Cover-up, bribe claims hit construction giant’s government mega-projects

The international construction giant building Victoria’s North East Link and the Sydney Metro train terminals at Australia’s newest international airport is accused of covering up a worker exploitation scandal and concealing evidence of unlawful conduct on its projects.

Webuild faces union accusations that it knew “illegal employees were working” at the Western Sydney Airport and forced out its own industrial relations manager after he repeatedly raised concerns about inaction against a key subcontractor’s suspected unlawful behaviour.

The subcontractor, Future Form, is a booming formwork company and sponsors the Canterbury Bulldogs in the NRL, and was on the weekend exposed by this masthead and 60 Minutes over suspected involvement in violent standover activity and alleged systemic underpayment to workers.

Future Form has “categorically” denied all wrongdoing and vowed to “clear our name” as federal government ministers said on Monday they had asked the workplace regulator and the airport project’s delivery authority to investigate.

Company emails reveal the CFMEU administration repeatedly warned Webuild that Future Form was accused of engaging in serious malpractice – concerns Webuild’s industrial manager also repeatedly raised prior to his removal.

In a still-confidential interim report, seen by this masthead, the CFMEU administration’s chief investigator, Geoffrey Watson, SC, also alleged that Webuild’s knowledge of the suspected wrongdoing on the taxpayer-funded airport project created “serious difficulties” for the giant firm, given it was obliged to prevent such malfeasance and report it to the Minns government.

Webuild is also facing questions about its response to alleged corruption and gangland infiltration on Victoria’s North East Link project, where the huge Italian firm is part of the consortium delivering the $26 billion road project bankrolled by state and federal taxpayers.

In addition to previous reports of gangland infiltration, this masthead has uncovered formal complaints lodged with Victorian officials from subcontractors who claim they had to pay “bribes” to third parties to win contracts on the project, and blame the consortium for enabling corrupt practices in partnership with crooked CFMEU officials.

One subcontractor complaint, from July last year, was sent to a government official responsible for the North East Link and claimed that unlawful conduct was “clearly displayed on the North East Link project”.

In response, the official urged the complainant to report any known or suspected criminal conduct to police.

Webuild’s management of the Western Sydney Airport site and its use of subcontractor Future Form to perform key works has been under scrutiny since last year.

The project has a budget of $11 billion, but a dispute with the Webuild-led consortium building the project threatens a blowout of up to $2.2 billion.

This year, Sydney Metro – which oversees the rail work for the airport – requested Webuild investigate union administration allegations that Future Form was engaged in underpayments and sham contracting. If proven, the claims would mean the company had breached the Minns government’s procurement policy.

A Sydney Metro spokesman said Webuild had advised on July 8 that its investigation was concluded and “the allegations were not substantiated”.

However, emails and documents show that two weeks earlier, senior Webuild managers were in possession of damning material that indicated Future Form was indeed breaking workplace laws.

On June 25, two senior Webuild managers accompanied the CFMEU on an inspection of the airport project site, where, according to the two union organisers present, Webuild conceded the site was dangerous and needed to be immediately shut down.

The incident was the second time that part of the airport site was shut down due to safety concerns involving Future Form.

On March 7, a Future Form worker fell through scaffolding, which prompted SafeWork NSW to attend the site and issue rectification notices.

On June 25, Webuild sent the union administration records suggesting Future Form was denying dozens of workers their workers’ compensation protection and was potentially paying some employees less than half the contracted rate – an average of just $65,000 a year.

Webuild was subsequently sent formal notices by the administration advising that it suspected “underpayment or non-payment of entitlements including superannuation, hourly rate, overtime, meal allowances, income protection, redundancy contributions and other allowances”, and sham contracting.

Sham contracting is an illegal practice that involves paying workers as though they are subcontractors rather than employees to avoid the cost of entitlements.

The CFMEU administration separately emailed Webuild senior management, including a high-ranking project manager, to warn that the workers’ compensation records suggested Future Form workers “are underinsured and undercovered by the [workers compensation] insurance company iCare”.

The next morning, on June 26, following the union’s request for records, a Webuild representative provided further files on Future Form, but under a different company name.

According to Watson’s provisional findings, these files also contained serious anomalies about the pay rates and insurance cover of Future Form workers, most notably the fact that insurance had only been issued that morning – apparently in response to the union’s investigation.

The new insurance coverage indicated that the workers had not been previously covered, Watson said. The failure to put workers’ compensation insurance in place can lead to criminal prosecutions and severe financial penalties.

In his provisional report, Watson flagged that the documents suggest sham contracting on the airport site went higher than just Future Form and that Webuild “knew and accepted that illegal employees were working on this government site”.

According to three sources aware of the industrial relations manager’s account, including serving and former Webuild insiders, the manager repeatedly pushed Future Form to clarify concerns he held that the company might be engaged in unlawful or improper workplace behaviour.

The sources said the manager was not only never given the information he requested, but rebuffed by his superior at Webuild when he tried to demand answers. After this, the sources said, he was told his position was being made redundant.

“He was pushed out because he was making noise about Future Form that Webuild felt was inconvenient. It’s a disgrace,” a supporter of the manager said.

Webuild declined to comment on the underpayment and sham contracting allegations related to Future Form.

It did not respond before publication to questions about why its industrial relations manager tasked with investigating the matter was removed or how it was assured of Future Form’s compliance when reporting to Sydney Metro.

The Spark consortium delivering the North East Link, which includes Webuild, declined to comment.

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