Anonymous gift cards were used to pay the dues of hundreds of ALP members at the core of Bill Shorten's local power base in one of the biggest-ever branch-stacking scams to hit the Victorian Labor party.
Insiders close to it say the operation has run for years and is closely linked to the plumbers union and suburban Labor warlords loyal to Mr Shorten and fellow federal frontbencher, Stephen Conroy.
A new branch-stacking scandal threatens to engulf Senator Stephen Conroy (left) and Opposition Leader Bill Shorten. Photo: Alex Ellinghausen
Documents obtained by Fairfax Media reveal that in 2013, gift cards worth thousands of dollars were used to pay Labor memberships of plumbers union officials and suburban branch members.
Among them is Plumbing Trades Employees Union organiser and Whittlesea councillor Norm Kelly. He denied any knowledge of the gift cards and insisted he always paid his own membership.
Many of the members involved appear to be of Lebanese background and linked to northern suburban powerbroker David Asmar, the husband of Diana Asmar, the Victorian secretary of the trouble-plagued Health Services Union No.1 branch.
Diana Asmar was elected as the new secretary of the Victoria No. 1 Branch of the HSU in 2013. Photo: Luis Enrique Ascui
Another group appears to centre on the family of former plumbers union assistant secretary Tony Murphy, who for many years was a party powerbroker in Melbourne's north.
The documents show the gift cards were used to buy hundreds of memberships in the last two weeks of May 2013, the period in which "multiple" party memberships are habitually renewed before the 30 May renewal deadline. Fairfax Media understands the gift cards were also used in 2012 and, to a lesser extent, in 2014.
Sources close to the branch-stacking say that, before online membership was introduced allowing gift cards to be employed, cash was used to pay the memberships.
Branch stacking involves factional players signing up new members, or renewing memberships, in bulk. Cash for payment of membership dues often comes from unions or union slush funds.
For factional warlords, the "stacks" represent numbers and power within Labor – numbers to be traded in factional and sub-factional deals and wielded in important policy and preselection battles.
The Visa gift cards used by the branch stackers are, in effect, disposable debit cards that do not show who the cardholder is or who paid for them.
Money can be placed on the cards but the cards expire once the money is used.
Each card has an individual card number, similar to a debit or credit card, and an expiry date. The lack of ability to trace who paid for them make them ideal for branch stacking.
One Labor member, Rebecca Sinclair, whose membership was paid for by an anonymous gift card said she had never used a gift card.
She said she could not recall paying for her membership in recent years.
"I seriously can't remember," she said.
Under Victorian Labor's splintered factional arrangements the plumbers, and associated party members, make up a right-wing sub-faction loyal to Shorten.
While the HSU is not currently affiliated to the ALP – it disaffiliated in 2011 amid the scandals surrounding former leaders Craig Thomson and Michael Williamson – it is an important factional resource.
The Labor leader's close friend and confidant Andrew Landeryou was a key player in Asmar's takeover of the HSU, and remains an important influence.
In August, aspiring ALP numbers man Haykel Handal was expelled from the party after a tribunal found him guilty of using anonymous debit cards to pay for about 30 memberships in the federal seats of Maribyrnong, Gellibrand and Melbourne.
Now, with the precedent firmly set, the party faces the dilemma of whether to investigate and take action over a much larger branch-stacking scam connected to more senior players in Shorten's group.
The May 2013 gift card renewals overlap with the PTEU's receipt and distribution of $36,000 from a controversial employer-bankrolled slush fund known as Industry 2020, run by Mr Shorten's successor as Australian Workers Union secretary, Cesar Melhem.
Cesar Melhem (red shirt) was the successor of Bill Shorten (wearing tie) as secretary of the AWU. Photo: Still taken from YouTube
Industry 2020 was wound up when Mr Melhem was parachuted into a safe Victorian upper house seat in May 2013.
The PTEU registered its own fund in May 2013, the Progressive Social Campaign Inc, to receive and distribute some of the funds that remained in the Industry 2020 account.
Last year, plumbers union secretary Earl Setches told the trade union royal commission that all the money inherited by his Progressive Social Campaigns was paid out to "the guys who were on strike" at the time.
Mr Melhem was forced to stand down as Labor upper house whip in June after the royal commission heard allegations of a deal he did as AWU secretary with a cleaning company that left workers on lower pay in return for cash payments to the AWU.
Labor MP Cesar Melhem was forced to stand down as Victorian Labor upper house whip in June 2015 after allegations about deals he did as AWU secretary made it to the Royal Commission into Trade Union Corruption. Photo: Darrian Traynor
A series of internal reviews and inquiries into branch stacking of led to numerous calls for reform. In his first major speech as Opposition Leader last year Mr Shorten promised sweeping internal reform of the ALP. However the reform push has stalled.
In March, a move to crack down on branch stacking through rules requiring all membership dues be paid by traceable means, such as a personal credit card, was defeated at state conference.
Labor even offers members a $15 discount if they pay by traceable means.
ALP Victorian secretary Noah Carroll declined to comment. Mr Setches did not respond to calls or SMS messages.
