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How QLD Construction Can Navigate the Legal Fallout from the CFMEU Corruption Crisis

  • Writer: John Merlo
    John Merlo
  • 2 hours ago
  • 22 min read

LEGAL NOTICE

This article discusses findings and allegations from the Watson Report into the Construction, Forestry and Maritime Employees Union (CFMEU), commissioned by the Queensland Government and publicly released in February 2026.

 

Important Qualifications:

  • This article reports on public documents, official reports, and media coverage

  • All allegations discussed have not been tested in court unless specifically stated

  • This article does not make independent factual assertions beyond what is contained in cited sources

  • The Watson Report's findings represent the investigator's conclusions, not judicial determinations

  • All persons are presumed innocent until proven guilty


Readers should seek independent legal advice regarding any specific matters discussed herein.



Key Takeaways

  • Corruption is Real and Documented: The Watson Report detailed how criminals used EBA sales, "ghost workers," and extortion to skim billions. These methods are now red flags for regulators in Queensland.

  • Enforcement is Happening Now: Victoria's Taskforce Hawk has already laid over 70 charges, proving this is not a theoretical risk. Integrity bodies like the NACC and CCC are actively investigating.

  • Compliance is Non-Negotiable: From 1 July 2026, new AML laws will scrutinize your transactions. Your contracts must now include specific anti-corruption and audit clauses to protect your business.




Table of Contents



The public release of Geoffrey Watson SC's comprehensive report on the Victorian CFMEU branch in February 2026 was a seismic event for Australia's construction industry. It wasn't just an exposé; it was an autopsy of a systemically corrupt union branch that had, in the report's own words, ceased to be a trade union and become a "crime syndicate."


While the report focused on Victoria, its findings—and the federal response—have created a new and perilous legal landscape for every construction business in Australia, especially in Queensland. With major state and federal investment pouring into local projects, the practices uncovered in Victoria are now the primary red flags for regulators here.


This guide is designed to be a comprehensive survival manual for Queensland construction businesses, breaking down the new threats and providing a clear action plan.



PART 1: THE CRISIS

Introduction: The Victorian Shockwave Hits Queensland

The CFMEU scandal, laid bare by the Watson Report, has fundamentally altered the legal risk profile for Queensland builders. The report's findings are not historical footnotes; they are a live playbook for federal and state regulators tasked with safeguarding billions in public infrastructure spending. For any construction law professional or business owner in Queensland, understanding this new environment is not optional—it's essential for survival.


Inside the Watson Report: How the Corruption Machine Worked

The "Crime Syndicate" Finding

The report's most damning conclusion was its characterisation of the Victorian CFMEU branch during the period examined as exhibiting what the report termed 'crime syndicate' characteristics in its investigative findings. The report's characterisation represents the investigator's conclusions based on his review of evidence, not judicial findings. According to the report's findings, this characterisation reflected allegations that the union engaged in systemic extortion, bribery, and was infiltrated by outlaw motorcycle gang (OMCG) members.


The Watson Report documents substantial taxpayer costs from corrupt practices across Victorian infrastructure projects. Specific examples detailed in the report include tens of millions of dollars in cost overruns on major projects due to inflated labour costs, fraudulent invoicing, and ghost worker schemes. The report identifies multiple individuals—including former union officials, underworld figures, and senior OMCG members—who the report alleges illustrate the depth of criminal infiltration into the union's operations.


No individuals have been convicted of criminal offences specifically arising from the Watson Report's allegations, and All persons referred to in the report are entitled to dispute its characterisations.


Case Study 1: The EBA Black Market

A striking example detailed in the Watson Report involves an individual who set up a company, secured a CFMEU EBA through expedited union approval processes, and allegedly sold the EBA-compliant company for a substantial sum within days. The report uses this as an example of what it characterises as an "EBA black market," where the report alleges contractors were quoted six and seven-figure sums for pre-approved labour hire EBAs.


The report found that EBAs, which should be negotiated agreements between employers and employees, were being treated as valuable commodities that could be bought and sold for profit, with union officials allegedly facilitating these transactions. The lesson for Queensland builders is clear: if an individual or entity offers a "pre-approved" EBA for a price, this practice as detailed in the Watson Report carries significant legal risks and could potentially expose parties to criminal liability.


This is not a legitimate business practice; it must be avoided and reported immediately to appropriate authorities.


Case Study 2: The Alleged "Industrial Mediation" Arrangement

The Watson Report details allegations that builders paid substantial retainers to individuals described in the report as underworld figures for so-called 'industrial mediation' services. The report characterises these arrangements as having the operational characteristics of extortion, with builders allegedly paying these fees to prevent union-instigated industrial disruptions that could halt construction sites at enormous financial cost. The report suggests these payments functioned as protection money rather than legitimate service fees, with the report estimating one such arrangement generated millions of dollars annually for the recipient.


The report describes a model where the threat of CFMEU industrial action was weaponised to extract payments from builders who feared costly site shutdowns. These arrangements have not been tested in court proceedings, and individuals referred to in the report in relation to these allegations are entitled to dispute the characterisations and maintain that their services were legitimate.


The broader lesson here is that any arrangement where threats of industrial action are used to extract payments is a high-risk activity that will attract intense scrutiny from law enforcement and may constitute criminal conduct. Businesses should seek immediate legal advice before engaging with any individual or entity where such practices are suspected. 


Case Study 3: Ghost Workers on Major Projects

The "ghost worker" scheme, particularly on projects like the Metro Tunnel, was another key method of fraud according to the Watson Report. Labour hire firms with alleged connections to organized crime figures allegedly billed for non-existent workers or "fake delegates" who earned over $200,000 a year for no actual work according to the report's findings.


The report details how certain labour hire companies enjoyed near-monopoly access to major government projects, with the Watson Report alleging these firms used OMCG members to "recruit" workers who brought what the report described as "violent skill sets" to worksites. This practice directly inflates project costs and funnels money to criminal entities.


The lesson for Queensland businesses is the critical importance of implementing robust site attendance verification systems for all labour hire personnel. Cross-referencing sign-in sheets, biometric data, and invoices is no longer just good practice; it's a necessary defence against fraudulent invoicing.

 

The Queensland Reality Check: Major Local Projects at Risk

It is dangerously naive to assume this is only a Victorian problem. Queensland is in the midst of an unprecedented infrastructure boom, creating fertile ground for the same corrupt practices to take root. The sheer scale of investment makes local projects a prime target.


Consequently, these high-value local projects are now under intense scrutiny from both state and federal regulators:


The significant federal funding and international oversight attached to many of these projects, especially the Olympics, guarantees a zero-tolerance approach from regulators. The risk of being caught in the crossfire is higher than ever.

 

 

PART 2: LEGAL THREAT #1 - ANTI-MONEY LAUNDERING (AML) LAWS

Understanding the Tranche 2 Tsunami

Australia's Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) laws are undergoing their most significant expansion in over a decade. These "Tranche 2" reforms, effective 1 July 2026, specifically target "gatekeeper" professions—the lawyers, accountants, and real estate agents who are essential to every major construction project.


This is a critical shift. While your building company may not report directly to the financial intelligence agency, AUSTRAC, your professional partners will be legally obligated to. They must now scrutinize your transactions, verify your ownership structures, and report any suspicious activity. This due diligence tsunami means your financial dealings will be under a microscope like never before.

 

8 Ways Criminals Launder Money in Construction

Understanding the methods is the first step to identifying them. Criminals exploit the construction industry's complexity, high cash flow, and numerous contractors to wash illicit funds.


Here are eight primary methods of money laundering you must be aware of:

  1. False Invoicing: This is the most common method. A criminal-controlled subcontractor issues an invoice to a legitimate project for materials that were never delivered or work that was never performed. The builder pays the invoice, and the "dirty" money is now integrated into the legitimate financial system as clean revenue. Detection signs include vague invoice descriptions, round-number figures, and a lack of corresponding delivery dockets or site records.

  2. Labour Hire Shams: Similar to false invoicing, this involves billing for "ghost" workers who don't exist or are never on-site. A labour hire company, often a front for an organised crime group, will submit timesheets for a dozen workers when only eight were present. The builder pays for twelve, and the excess funds are laundered. This is why robust site sign-in and verification processes are critical.

  3. Cash Payments: The construction industry has historically had a high volume of cash transactions. Criminals exploit this by using large cash sums, often from drug trafficking or extortion, to pay for materials or off-the-books labour. This injects the illicit cash directly into the economy, skirting the banking system's mandatory reporting thresholds for transactions over $10,000.

  4. Phoenixing Links: This involves the deliberate liquidation of a company to avoid paying debts, taxes, and employee entitlements, only for the same directors to re-emerge with a new company (and ABN) to continue trading. In a money laundering context, a phoenix company can be used to receive large payments for a project, which are then stripped out before the company is liquidated, leaving creditors with nothing and the criminals with clean cash.

  5. Complex Trust Structures: Criminals use layers of discretionary trusts and shell companies, often registered in different jurisdictions, to obscure the ultimate beneficial owner of an entity. Money is moved between these entities in a series of complex transactions, making it nearly impossible for auditors or law enforcement to follow the money trail and identify who is truly profiting from the criminal activity.

  6. Procurement Kickbacks: This is a classic form of corruption. A supplier will overcharge for materials and then "kick back" a portion of the inflated price to a corrupt procurement officer or project manager. These kickbacks are often disguised as "consulting fees" or other sham payments made to an associate or a shell company controlled by the corrupt employee, effectively laundering the proceeds of the fraud.

  7. Inflated Variations: A contractor with criminal links may deliberately underbid for a project to win the contract. They then use threats, intimidation, or collusion with a corrupt project manager to submit and approve numerous bogus or grossly inflated variation claims. This extracts fraudulent profit from the project, which is then laundered through the contractor's business.

  8. Related Entity Transactions: Criminals may set up a network of interconnected companies—a builder, a labour hire firm, a materials supplier, and an equipment rental company. They then make circular payments between these entities for non-existent services. This creates a complex and confusing paper trail that gives the appearance of legitimate business activity, making it difficult to isolate and identify the laundered funds.

 

Your 20-Point AML Red Flag Checklist

Training your staff—from the accounts department to project managers on site—to spot red flags is your first and most effective line of defence against being drawn into a criminal enterprise. This checklist is a practical tool to help identify suspicious activity. While one or two flags might have a legitimate explanation, a pattern of them is a serious warning sign that requires immediate escalation.

  1. Contractors requesting cash payments ≥ $10,000. (Why it matters: This could be an attempt to avoid AUSTRAC's mandatory reporting threshold.)

  2. Invoices with vague descriptions or round figures. (Why it matters: Legitimate invoices are specific; round numbers can indicate fabricated costs.)

  3. Multiple companies with the same directors/addresses. (Why it matters: Could indicate a shell company network for phoenixing or bid-rigging.)

  4. Rapid company formation just before a project. (Why it matters: Suggests the entity was created for a single, potentially illicit, purpose.)

  5. Beneficial ownership is difficult to verify or hidden behind trusts. (Why it matters: Legitimate businesses are often transparent; layers of secrecy sometimes hide criminal control.)

  6. Payments to offshore entities without a clear commercial purpose. (Why it matters: A classic method for moving illicit funds and evading tax.)

  7. Consultants with no verifiable qualifications or track record. (Why it matters: Their "consulting fees" may be disguised kickbacks or bribes.)

  8. Labour hire requesting payment for "ghost" workers. (Why it matters: This is outright fraud and a way to extract cash from a project.)

  9. Contractors offering unusually low bids. (Why it matters: Could indicate they plan to make up the difference through extortion or fraudulent variations.)

  10. Requests to split payments across multiple entities. (Why it matters: Another tactic to stay under the $10,000 reporting threshold.)

  11. Use of complex trust structures without a clear rationale. (Why it matters: Can be intended to confuse auditors and hide the true beneficiaries of funds.)

  12. Frequent changes to bank account details. (Why it matters: Could be a sign of a phoenixing operation about to occur.)

  13. Payments to individuals rather than businesses. (Why it matters: May bypass corporate accountability and can be a way to pay kickbacks.)

  14. Inflated variation claims without proper documentation. (Why it matters: This is identified in the Watson Report as a method for extracting fraudulent profit from fixed-price contracts.)

  15. Contractors connected to known criminal figures. (Why it matters: A significant red flag requiring immediate due diligence and legal advice.)

  16. Refusal to provide tax invoices or ABN details. (Why it matters: May indicate a non-compliant or potentially non-existent entity.)

  17. Use of labour hire firms with connections to outlaw motorcycle gangs. (Why it matters: The Watson Report documents how OMCG-connected labour hire firms were used as vectors for extortion, violence, and the placement of individuals with serious criminal histories into taxpayer-funded projects.)

  18. Equipment hire through intermediaries at inflated rates. (Why it matters: The intermediary may be a front for siphoning funds to criminals.)

  19. "Consulting fees" paid to union officials or their associates. (Why it matters: This is a common disguise for bribes or secret commissions.)

  20. Payments structured to avoid bank reporting thresholds. (Why it matters: Structuring payments to evade AML reporting requirements is itself a criminal offence under Australian law.)

 

 

PART 3: LEGAL THREAT #2 - THE ANTI-CORRUPTION CRACKDOWN

Meet the Watchdogs: Who Investigates Construction Corruption?

Following the Watson Report, the regulatory landscape is armed and active. It's crucial to understand the distinct roles of the key integrity bodies. At the federal level, the National Anti-Corruption Commission (NACC) has a broad and powerful remit to investigate corruption affecting any Commonwealth project or funding. This includes major infrastructure, defence projects, and any program with federal money involved.


At the state level, the Crime and Corruption Commission (CCC) Queensland focuses on corruption within the state's public sector. This covers state government departments, local councils, and government-owned corporations involved in construction projects. It's worth noting that the failures of Victoria's IBAC to act on warnings, as highlighted in the Watson Report, were a major catalyst for strengthening the NACC's powers, signalling a new era of proactive enforcement.

 

Taskforce Hawk: What Recent Arrests Teach Us

Warning: The risk of enforcement is not theoretical; it is happening right now. The idea that this is a problem for another state or another time is a dangerous misconception.


The proof is in the actions of Victoria's Taskforce Hawk. This multi-agency investigation has already resulted in over 70 charges being laid against 15 individuals according to public police statements. Recent charges include CFMEU delegates being arrested and charged with serious offences including blackmail and extortion on construction sites.


These charges are currently before the courts, and all individuals charged are entitled to the presumption of innocence. This article makes no comment on the merits of any prosecution case.


These enforcement actions prove that police and regulators are actively and aggressively targeting the nexus between organized crime and union officials on building sites. The enforcement phase has begun.

 

Are You Exposed? High-Risk Scenarios from the Watson Report

The Watson Report provides a playbook of high-risk scenarios that can expose your business to criminal liability.


Imagine a project manager being approached by a union delegate who offers a "problem-free" project—no industrial action, no delays—in exchange for exclusively using a preferred, and often overpriced, subcontractor. This isn't a friendly deal; it's potential extortion.


Or consider the risk of "secret commissions," where a procurement officer accepts a kickback from a supplier in exchange for awarding them a contract.


Another major risk is the pressure to approve sham compliance documents or fraudulent variation claims to keep a project moving.


When these real-world scenarios arise, you are navigating a legal minefield, and it is critical to consult a specialist building and construction lawyer before taking any action.

 

PART 4: LEGAL THREAT #3 - REPORTING OBLIGATIONS & PROTECTIONS

When is Reporting a Legal Duty?

Navigating the line between optional and mandatory reporting is critical. For businesses that are defined as "reporting entities" under the expanded AML laws (which will include lawyers and accountants from July 2026), the duty is clear and strict. They have a legal obligation to submit a Suspicious Matter Report (SMR) to AUSTRAC if they have reasonable grounds to suspect a transaction is related to criminal activity.


For other businesses, like builders and contractors, the obligation can be more complex. While there may not be a direct statutory duty to report to AUSTRAC, failing to act on knowledge of serious criminal conduct can expose directors to breaches of their duties under the Corporations Act.


Furthermore, knowingly concealing a serious indictable offence is a crime in itself. A crucial point to understand is the offence of "tipping off." It is illegal to warn a person that they are the subject of a suspicious matter report. This offence carries severe penalties and can compromise an entire investigation.

 

Which Regulator Should You Report To? A Decision Tree

Reporting to the wrong agency can lead to critical delays or result in an issue not being investigated at all. Each regulator has a specific jurisdiction, and choosing the right one is the first step to an effective response.


This decision tree provides a simple guide to direct you to the right front door for your specific concern.


  • START: What type of issue do you suspect?

    • Is there an immediate threat of violence or physical harm?

    • Is it a demand for a cash bribe or extortion by a union official?

    • Does it involve corruption on a QLD state or local council project?

    • Does it involve corruption on a project with Federal funding (e.g., Bruce Highway, Defence)?

      • YES -> REPORT TO: NACC

    • Is it a suspicious financial transaction (and you are an AML reporting entity)?

      • YES -> REPORT TO: AUSTRAC (SMR as soon as practicable after forming the suspicion).

    • Is it private sector corruption with no government or union involvement (e.g., employee fraud)?

      • YES -> REPORT TO: Queensland Police and consider corporate whistleblower protections.

 

The Evidence Preservation Protocol: Your Step-by-Step Guide

The moment you suspect wrongdoing is critical. Your immediate actions can determine whether a future investigation succeeds or fails. Evidence can be deleted or "lost" in minutes, so a swift and methodical response is essential.


The following protocol outlines the necessary steps but always remember the golden rule: contact your lawyer first.

  1. Seek Legal Advice First: Before you do anything else, contact your lawyer. Involving a legal professional from the outset can potentially shield your internal investigation under legal professional privilege. This means that reports, interviews, and findings prepared for the purpose of obtaining legal advice may be protected from disclosure to opposing parties in future litigation.

  2. Secure Digital Evidence: Immediately issue a written directive to your IT department or provider to preserve all relevant data. This includes emails, server logs, accounting data, phone records, and messaging app histories. Instruct them not to access or search any devices themselves; a forensic IT expert should be engaged to create a forensically sound copy (an "image") of the relevant hard drives to avoid contaminating the evidence.

  3. Gather Financial Records: Systematically collate all relevant financial documents. This includes bank statements, invoices, purchase orders, receipts, payment authorisations, and variation claims. Store the original copies in a secure location.

  4. Preserve Physical Evidence: Secure any physical documents, such as notebooks, diaries, or printed records, in a locked, tamper-proof location. Access should be strictly limited and logged.

  5. Document the Chain of Custody: Create a formal log for every piece of evidence, both physical and digital. This log must record who has handled the evidence, the date and time of access, and the purpose for which it was accessed. An unbroken chain of custody is vital for evidence to be admissible in court.

  6. Manage Witnesses: Identify key personnel who may have knowledge of the matter. Your legal professional should conduct and document formal interviews. Crucially, instruct all potential witnesses not to discuss the matter with anyone else to prevent collusion or contamination of their testimony.

 

Understanding Your Legal Risks and Protections

Reporting corruption comes with both protections and risks. The two main federal legislative pillars of whistleblower protection are the Corporations Act 2001 for corporate/private sector matters and the Public Interest Disclosure Act 2013 for Commonwealth public sector issues. At the state level, Queensland has its own Public Interest Disclosure (PID) Act 2010 that covers Queensland's state public sector.


These acts provide crucial protections, including the right to anonymity (or confidentiality), immunity from certain legal actions, and protection from retaliatory action like dismissal or demotion.


However, there are significant risks in both acting and not acting. The risks of not reporting include being found to have breached director's duties, being charged with concealing an offence, or allowing the corrupt conduct to escalate, causing greater financial and reputational damage.


The risks of reporting incorrectly—for example, by making public allegations without going through a protected channel—can include exposure to defamation claims. This is why following the correct procedure and seeking legal advice is paramount.

 

 

PART 5: YOUR ACTION PLAN FOR SURVIVAL

A 90-Day Plan to Fortify Your Business

Reacting to this new legal environment requires a structured, proactive approach. This 90-day plan provides an emergency framework to assess your vulnerabilities and strengthen your defences.

  • Days 1-30 (Assess & Review): The first month is about understanding your exposure. Conduct a formal, documented risk assessment of your projects and business practices, focusing on the red flags identified earlier. Review all current procurement, payment, and subcontractor engagement policies. Brief your senior management team and board on the findings of the Watson Report and the new legal landscape.

  • Days 31-60 (Implement & Train): The second month is for action. Roll out enhanced due diligence checks for all new and existing subcontractors, including beneficial ownership verification. Deliver mandatory, role-specific training to your staff on spotting AML red flags, understanding their reporting obligations, and the company's internal protocols for escalating concerns.

  • Days 61-90 (Update & Establish): The final month is about embedding these changes. Update all your standard form contracts with the new clauses outlined below. Establish a formal, confidential internal reporting system (a whistleblower hotline or designated integrity officer) so employees have a safe channel to raise concerns. Finally, conduct a drill or desktop exercise to test the entire framework.

 

Critical Contract Clauses You Must Implement Now

Your contracts are not just commercial documents; they are your first and most powerful line of legal defence. Clear, unambiguous clauses create explicit legal obligations for your subcontractors and provide you with the grounds for immediate termination if those obligations are breached.


Adapting your contracts is a non-negotiable step in this new environment. The following example clauses should be reviewed by your lawyer and incorporated into your standard agreements to create a contractual shield against corruption. You can find more detailed guidance in our firm's legal publications.

 

Example Clause - Anti-Corruption Warranty:

"The Contractor warrants that neither it nor any of its directors, officers, employees or subcontractors have offered, promised, given, authorised, solicited or accepted any undue pecuniary or other advantage of any kind (or implied that they will or might do any such thing at any time in the future) to obtain or retain business or any improper advantage in connection with this Contract."


Example Clause - Beneficial Ownership Disclosure:

"The Contractor must, upon request, disclose the identity of all beneficial owners (as defined in the AML/CTF Act) who own or control 25% or more of the Contractor, and immediately notify the Principal of any changes to its beneficial ownership structure."


Example Clause - Audit Rights:

"The Principal may, on 48 hours' written notice, audit the Contractor's books and records relating to this Contract, including but not limited to payroll records, site attendance logs, and invoices from sub-suppliers, to verify the Contractor's compliance with all applicable laws and the terms of this Contract."

 

Lessons from Victoria: How to Avoid a Repeat in Queensland

Warning: Queensland's construction industry must learn from Victoria's failures to avoid a similar, devastating crisis. Complacency is not an option.


The Watson Report was not just an indictment of a union; it was an indictment of systemic failure. To avoid a repeat in Queensland, we must understand the key failures identified. The report detailed a State Government that was "cowed" by union power and repeatedly ignored clear warnings from industry and law enforcement. It highlighted a lack of proactive enforcement from police over many years, which allowed the corruption to become entrenched. Finally, it exposed weak government procurement frameworks that were easily manipulated.


The lesson for Queensland builders is stark: you cannot rely solely on the government or regulators to protect your business. You must assume responsibility for your own compliance and integrity. This means implementing your own robust, zero-tolerance compliance frameworks now, before you are forced to do so by a regulator or, worse, a criminal investigation.


The proactive measures outlined in this guide, from contract updates to staff training, are the essential steps to ensure your business does not become another casualty.


For a detailed review of your current contracts and practices, seeking professional legal advice is a prudent next step.

 

 

PART 6: PRACTICAL TOOLS & RESOURCES

Glossary of Key Terms

  • AML/CTF: Anti-Money Laundering/Counter-Terrorism Financing. The laws designed to prevent the proceeds of crime from being legitimised.

  • AUSTRAC: Australian Transaction Reports and Analysis Centre. Australia's financial intelligence agency and AML/CTF regulator.

  • Beneficial Ownership: The ultimate individual person who truly owns, controls, and benefits from a company or asset, regardless of whose name is on the title.

  • CCC: Crime and Corruption Commission (Queensland). The state's leading body for investigating corruption in the public sector.

  • EBA: Enterprise Bargaining Agreement. A collective agreement made at an enterprise level between employers and employees about terms and conditions of employment.

  • Extortion: The crime of obtaining something, especially money, through force or threats.

  • Ghost Worker: A non-existent employee for whom a company is fraudulently billed, allowing criminals to siphon money from a project.

  • NACC: National Anti-Corruption Commission. The federal body that investigates serious or systemic corruption in the Commonwealth public sector.

  • OMCG: Outlaw Motorcycle Gang. A key focus of law enforcement investigations into organised crime in the construction industry.

  • Phoenixing: The illegal act of liquidating a company to avoid its debts, only to restart a near-identical business under a new name.

  • PID Act: Public Interest Disclosure Act 2010 (QLD). The primary legislation in Queensland that provides protections for public sector whistleblowers.

  • Red Flag: A warning sign or indicator of potential illegal or suspicious activity that requires further investigation.

  • Secret Commission: An undisclosed kickback, bribe, or other benefit paid to an employee or agent to influence them in favour of the person paying it.

  • SMR: Suspicious Matter Report. A mandatory report that must be filed with AUSTRAC by a reporting entity if they suspect a transaction is linked to a crime.

  • Taskforce Hawk: The dedicated Victoria Police unit established to investigate organised crime and corruption within the construction industry.

  • Tranche 2: The common name for the upcoming reforms that will expand Australia's AML/CTF laws to cover lawyers, accountants, and real estate agents.

 

Essential Resources Hub

 



FAQs

What is a 'beneficial owner' and why is it important?

A 'beneficial owner' is the ultimate individual person who owns or controls a company, even if their name isn't on the company documents. They may be hidden behind a series of trusts or other companies. Identifying them is critical for AML compliance because it reveals who you are really doing business with and prevents criminals from using shell companies to hide their involvement.

Can I get in trouble for not reporting something I only suspect?

Yes. For entities covered by AML laws, the threshold is "suspicion." You don't need proof. For others, knowingly concealing or assisting to conceal serious criminal conduct (which may constitute being an accessory after the fact under section 10 of the Queensland Criminal Code, or in some cases, attempting to pervert the course of justice under section 140) or a director failing to act in the company's best interests by ignoring red flags can lead to serious legal consequences. It's always safer to seek legal advice and report through the proper channels.

What's the difference between the NACC and the CCC?

The NACC (National Anti-Corruption Commission) is a federal body that investigates corruption involving Commonwealth officials, federal funding, or federal projects. The CCC (Crime and Corruption Commission) is a Queensland state body that investigates corruption involving state government departments, local councils, and QLD police.

How do I verify a subcontractor is legitimate?

Start with the basics. Conduct an ASIC search to check their company registration and director details. Check their licence status on the Queensland Building and Construction Commission (QBCC) register. Ask for and check trade references. For high-value contracts, consider engaging a professional due diligence firm to conduct a more thorough background check.

What is the first thing I should do if a union official demands a cash payment?

Do not pay it. Immediately and discreetly document the demand (who, when, where, what was said). Then, contact a construction dispute lawyer to get privileged legal advice. Your lawyer will guide you on the next steps, which will likely involve reporting the matter to the Fair Work Ombudsman and the Queensland Police.

Are 'facilitation payments' legal in Australia?

No. While some countries might entertain exceptions for small "facilitation payments" to speed up routine government actions, Australian law does not recognise this. Any payment made to an official to improperly influence a decision is considered a bribe and is illegal.

What are my rights if an investigator from the CCC or NACC wants to interview me?

You have the right to legal representation. You should not answer questions or provide documents without first speaking to a lawyer. Your lawyer can ensure your rights are protected, clarify the scope of the investigation, and advise you on your obligations.

Does legal professional privilege protect everything I tell my lawyer?

Legal professional privilege protects confidential communications between a client and their lawyer made for the dominant purpose of giving or receiving legal advice or for use in litigation. However, it does not protect communications made to further a crime or fraud.

What is the difference between extortion and a legitimate industrial dispute?

A legitimate dispute relates to lawful matters like wages, safety, or conditions under the Fair Work Act. Extortion involves a demand (often for money or to use a specific business) backed by an unlawful threat, such as a threat of violence, property damage, or illegitimate industrial action designed to cause financial harm.

Can terminating a contract with a corrupt subcontractor be risky?

Yes, it can be. If not done correctly, you could face a claim for wrongful termination. It is vital to follow the exact termination procedures outlined in your contract and the relevant legislation, particularly Schedule 1B of the Queensland Building and Construction Commission Act 1991, which governs domestic building contracts (and replaced the repealed Domestic Building Contracts Act 2000). This is a key reason why having clear anti-corruption clauses is so important, as they provide a solid basis for terminating construction contracts.

What happens if a payment dispute arises from one of these situations?

Disputes over payments, especially those involving allegations of fraud or corruption, can become incredibly complex. Understanding your legal payment rights in construction is the first step. Depending on the contract and the amount, the matter could end up before the Queensland Civil and Administrative Tribunal (QCAT), which is detailed in our guide to QCAT in Queensland.

How does this affect my obligations under the QBCC Act?

The QBCC Act 1991 requires licensees to be "fit and proper" persons. Being involved in, or turning a blind eye to, corruption, fraud, or money laundering could lead the QBCC to determine that you no longer meet this requirement, putting your licence at severe risk of suspension or cancellation.


This article is for informational purposes only and does not constitute legal advice. You should consult with a qualified legal professional for advice tailored to your specific situation.

Source Attribution: This article discusses allegations and findings from the Watson Report and other public sources. Where this article discusses the Watson Report's findings, it is reporting on those findings as stated in the report.

No Warranty: Readers should seek independent legal advice regarding any matters discussed herein. Merlo Law does not warrant the accuracy of third-party reports or media coverage discussed in this article.

Currency and Updates: The information is current as of February 13, 2026. Legal proceedings and regulatory matters discussed may have progressed since publication. This article will be updated if material legal developments occur or if factual corrections are required. Last updated: February 13, 2026. 

Correction Policy: If you believe any statement in this article is factually inaccurate or requires clarification, please contact Merlo Law at info@merlolaw.com.au with supporting documentation. 


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