Flames and fear: Violence erupts on state’s construction sites

Violence in Victoria’s construction industry has erupted again, with more firebombing attacks blamed on underworld figures seeking to profit from private and government building projects.

At least two firebombings occurred in January, including an arson attack late last month outside the northern suburbs family home of an employee of a major construction company. In the other attack, on January 11, heavy machinery worth millions of dollars was torched at a major Southbank building site.

The revelations come amid the release of a landmark report from corruption-busting lawyer Geoffrey Watson, SC, that concluded the Allan government’s signature infrastructure projects have hosted drug trafficking, systemic corruption and bribery, bikie gangs and the shocking sexual exploitation of women, at an estimated cost to the taxpayers of $15 billion.

The latest arson attacks are connected to about a dozen firebombings over the past 18 months, and industry sources, speaking anonymously due to fear of repercussions, suggest that gangland syndicates believe they can shrug off growing police and regulatory attention, as with Victoria’s tobacco wars.

The January 11 firebombing targeted machinery being used by the Delta Group, a nationwide demolition giant that had two of its earthmoving rigs – worth up to an estimated $2 million each – torched on other large sites in late 2024.

The late January attack on the construction company employee involved the torching of the man’s car outside his home and is connected to two other firebombings last year.

While there have been no arrests over the January fires, Taskforce Hawk, the elite police taskforce launched 10 months ago to combat building industry organised crime, has dramatically stepped up its activity, adopting an Al Capone-style investigative strategy to disrupt the sector.

American crime boss Capone was famously charged with tax offences, despite police suspecting his involvement in a range of more serious activities.

Hawk was formed as the Victorian government faced immense pressure about its failure to combat corruption and waste on government sites.

Ex-union leaders with alleged deep gangland links, including former senior CFMEU official Derek Christopher, have been hit with relatively minor charges by Taskforce Hawk as police press on with longer-term probes.

The owners of a suspected corrupt major contractor on Victorian government’s Big Build have also faced relatively minor charges amid ongoing investigations by Hawk, contributing to the firm’s sudden collapse.

Hawk has also laid serious criminal charges against several alleged gangland figures accused of standing over a large building firm, and separately charged underworld arson-for-hire operatives over two of the arson attacks in the industry.

The federal police continue to probe Melbourne gangland figures John Khoury and Mick Gatto over allegations they received suspect payments from construction firms, including contractors on the Big Build.

The revelations of fresh and ongoing criminal activity and probes came as corruption-busting lawyer Geoffrey Watson’s final report from his 18-month investigation into the CFMEU was released.

The damning report, which he also spoke to in remarkable testimony at Queensland’s inquiry into the CFMEU on Wednesday, found the union had a contempt for the law, that the Victorian government’s $100 billion Big Build program had fuelled that lawless environment and the state had then turned a blind eye out of fear of disrupting its signature infrastructure projects.

Watson told the inquiry that police were “dormant” on the CFMEU’s bad behaviour until recently.

He said, as with politicians and bureaucrats, the police had a culture of ignoring the problem.

“Police regarded these as industrial issues to be [worked out] between bosses and unions, or between unions and unions. The police allowed this to get out of hand, and there was nothing being done,” he said.

As an example of the close relationship between the underworld and the union, Watson described in his report then CFMEU boss John Setka inviting Gatto ahead of premier Daniel Andrews to the union’s annual AFL grand final breakfast.

“A message came back from Andrew’s [sic] office suggesting that, if Gatto was attending, the premier would not,” the report says.

“When he heard this, Setka laughed and said ‘F--- the premier’. Gatto was given a seat at the head table.”

Watson noted Gatto had such strong connections with the CFMEU that he had been able to stop work at any site.

“Now is the time for change. Now is the time finally to break Gatto’s malignant influence over the CFMEU and the Victorian building industry,” the report says. “Now is the time to get rid of Gatto once and for all.”

Gatto has previously denied wrongdoing.

Watson said he believed billions of dollars in taxpayer money, including federal money, was directed towards organised crime.

“I was especially hurt when I found out a lot of these projects were being partially funded by the federal government. Why isn’t that a central issue? … If no harm has been done, you could overlook it, but harm was being done.”

Watson said the Victorian government could have reined in the “out of control” CFMEU if it had chosen to act, blaming politicians and public servants for the inaction.

“If someone had stomped on it earlier, it would have stopped earlier,” he told the inquiry, pointing to the progress already made by the union’s administrators.

The media, particularly this masthead’s Nick McKenzie, had been writing consistently about serious allegations since 2010, he said.

“I just don’t understand if it was that big in the newspapers, why the government wasn’t saying ‘hold on’,” he said.

Watson said those suggesting historical connections between unions and the Labor Party were to blame did not consider the plainly “strained” relationship with Setka.

“I wasn’t looking into corruption in the Labor Party, I was looking into corruption in the CFMEU,” he told the inquiry. “My theory is that what happened here is the CFMEU built up such a momentum of authority and power that people were pretty scared of them. The CFMEU could bring the Big Build to a halt.”

Watson said the government “just wanted to get the projects finished”, and so had to “keep the CFMEU on side”.

“The government was really beholden to the CFMEU,” he said. “I couldn’t see the Victorian government doing anything.”

Watson’s report and testimony sparked opposition calls for Victoria’s anti-corruption commission to investigate, including his finding that the CFMEU’s behaviour could have poured about $15 billion “directly into the hands of criminals”.

Opposition Leader Jess Wilson accused Premier Jacinta Allan of being “utterly compromised” because she was responsible for many of the government projects as transport infrastructure minister and now premier.

“She cannot continue to deny knowledge or fail to take responsibility,” Wilson said. “She is the minister responsible for ensuring that tax dollars were being respected, not being funnelled into organised crime and into corruption.”

The opposition has committed to a royal commission into the CFMEU if elected and pledged to set up a new industry watchdog named Construction Enforcement Victoria.

Shadow attorney-general James Newbury said the scandal was the worst corruption the state had ever seen and should be investigated by the Independent Broad-based Anti-corruption Commission.

“Is there any more reason for our chief integrity agency to investigate by five o’clock today?” Newbury said.

In December, a parliamentary inquiry recommended IBAC be given “follow the dollar” powers to investigate the use of taxpayer money that flows through to subcontractors, a move IBAC Commissioner Victoria Elliot supports. She has previously told MPs that the commission has been hamstrung investigating allegations where there is not a direct funding link to a government agency.

Prior to Watson’s report being released and his testimony, Victorian Attorney-General Sonya Kilkenny said the government would respond once it had seen the report.

“So not only is it impossible for me to comment on the allegations and the report, it would be entirely irresponsible of me to do that,” Kilkenny said.

Speaking broadly rather than responding to specific allegations, Kilkenny said governments should do the work required to stamp out illegal criminal conduct on infrastructure projects.

“Of course, that would be a priority of any government to ensure that, and that will be the work that this government continues to do,” she said.

Kilkenny also pointed to the Wilson review initiated after this masthead revealed organised criminal infiltration of taxpayer-funded projects, and to the recommendations Victoria has implemented.

Watson last year dismissed the Wilson review as being effectively a cover-up because it was not asked or empowered to do the necessary work.

That report recommended improvements in how complaints about behaviour on government projects were reported, with many of these reforms passed in parliament late last year.

The Wilson review differed from the inquiry in Queensland, which has powers akin to a royal commission, because it looked at the process around how governments received and responded to complaints about behaviour on taxpayer-funded projects, rather than the behaviour itself.

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