCTION 1. I am the Chief Executive Officer of ATC Insurance Solutions Pty Ltd (ATC). ATC is a privately held company and was incorporated in I am one of two directors of ATC. Mr Shane Sheppard is the other director. Mr Sheppard and I are also the major shareholders of ATC. ATC employs approximately 30 staff. 2. By summons dated 26 August 2014, I was summoned to appear to give evidence before the Commission on 5 September On Friday, 29 August 2014, solicitors acting on my behalf, Holding Redlich, received a letter from the Solicitor Assisting the Commission requesting that I provide a statement addressing certain topics by 4:00pm on Wednesday, 3 September A copy of that letter is annexed to this statement and marked CA-1. M: _1 AVT

2 4. In the short amount of time available, I have, to the best of my knowledge and understanding, addressed the matters requested by the Commission. In certain cases I have refreshed my memory from documents produced to the Commission by ATC pursuant to Notices to Produce dated 18 August 2014 (Notice number 370) and 27 August 2014 (Notice number 499). B. BACKGROUND, PROFESSIONAL QUALIFICATIONS AND EXPERIENCE 5. In September 2008, I was appointed CEO of ATC. 6. In March 2011, I was appointed a director of ATC. 7. Prior to becoming CEO of ATC I held a number of senior corporate positions, including: a. Principal of Maxama Consulting Group; b. Victorian Branch Manager of Comops Ltd; and c. Commercial Director of Unibis Software Technology. 8. I hold a Master of Business Administration, a Master of Applied Finance, and a Bachelor of Arts (Hons) from Monash University. C. RELATIONSHIP BETWEEN ATC AND THE ETU, INCLUDING THE SUPPLY AGREEMENT DATED FEBRUARY ATC is a provider of insurance cover as an agent of various underwriters at Lloyd s of London. 10. Since January 2008, ATC has provided income protection insurance on behalf of underwriters to members of the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (ETU). 11. Although I wasn t employed by ATC at the time, I understand from my discussions with the then ATC management that in late 2007 ATC was given M: _1 AVT 2

3 the opportunity to submit a proposal to become the supplier of income protection insurance to the ETU. 12. Prior to 2008, the ETU was supplied income protection insurance by IUS Pty Ltd (IUS). ATC has no corporate relationship with IUS. 13. ATC was successful with its proposal to the ETU and commenced the provision of income protection insurance services to the ETU from January It is my understanding that the ETU received a management fee for administering the previous income protection insurance arrangement with IUS, and that this management fee continued to be collected by the ETU once ATC became its income protection insurance provider in January I understand that under the previous IUS scheme, IUS would charge the full amount under the relevant Enterprise Bargaining Agreement and then rebate the management fee charged by the ETU back to the ETU. ATC has never rebated the ETU management fee back to the ETU. When ATC took over the ETU s income protection insurance arrangements, ATC invoiced the fees and charges for insurance to the ETU, and the ETU management fee was collected by the ETU without any involvement from ATC. I refer to those arrangements further in paragraph 20 below. 14. In February 2012, ATC and the ETU formalised the provision of income protection insurance by ATC to ETU members in a written agreement (the Supply Agreement). A copy of the Supply Agreement is annexed to this statement and marked CA The entry into the Supply Agreement followed the ETU, in 2010, agreeing a new Enterprise Bargaining Agreement (2010 EBA) with the employers of its members. I was aware that one of the terms of the previous EBA was that employers party to it were obliged to provide income protection insurance to ETU members through an insurance policy and scheme nominated by the ETU. 16. As the existing provider of income protection insurance for ETU members on behalf of underwriters, it was a commercial objective of ATC to be the provider of the insurance scheme nominated by the ETU under the terms of the 2010 EBA. The Supply Agreement secured this commercial objective. The Supply M: _1 AVT 3

4 Agreement formalised the existing arrangements between ATC and the ETU on substantially the same terms. 17. ATC invoices the ETU for income protection insurance for its members on a monthly basis. The aggregate monthly invoice issued by ATC has four components: a. the Premium charged by the underwriters of the insurance policy; b. Goods and Services Tax; c. Stamp Duty; and d. an Administration Fee charged by ATC for procuring, underwriting, managing and administering the insurance scheme. 18. The amount invoiced by ATC to the ETU is referred to in the Supply Agreement as the Premiums and Charges. The total amount of these Premiums and Charges were agreed between ATC and the ETU at the time of entering into the Supply Agreement and are set out in Schedule 1. The current Premiums and Charges applicable for each ETU member are at item 3 of Schedule The amount ultimately payable by the employer in respect of each ETU member s insurance policy (referred to in the Supply Agreement as the Insurance Charge) consists of the Premium and Charges invoiced by ATC as well as a fee charged by the ETU, referred to as the ETU Management Fee (to which I referred at paragraph 13 above). This amount corresponds to that identified in the Enterprise Bargaining Agreement. 20. I am aware that that the ETU Management Fee is a component of the total Insurance Charge payable by employers under their EBA with the ETU and I understand that it is collected by Protect Services Pty Ltd (Protect) on behalf of the ETU. It is also my understanding that Protect is the trading name of ElecNet Pty Ltd (ElecNet). M: _1 AVT 4

5 21. ATC is not in any way responsible for invoicing, collecting or administering the ETU Management Fee on behalf of the ETU, and its only dealings with Protect (and, indirectly, ElecNet) are as set out in the following paragraph. 22. The insurance scheme is administered on a monthly cycle as follows: a. the employer provides a monthly declaration of workers requiring insurance (Declaration); b. Protect issues an invoice of the monthly Insurance Charge to the employer based on the Declaration; c. towards the end of the month, and typically on or around the 27 th of each month, ATC receives a report from Protect which identifies the number of insured workers for the month (an example report received from Protect on or around 25 July 2014 is annexed to this statement and marked CA-3); d. on receiving the report from Protect identifying the number of insured workers, ATC does two things: i. first, ATC prepares and issues the monthly invoice to the ETU to which I referred at paragraph 17 above; and ii. secondly, ATC pays the insurance premium payable to the underwriter(s) of the policy; e. Protect collects the Insurance Charge from the employer, deducts the ETU Management Fee and then remits the balance of the Insurance Charge to ATC in payment of the monthly invoice issued by ATC. 23. There is an annual adjustment process to account for insurance paid for, but not provided, due to reasons such as the employer not paying its bills or giving incorrect employee information. M: _1 AVT 5

6 D. RELATIONSHIP BETWEEN ATC AND DEAN MIGHELL & ASSOCIATES PTY LTD 24. Because of my regular involvement with the ETU in administering and providing the insurance scheme, I was aware from around 2012 that Mr Mighell was considering leaving his position as Secretary of the ETU, Victorian Branch. Even prior to that time, beginning in around 2010, there were discussions between ATC and Mr Mighell with respect to potential employment opportunities with ATC if and when he left the ETU. 25. Mr Mighell was an experienced union official and, when he left his position at the ETU in March 2013, ATC identified an opportunity to engage him as a consultant to strengthen its existing union relationships as well as to identify, and assist ATC realise, new opportunities in the trade union sector. 26. As I note in paragraph 24 above, prior to his departure, Mr Sheppard and I discussed potential employment opportunities at ATC with Mr Mighell once he was no longer at the ETU, but no formal discussions took place in this regard. 27. Shortly after his departure from the ETU in March 2013, Mr Sheppard and I entered into negotiations with Mr Mighell regarding the possibility of him being engaged as a consultant with ATC and the terms of that engagement. 28. Those negotiations culminated in the entry into an agreement between ATC and Mr Mighell s consultancy business which, at that stage, was still to be incorporated (Independent Contractor Agreement). I understand that DM&A was incorporated in the days following the Independent Contractor Agreement being signed. From its incorporation, DM&A assumed the obligations of the Contractor under the agreement. A copy of the Independent Contractor Agreement is annexed to this statement and marked CA Schedule 1 of the Independent Contractor Agreement sets out the details of DM&A s engagement, including the services to be performed by DM&A. Those services related to the purpose for which DM&A was engaged by ATC and to which I referred at paragraph 25 above; that is, consolidating and growing ATC s trade union client base. Specifically, those services included: M: _1 AVT 6

7 a. providing advice and expertise in relation to the development of income protection schemes for trade unions; b. identifying and developing income protection scheme opportunities within the trade union sector; c. facilitating and growing the Maritime Union of Australia income protection scheme, another union insurance scheme administered by ATC; and d. facilitating and further developing ATC s relationships and business opportunities with its existing trade union clients. 30. Between June 2013 and April 2014, ATC made a monthly payment to DM&A of $15,000 (excluding GST) in accordance with the terms of the Independent Contractor Agreement. These monthly payments were in addition to the $100,000 (excluding GST) paid to DM&A as a signing bonus. An amount of $150,000 (excluding GST) was also paid to DM&A Associates on 29 April 2014 in accordance with the bonus provisions of his contract. 31. During March this year there was a major breakdown in the relationship with Mr Mighell, myself and ATC. On 14 April 2014, ATC wrote a letter to Mr Mighell terminating the Independent Contractor Agreement. The termination was effective immediately and ATC made payment in lieu of the 4 weeks notice required by the agreement. Dated: 4 September 2014 M: _1 AVT 7

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