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The Federal Government's Royal Commission into Trade Union Governance and Corruption has heard that a Victorian trade union official cut a deal that saw cleaning firm Cleanevent give his union thousands of dollars in return for driving down workers' pay.

The Royal Commission has heard that Cleanevent, a subsidiary of Spotless, paid the Australian Workers Union (AWU) up to $25,000 a year under the agreement that traded off higher wages and casuals' penalty rates and saved the company about $2 million in labour costs.

The official, Cesar Melhem, who was AWU State Secretary at the time and is now a member of the Victorian Legislative Council, was involved in negotiations for the unusual deal with Cleanevent that kept staff on outdated WorkChoices-era agreements and meant some were paid about $18 instead of $50 an hour.

Melhelm has been summonsed to face the trade union royal commission for questioning early next week.

According to a report in Melbourne newspaper The Age, the allegation is the latest incident to implicate the upper house Labor MP in serious corruption allegations, after the Royal Commission last year heard evidence he spent almost $30,000 from a union slush fund on personal expenses without reimbursement.

On Thursday (28th May), the Royal Commission heard that Cleanevent and the AWU began working with the union in 2010 to extend the old workplace deal that paid staff below-award wages and banned industrial action.

Cleanevent Senior Manager Steven Webber said that when the company was acquired by Spotless in 2010 it was agreed that the 2005 enterprise agreement would be extended by way of a memorandum of understanding.

Webber said he attend the AWU's office to meet with Melhem, who told him it would be necessary for Cleanevent to pay $25,000 a year for membership fees.

In a sworn statement, Webber explained "the way this was put by Mr Melhem was that the AWU wanted there to be a certain number of union members amongst Cleanevent employees, and that up to $25,000 would be paid by Cleanevent on behalf of employees that were or would become union members."

Counsel assisting the inquiry Jeremy Stoljar said the benefits to Cleanevent included savings in the order of $2 million which it would otherwise have paid its employees in wages and penalty rates. He said the AWU also benefited under the deal by inflating its membership numbers, which, in turn, gave it a greater level of representation on the Labor Party conference floor.

Stoljar stated "in short, the benefits to Cleanevent and the AWU are obvious (and) the persons who miss out are the workers."

AWU National Secretary Scott McDine said on Thursday the royal commission was a politically motivated "witch hunt". 

8th October 2008 - CLEANEVENT DENIES ALLEGATIONS OF ILLEGAL SUBCONTRACTING

20th August 2008 - LOVETT STANDS DOWN AT CLEANEVENT

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