Summary: A series of reports, investigations, and political actions have emerged concerning alleged misconduct, corruption, and organized crime infiltration on Victoria’s “Big Build” infrastructure program. Allegations include bribery, extortion, ghost shifts, and links to outlaw motorcycle gangs. A report by integrity investigator Geoffrey Watson, SC, estimated potential costs to taxpayers at $15 billion, a figure disputed by the state government. These matters have led to arrests, calls for expanded anti-corruption powers, and debate over the necessity of a royal commission.
Key Allegations and Findings
The Watson Report
An independent report titled “Rotting from the Top,” authored by Geoffrey Watson, SC, and commissioned by the CFMEU administrator, detailed extensive allegations of corruption and criminality within the union’s Victorian branch. The report was submitted to the Queensland Commission of Inquiry into the CFMEU.
Key allegations contained in the report include:
- Systemic Corruption and Organized Crime: Major infrastructure projects allegedly enabled systemic corruption, drug trafficking, bikie gang activity, and the sexual exploitation of women.
- Union Leadership: The report attributes the CFMEU’s descent to the leadership of former official John Setka. Watson concluded that Setka’s leadership transformed the union into an enabler of corruption and organized crime.
- Drug Distribution: Intelligence suggested bikie gangs used government building sites as hubs for drug distribution.
- Bribery for Jobs: Workers reportedly paid bribes to union officials and delegates to secure high-paying jobs on Big Build sites.
- “Ghost” Shifts and Kickbacks: Union delegates and health and safety officials allegedly received payments from multiple firms simultaneously for the same shifts. Labour hire firms reportedly paid bribes to secure CFMEU Enterprise Bargaining Agreement (EBA) endorsements.
- Underworld Figures: The report details the alleged involvement of figures like Mick Gatto, described as a “fixer” earning over $5 million annually. Watson criticized Gatto for running what he termed a “racket” that extorted money from contractors.
- Sexual Exploitation: Allegations were made that female workers were exploited on worksites.
- Employment of Individuals with Criminal Backgrounds: The report states that the union actively employed individuals with criminal histories, including convicted killers, and forced contractors to employ patched bikies and other violent individuals.
- Cost Estimate: The report estimated that CFMEU actions added approximately 15 percent to project costs, leading to a “very rough” estimate of $15 billion in costs to Victorian taxpayers. The report also stated that a significant portion of this amount was allegedly “poured directly into the hands of criminals and organised crime gangs.”
Removed Report Sections
Sections of Watson’s report were removed by CFMEU administrator Mark Irving, KC, prior to its public release. Irving stated the sections were removed because he was “not satisfied that they were well-founded or properly tested.” Watson stated he “was directed to make the changes.”
The removed material reportedly concluded that the Victorian government was aware of corruption on the state's rail and road projects—involving CFMEU officials, organized crime figures, and bikie gangs—and chose to take no action. The report allegedly suggested that the government's inaction was not primarily due to deteriorating relations between Labor and the CFMEU, but rather a fear that adverse industrial action could halt the “Big Build” projects.
Political Donations and Contractor Links
Donations to Victorian Labor
Records show that Victorian Labor received campaign donations from several firms involved in Big Build projects that are now subject to police action over suspected corrupt payments or have links to organized crime figures.
- B K Labour: This traffic management firm, which worked on the Big Build, donated at least $3,264 to Victorian Labor in May 2022. Its owner, Bernard Kearney, was charged in December with fraud related to allegedly fake Big Build invoices. A report by Watson indicated that B K Labour was reportedly compelled onto the Big Build by former union boss Joe Myles.
- Anthony Ciccone (Cycon Civil and Project Labour Solutions - PLS): Donated $3,264 to Victorian Labor in 2022. Ciccone engaged Mick Gatto to assist with a dispute involving his Big Build operations. PLS employs the wife of former union boss Derek Christopher. Cycon is identified in Watson’s report as employing a union delegate with alleged Comancheros connections. Ciccone’s Big Build business also has a partnership with a firm operated by former Finks bikie Tom Estcourt. Ciccone stated he had no recollection of the donation.
- CCL: This Big Build labour hire firm is listed as having given state Labor $3,264. Watson’s report states that CCL agreed to hire former Bandidos boss Johnny "Two Guns" Walker as a CFMEU health and safety representative while he was serving a manslaughter sentence.
- Unnamed Firm: An owner of a Big Build business, which is involved in two ongoing federal police probes for allegedly bribing former union boss John Perkovic and making suspect payments to another police target, donated $5,488 to Victorian Labor in 2022.
- Stan Papayianneris’s Company: This CFMEU-aligned company donated $3,550 to Labor. Papayianneris was previously a business partner of Jadran Delic, described as an “underworld figure” and an associate of former union boss John Setka. Papayianneris has not been accused of wrongdoing.
Government Response to Donations
A Victorian Labor spokesperson stated that the donations were made prior to the surfacing of these allegations and complied with legal requirements. The spokesperson added that Victorian Labor cannot accept donations from the CFMEU and has a process for reviewing all donations. Premier Jacinta Allan stated that donations were a matter for the party, were lawful, and had been appropriately declared.
Police Investigations and Arrests
Taskforce Hawk
Victoria Police established Taskforce Hawk in mid-2024 to investigate organized crime and union corruption on taxpayer-funded infrastructure projects. The taskforce has resulted in multiple arrests and charges.
Arrests made by Taskforce Hawk and other police units include:
- Joel Leavitt: A 32-year-old former CFMEU official and alleged Bandidos bikie member was arrested in connection with an investigation into extortion. The investigation relates to an alleged demand for $663,000 from a victim on January 19, 2026. Leavitt was cited in the Watson report as earning over $200,000 annually as a CFMEU health and safety representative and was provided with a government-funded vehicle. Two other men, a 32-year-old Watsonia man and a 55-year-old Mernda man, were also arrested.
- John Setka: The former CFMEU boss faces new charges related to allegations that he issued a threat to an official of the CFMEU administration on Christmas Day 2024. He was also charged for allegedly committing offenses while on bail. Setka denied threatening anyone.
- Bernard Kearney: Owner of B K Labour, charged with fraud related to allegedly fake Big Build invoices.
Witness Intimidation
Federal police have warned that investigations into building industry crime and corruption are being hindered by threats from organized crime figures and a culture of fear within the industry. A confidential letter from a high-ranking AFP officer stated that many business owners contacted for assistance "have been intimidated into not co-operating with police after receiving threats."
Firebombings
A series of firebombings have occurred, including an attack on machinery at a Southbank building site and a construction executive's car. In Sydney, the home of construction CEO George Bardas was firebombed. NSW Police deemed the fire suspicious.
Government and Agency Responses
Premier Jacinta Allan’s Position
Premier Jacinta Allan has stated that she referred allegations of misconduct to IBAC in July 2024, as well as to Victoria Police and the Fair Work Commission. She has disputed the $15 billion cost estimate from Watson’s report, characterizing it as “untested” and “not well-founded or properly tested.” Allan rejected calls for a royal commission, stating that a previous royal commission “failed” and that the focus should be on “taking action now.” She has cited the work of Taskforce Hawk and the cancellation of construction licenses as evidence of government action.
IBAC’s Jurisdiction and Powers
IBAC confirmed that it did not investigate Premier Allan’s referral concerning allegations of organized crime and graft on taxpayer-funded projects, stating the matters were outside its remit. IBAC has requested expanded powers, including the ability to “follow the dollar” to trace public funds through subcontractors and a lower threshold for launching investigations. The parliament’s integrity and oversight committee recommended in December 2024 that IBAC be granted these powers.
Calls for Expanded Powers and Royal Commission
- IBAC: The commission has renewed calls for stronger powers, including “follow-the-dollar” powers and clearer definitions for “public officer” and “public bodies.”
- Opposition: Opposition Leader Jess Wilson has proposed a royal commission into alleged CFMEU corruption and has introduced terms of reference. The opposition has also proposed US-style anti-racketeering laws and establishing a police taskforce to seize assets.
- Greens: The Victorian Greens have proposed granting IBAC “follow the dollar” powers.
- Former Officials: Former IBAC commissioners Robert Redlich and Stephen O’Bryan, as well as former IBAC CEO Alistair Maclean, have called for a royal commission or similar inquiry.
- Government MPs: Multiple Victorian government MPs have expressed support for a royal commission, citing concerns that refusing an inquiry could create a perception of government culpability.
Legislative developments
- The government adjourned a parliamentary debate on an omnibus justice bill to prevent a Greens amendment granting IBAC “follow-the-money” powers from passing.
- An opposition-proposed bill to give IBAC "follow the dollar" powers passed through the Victorian upper house but subsequently failed in the lower house.
- The government has stated it is developing its own IBAC reform bill.
Victorian Ombudsman Warning
The Victorian Ombudsman warned that the Victorian Infrastructure Delivery Authority (VIDA), the agency managing the Big Build program, is exposed to corruption risks due to inadequate record-keeping regarding taxpayer fund expenditures. The ombudsman referred its concerns to IBAC and the Victorian Auditor-General’s Office.
Budget Constraints on Integrity Agencies
IBAC and the Victorian Ombudsman have warned of investigation delays due to funding gaps in the state budget. IBAC CEO Alison Byrne stated the agency will need to make staff redundant and delay investigations. Ombudsman Marlo Baragwanath warned that serious matters will not be investigated.
Contractor Allegations and Alleged Fraud
North East Link Delays
Documents released by the Victorian opposition indicate that the consortium building the North East Link, Spark, complained to the government in March 2023 about the CFMEU hindering construction. The consortium stated that tunnelling was delayed by up to two months due to “CFMEU driven assembly.” The project’s budget escalated from an initial $10 billion to $26 billion by December 2023, attributed by the government to expanded scope, environmental regulations, and global economic disruptions.
Metro Tunnel Fraud Allegation
Victorian government officials reportedly failed to formally alert Taskforce Hawk about allegations that employees of Schindler Group stole $6 million from the Metro Tunnel project. The alleged fraud, which did not involve the CFMEU, was discovered after a major flooding event. Schindler admitted the fraud, dismissed employees, and repaid the $6 million.
Suburban Rail Loop Allegations
Contractor and Labor donor Anthony Ciccone alleged that a subcontractor provided expensive vehicles and jet-skis to project managers on the Suburban Rail Loop, leading to its removal from the project. A Suburban Rail Loop Authority spokesperson urged anyone with information about unacceptable conduct to report it.
Political and Union Figures
John Setka
Former CFMEU official John Setka faces new criminal charges related to an alleged threat made on Christmas Day 2024. He was also charged by Taskforce Hawk for allegedly using a carriage service to menace or harass administration officials. Setka has denied the allegations.
Mick Gatto
Gangland figure Mick Gatto is described in Watson’s report as a long-term detrimental influence on the building sector. Records reportedly show that front companies linked to Gatto, which are under federal police investigation, received multiple payments from Big Build contractors. Gatto has denied receiving payments from the Big Build, government, or union, and has initiated defamation action against Watson.
Union Leaders Filmed with Gatto
Two prominent Victorian union and Labor powerbrokers, Earl Setches and Peter Marshall, were filmed dining with Gatto on a yacht. CFMEU administrator Mark Irving introduced rules in October 2024 to prevent union organizers or officials from meeting with Gatto or other industrial mediators.
Ongoing Inquiries
- Queensland Commission of Inquiry: A royal commission-style probe established by the Queensland government is investigating CFMEU-related matters. The inquiry has compelled Transport Australia to provide confidential records and is expected to question Geoffrey Watson regarding the removal of sections from his report.
- Fair Work Commission: The commission has documented over 1,000 complaints regarding CFMEU conduct, with 600 specifically related to Victorian construction sites.
- Taskforce Hawk: The Victorian police taskforce continues to investigate criminal activity in the construction industry.