AFP asks top builders for details on payment to underworld figures

The Australian Federal Police has dramatically entered the CFMEU and building industry scandal, revealing how a secret probe by detectives has uncovered huge sums of money paid to underworld figures to help secure union peace.

In a letter sent to up to a dozen companies by a senior AFP officer, the policing agency outlines suspicions that “building companies have been required to make facilitation payments to organised crime to prevent orchestrated stoppages at building sites”.

The letters request the firms – which operate in Victoria, NSW and Queensland, including on federal and state government funded projects – provide detectives with records and witness statements explaining why the payments were made.

The allegations described by the federal police in its letter are the strongest indication yet from any law enforcement agency of the extent of suspected organised crime in the nation’s building sector and highlight the challenge facing the Albanese government as it seeks to clean up the industry.

The administrator appointed 15 months ago by federal Labor to take over the CFMEU, Mark Irving, KC, has faced several days of intense scrutiny and political attacks over the efficacy of his reform work amid revelations his administration promoted a top union official despite warnings he was suspected to be corrupt.

The AFP correspondence, which has been obtained by this masthead from sources connected to the underworld, puts the spotlight on companies paying gangland figures and raises the question of why no firms have been held to account for their role in a system of suspect payments that has led to the sacking of multiple union bosses.

While the AFP makes no specific allegations against any company or individual, the agency states in general terms that its inquiry has uncovered a system in which firms were encouraged to pay off organised crime figures or face industrial disputation and “significant financial consequences for the building companies” told to make payments.

The AFP also alleges in its letter that some of the payments are suspected to have been disguised and involve “allegations of extortion and money-laundering”.

“These facilitation payments are known to be invoiced as consultancy and mediation services in some cases,” the letter states.

“AFP detectives would like to include in the witness statement requested any information and documents you may have that may be evidence of a facilitation payment being sought and made.

“Conversely, if you can say that the financial transactions … are legitimate business expenses incurred and paid for, that is also important to the AFP and should be included in the requested statement.”

The AFP has refused to disclose details of the investigation, but building industry and union sources said the agency was targeting up to 20 firms, including LTE, which operates on federal and state-funded projects in Victoria and Queensland, and Rangedale, which works on NSW and Victorian civil infrastructure works.

No charges have been laid and police suspicions have not been tested.

Both firms have previously featured in this masthead’s and 60 Minutes’ Building Bad series as having paid gangland identities Mick Gatto and John Khoury in order to cut deals with the CFMEU.

Building industry sources, speaking anonymously to discuss sensitive information, revealed another company that had placed Gatto on its books: Cobild.

The private construction firm has an estimated half a billion dollars’ worth of projects across Melbourne and in Byron Bay, and sources confirmed it made payments to Gatto to keep the CFMEU from pressuring it to offer union-brokered pay and conditions on its sites.

The payments from Cobild to Gatto, which have never before been reported, have been made as the firm expanded rapidly over the past three years.

Cobild has major projects in Victoria valued at between $70 million and $120 million in Toorak, Armadale and Frankston, as well as a luxury building venture in Byron Bay.

Cobild is owned by the Rotenberg family and managed by father and son team Coby and Rotem, who are not accused of any wrongdoing.

Gatto helped to organise a meeting between Cobild and the CFMEU in an attempt to ease pressure on the non-union firm.

The meeting took place prior to Irving’s appointment, who the federal Labor government commissioned to the CFMEU after this masthead’s Building Bad series broke last July.

Before Gatto’s intervention, the CFMEU publicly targeted Cobild with untested accusations its worksites hosted unsafe practices.

Coby Rotenberg did not respond to repeated requests from this masthead for comment and it is unclear whether Gatto remains on the firm’s payroll.

Gatto and LTE’s owner Nic Maric have previously denied all wrongdoing, while Rangedale has not responded to efforts to contact it.

In early October, Irving moved to freeze Gatto out of the industry after this masthead revealed how senior administration official Zach Smith, who runs the CFMEU for Irving in Victoria, had organised a secret meeting with the gangland identity and the union.

Irving wrote to Gatto warning he would use all his powers to destroy Gatto’s sway over the construction union.

Start the day with a summary of the day’s most important and interesting stories, analysis and insights. Sign up for our Morning Edition newsletter.