Underworld grip on Big Build sized up by government as contractors warned to purge suspect players
The CFMEU has in turn played a decisive role in which firms can secure contracts on major construction sites, including CBD developments and Big Build infrastructure projects.
Federal police are investigating if payments to companies linked to Gatto and his gangland associates have been made to unlawfully secure union backing on large projects or involve potential money laundering or accounting offences.
In March, the AFP raided Melbourne accountant Charles Pellegrino, who fronts several companies suspected to have received payments police suspect were intended for Gatto, Khoury or other construction industry or union players.
No charges have been laid in connection to the investigation. There is no suggestion Malcolm, Pellegrino, Khoury or Gatto are guilty of any offence, only that police are investigating why construction firms are paying companies controlled by Pellegrino and Malcolm. Gatto and Khoury did not respond to inquiries but have previously denied wrongdoing. Malcolm was unable to be contacted by this masthead.
An AFP spokesperson said Tuesday's raid formed 'part of the AFP's response to allegations of corruption in the Victorian building industry'.
The leaked Victorian Infrastructure Delivery Authority (VIDA) files obtained by this masthead reveal the peak Big Build agency is, alongside the federal police and a host of other government bodies, seeking to combat the construction industry nepotism and corruption exposed in this masthead's Building Bad series.
Six sources working with Big Build contractors, speaking anonymously to discuss confidential information, told this masthead that after the scandal erupted, Big Build and Labor officials were no longer encouraging contractors to acquiesce to CFMEU pressure.
Some said they had previously warned the Allan government about the problems that have now sparked police investigations and industry reform, and seen the CFMEU plunged into administration.
While sources said gangland figures were seeking to adapt to the Building Bad crackdown, the surge of recent scrutiny was 'bad for business'.
This masthead can also reveal that Gatto has taken the extraordinary step of threatening to sue the CFMEU administrator's chief investigator, Geoffrey Watson, SC, claiming that Watson's public denouncement of Gatto had 'caused persons in the construction industry community to refuse to do business with Mr Gatto'.
In a letter sent recently to Big Build contractors by VIDA's director-general, Kevin Devlin, the firms are urged to stamp out 'violence, bullying, harassment and intimidation' and refuse 'requests or demands for preferential treatment of contractors, subcontractors, suppliers or individuals'.
Devlin, without identifying any individuals in his letter, has also demanded the Big Build contractors take 'all appropriate steps to prevent the presence of persons with known criminal associations on site' and implement 'robust controls' to combat risks of 'fraud and corruption by suppliers and subcontractors … [including] so-called 'ghost shifts', double dipping, inappropriate substitution of labour or materials and theft of materials'.
Senior industry sources said Devlin was one of several senior public servants who had privately expressed frustration at how his previous warnings to the government about the problems on the Big Build had gone unheeded.
VIDA has also created a secret list of suspected gangland-linked entities, which it is attempting to map across the Big Build as it seeks to have underworld-linked firms removed from government projects. Big Build companies have been asked by VIDA to check their supply chains and in some cases remove firms from Big Build projects.
The VIDA list features multiple firms and individuals that are also separately being targeted in the federal police probe into payments linked to Gatto.
One of those also named on the VIDA list is Big Build contractor Nick Maric, whose company LTE boasts on its website that it is helping construct the West Gate Tunnel. LTE has made multiple 'consulting' payments to the suspected front companies now under AFP investigation.
'LTE Construction Group have constructed nearly 1000 bored piles for bridge foundations, noise walls and other structures all socketing into hard basalt,' the company's website reads. 'This includes occupation works for bridge piles at the M80 interchange, night shift and weekend works as required by the project to meet program requirements.'
In addition to Gatto and Khoury, Maric's business has connections to Comanchero outlaw bikie gang members involved in the construction sector and who are also named in the VIDA file: Bemir Saracevic and Krstomir Bjelogrlic. Maric denied any wrongdoing.
The VIDA list also names a bikie associate and MC Labour manager, Matt Lunedei. MC Labour has won a half-billion-dollar contract to supply workers to the Metro Tunnel and was recently embroiled in a ghost-shift scandal involving two union delegates.
CFMEU sources said MC Labour, which was known to have employed gangland and bikie figures on the Big Build, is poised to be thrown off the Metro Tunnel project and replaced with another labour hire provider.
The VIDA documents also name Rangedale, a company that had made multiple payments to front companies linked to the underworld as it conducted major works on several Big Build sites. Big Build officials have begun requesting contractors examine their relationship with Rangedale, a move which sources said had led to Rangedale being ousted from government sites.
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Asked about the list, a VIDA spokesperson said: 'Following recent reports of alleged illegal misconduct, checks were made on the identified individuals or entities to see if they were currently engaged on Big Build projects.'
When pressed about how many of the identified firms were still on the Big Build, the spokesperson said: 'Recent reports of alleged illegal misconduct have been referred to Victoria Police and enquiries are ongoing. It would be inappropriate to sanction individuals without an appropriate process.'
Also named on the VIDA files are several bikies – such as Joel Leavitt – who last year were sacked as Big Build CFMEU delegates but who continue to exercise influence over Big Build subcontractors.
The VIDA list names two firms started recently by Leavitt, along with a construction health and safety firm founded recently by ex-Mongols bikie boss and union delegate Tyrone Bell in partnership with a former CFMEU organiser, who is also named individually on the VIDA list.
While this masthead has uncovered no evidence that Bell and his business partner have managed to gain work via the Big Build, another figure on the VIDA list, Billy Mitris, (who does not have criminal convictions) was earlier this year still running two companies working on major government projects, including North East Link.
Mitris, who has ties to underworld figures and sacked union boss Elias Spernovasilis, controls a labour hire firm called X-Forces, which has employed veterans on the North East Link project.
Mitris gained access to the North East Link via his close connections within the CFMEU, sources said.
In his letter, Devlin, the VIDA director-general, told Big Build contractors they must immediately report 'any known or suspected instances of … individuals or companies that you suspect may be of ill-repute being involved in or having connections to your projects'.
'VIDA can potentially exercise contractual powers to direct the removal of particular individuals from projects,' the letter says.
'Depending on the issue, it may also be appropriate for your organisation to report the matter to another body such as the Fair Work Ombudsman, Fair Work Commission, WorkSafe, Comcare, Independent Broad-based Anti-corruption Commission (IBAC), Labour Hire Authority, the CFMEU administrator or the Australian Competition and Consumer Commission (ACCC), all of whom have reporting channels available.'
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