An Albanese government-appointed official stripped politically explosive sections from a landmark corruption report, removing findings that Victoria’s Labor government turned a blind eye to CFMEU graft and organised crime on infrastructure projects, including federally funded sites, at a cost to taxpayers of $15 billion.
In an extraordinary development on Tuesday evening, after this masthead asked CFMEU administrator Mark Irving, KC, if he or his administration had whitewashed material damaging to Labor from the report, the senior barrister released the deleted chapters and criticised the corruption expert he hired to write them.
Irving’s decision to release the deleted material came after Queensland’s Commission of Inquiry moved this week to use its powers to discover the removed chapters of the report by anti-corruption expert Geoffrey Watson, SC, having been provided a different version of the “final” report last month.
The commission intended to publish the report this week.
In a two-line statement also sent late on Tuesday, Watson confirmed parts of the report detailing the findings of his 18-month probe into the CFMEU had been “removed”.
“I did not suggest the changes. I was directed to make the changes,” Watson said.
But a spokesperson for Irving said in a statement that “the administrator determined to remove the two sections … because he was not satisfied that they were well-founded or properly tested”.
The responses from the two senior barristers came after this masthead had earlier confirmed that the most politically incendiary conclusions of Watson were stripped from his 136-page report into CFMEU crime and corruption some time in January.
The initial stripping of the two sections from the 18-month inquiry report, including one titled “government inaction on the CFMEU”, was overseen by the Irving-led administration in late January.
The material released on Tuesday evening reveals Watson concluded the Victorian government knew the state’s massive rail and road projects were infected by corrupt CFMEU officials working with organised crime figures and bikies but chose to look the other way.
“As the guardian of public money, the government had a duty to know. It had a duty to monitor delays and costs blowouts. There is no doubt the government knew about the rising problem – but it is equally clear that the government did nothing about it,” it says.
‘Much of that $15 billion has been poured directly into the hands of criminals and organised crime gangs.’
Geoffrey Watson’s report to the CFMEU
Watson also found that the suggestion the government’s failure was due to the close relationship between Labor and the CFMEU was “an inadequate and unsatisfactory explanation”, noting that “relations between Labor and the CFMEU had been deteriorating”.
“A better explanation is that the government, just like the contractors, had been cowed by the combination of the industrial might of the CFMEU and its willingness to act outside the law,” Watson concluded.
“Just like the [government] contractors, those in government feared that adverse industrial action would have shut down the Big Build, or at least large parts of the Big Build. They thought by passing the problem over to the private contractors it would go away.
“Unfortunately, if that was the plan, it did not work. If the government was planning to pacify the CFMEU in the hope that projects would proceed smoothly, it was wrong; things only got worse.”
The second section stripped from the Watson report, only to be released by Irving, detailed the likely cost of the government inaction to taxpayers, who unwittingly funded union corruption, bikie infiltration and organised crime rackets on what Labor calls the Big Build.
Watson said he interviewed an experienced industry insider who “estimated the actions of the CFMEU had increased costs by 30 per cent” but that other inquiry witnesses described blowouts of between 15 per cent and 20 per cent. None said it would be less than 10 per cent.
Watson settled on a “very rough” estimate of 15 per cent, describing it as “not unreasonable” and “probably conservative”.
“From there the maths is simple – the leadership of the CFMEU has cost the Victorian taxpayer something like $15 billion. There is another point to this – as will be seen, much of that $15 billion has been poured directly into the hands of criminals and organised crime gangs,” Watson said.
The CFMEU appointed Watson, a former counsel assisting the NSW Independent Commission Against Corruption, in mid-2024 as an independent investigator to probe allegations of crime and corruption first aired by this masthead’s Building Bad series.
Watson ended up working for Irving, a senior barrister with longstanding ties to the union movement who was handpicked as CFMEU administrator by the Albanese government in response to the same Building Bad allegations.
The Big Build is a once-in-a-generation $100 billion upgrade to Victoria’s road and rail system that is funded by the Allan and Albanese governments.
Watson’s findings contradict the denials of Premier Jacinta Allan, the Victorian minister previously responsible for the Big Build, that she had any knowledge of the CFMEU scandal until it was revealed by this masthead and 60 Minutes in 2024.
The conclusions in Watson’s pre-sanitised report mark the first formal inquiry to conclude that the Victorian Labor government enabled corruption involving the CFMEU, bikies and gangland figures. It has also been the first formal estimate of the cost to taxpayers.
The two sections embarrassing to Labor were stripped from the Watson report in January after the Irving-led administration was contacted weeks earlier by Queensland’s CFMEU Commission of Inquiry.
Three sources with knowledge of the matter said that in December, the commission flagged it intended to use its powers to obtain and publish the Watson report.
The Queensland inquiry is a royal commission-style probe called by the state’s LNP government last year and headed by conservative barrister Stuart Wood, KC, and is probing how improper conduct may have led to taxpayer-funded cost blowouts on publicly funded projects in that state.
In NSW, there have also been major revelations – prompting a state government inquiry – of alleged worker exploitation, mafia-style threats and a corporate cover-up involving major firms working on the Western Sydney Airport metro project.
The sanitised Watson report ultimately delivered to the Queensland commission by Irving in late January was still, according to two sources speaking anonymously given the report’s confidentiality, “dynamite”, albeit heavily redacted to also protect the identity of Watson’s inquiry witnesses.
The version that was set to be released on Wednesday – even without the deleted chapters – contained a litany of damning conclusions about massive corrupting of the Big Build, sources said.
Sources said the Queensland commission may have first twigged that the report it was handed in January was stripped of politically sensitive material because a summary included a dot point headed “governmental inaction on the CFMEU” but with no corresponding chapter or explanation.
“The crazy thing is that had these two sections not been whitewashed, Labor could have argued them away,” said a source with knowledge of the contents of the Watson inquiry. “It’s their removal that creates the problem.”
A second source, who asked to remain confidential because of the sensitive nature of the issues, said the commission would publicly grill Watson on Wednesday about his report and that his appearance would probably be dominated by questions about precisely why and when the sections were removed.
Irving has appeared an often-fearless administrator. Under his watch, the CFMEU has sacked dozens of officials around the nation, implemented major reforms, appointed dynamic union leaders such as Michael Crosby in NSW, and exposed several cases of serious corruption.
Irving has also moved aggressively to push gangland figures such as Mick Gatto from the construction sector, while confronting serious violence and standover activity in NSW and Queensland.
But his administration has also been hampered by missteps, resignations and persistent accusations it is too close to the federal Labor government that created it to ward off demands from the federal opposition that the CFMEU face another royal commission or be deregistered.
The administration’s initial and now abandoned sanitising of Watson’s report in January also came after the federal opposition separately demanded its release.
On December 9, Irving was contacted by federal opposition industrial relations spokesman Tim Wilson requesting the immediate public release of Watson’s report.
“In the interests of transparency, the clear public interest and to ensure public confidence is sustained that you are acting to clean up the union, I would encourage you to act swiftly on its release. I understand any report from Victoria is likely to be sensitive. However, delaying its release will only create concern that there is an attempt to cover up misconduct,” Wilson wrote to Watson.
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Nick McKenzie is an Age investigative journalist who has three times been named the Graham Perkin Australian Journalist of the Year. A winner of 20 Walkley Awards, including the Gold Walkley, he investigates politics, business, foreign affairs and criminal justice.Connect via email.