Australia sets up probe into union graft as reports of corruption grow

SYDNEY (AFP) - Australian Prime Minister Tony Abbott on Monday unveiled a royal commission to investigate alleged corruption among leading trade unions as reports of widespread bribes and kickbacks involving organised crime grow.

The ruling Liberal-National coalition, which embarked on an unpopular industrial relations overhaul when last in power that cost them office in 2007, has long pledged to tackle union powers over opposition fears of a witch-hunt.

"This will not be an inquiry into trade unionism or the day-to-day activities of honest trade union officials," Abbott said in a statement.

"We don't want honest workers to be ripped off by dishonest union bosses." He said a royal commission, which has wide-ranging powers and can summon witnesses, made good on a September election promise to set up a judicial inquiry into an Australian Workers' Union slush fund.

But the commission, to be led by retired high court judge Dyson Heydon, will be far broader.

"There are systemic issues involving secret funds, commissions and kickbacks that need to be considered," said Abbott.

"In addition, recent allegations of corrupt behaviour, unlawful kickbacks and standover tactics in the construction industry have made it clear that there is a need for serious scrutiny of allegedly corrupt conduct, wherever it may occur.

"As a result, the terms of reference are not limited to any particular organisations, particular allegations or particular industries. The inquiry will be able to go wherever the evidence leads it." The terms list the Australian Workers Union, the Construction Forestry Mining and Energy Union, the Electrical Trades Union, the Health Services Union (HSU) and the Transport Workers Union for investigation.

A scandal involving the HSU and former Labor MP Craig Thomson - who was charged with fraud over his alleged spending of union money on prostitutes, air travel and lavish meals - cast a shadow over the previous Labor government, voted out in September.

Thomson, who denies the charges, was asked to quit Labor over the allegations, which badly damaged the party's standing in an election year.

Australia's Labor party is closely aligned with the country's unions.

Opposition Labor leader Bill Shorten had urged the government to let the police tackle the graft allegations while the Greens branded the move an "ideological witch-hunt".