CFMEU corruption inquiry implicates Mick Gatto in labour hire schemes and tax evasion

Consensus Summary

A Queensland inquiry into the CFMEU corruption scandal has intensified scrutiny of underworld figure Mick Gatto, with lawyer Geoffrey Watson SC alleging Gatto controls a network of labour hire companies—including M1 Group—through dummy directors Michael Portia and Tony Paragalli. Watson’s explosive report, *Rotting from the Top*, claims Gatto’s influence secured lucrative contracts on Victoria’s $100 billion Big Build program while enabling systematic tax evasion, including a $13.7 million debt by M1 Group Trades and Labour. The inquiry heard M1 Group paid Gatto over $1 million between 2016 and 2025, with transactions escalating to $200,000 in the first half of 2025, despite the company’s insolvency. Watson’s testimony, delivered under tense cross-examination, accused Gatto of orchestrating a ‘classic tax dodge model’ and transferring ownership of firms to his daughter to obscure his control.

The allegations stem from Watson’s investigation, which linked Gatto to M1 Group’s formation after the company failed to secure an enterprise bargaining agreement with the CFMEU. The Age revealed in March that Victoria’s Labour Hire Authority had exposed the firm, yet no regulatory action was taken. Watson’s report further estimated CFMEU corruption could have inflated Big Build costs by 15 per cent, a claim fiercely contested by former Premier Jacinta Allan and her ministers, who accused Watson of recklessness. The political fallout culminated in Allan’s ousting this week, with her successor, Premier Ben Carroll, announcing a royal commission into the construction industry on Tuesday—a move Watson described as long overdue.

Key figures in the dispute include Watson, who stood by his findings despite admitting he should have acknowledged Paragalli and Portia’s partial ownership of M1 Group; Simon Wilson KC, the barrister for M1 Group, who argued payments to Gatto were necessary to ‘fix contracts’ blocked by larger CFMEU-aligned firms; and CFMEU administrator Michael Crosby, who called for industry-wide reforms to address ‘criminality’ tied to ‘fixers’ influencing contract awards. Gatto, Portia, and Paragalli have uniformly denied any wrongdoing, with Gatto previously denying ownership of the companies. The inquiry also highlighted internal divisions within the CFMEU, with Crosby expressing skepticism about royal commissions but supporting a broad probe to restore the union’s ethical standing.

While all three outlets agree on the core allegations—Gatto’s control of M1 Group, the payments to him, and the tax debts—differences emerge in emphasis. The Guardian and ABC focus on the political repercussions, including Allan’s removal and Carroll’s royal commission pledge, while The Age delves deeper into the financial mechanics of Gatto’s alleged tax evasion and the use of dummy directors. The Guardian also reports that no government official contacted Watson to challenge his $15 billion corruption cost estimate, a claim The Age does not address. Meanwhile, ABC provides unique details on the Gold Coast operations of M1 Traffic Control Qld Pty Ltd and the combative nature of Watson’s cross-examination, which prompted the commissioner to intervene over ‘theatre’ and ‘abuse’ between the barristers.

Unresolved questions remain about the scope of Gatto’s influence and whether the Victorian government will pursue legal action against M1 Group or its directors. Watson’s report has sparked threats of lawsuits from Paragalli and Portia, who accused him of mixing up company names—a detail Watson used to argue the firms’ complexity was designed to obscure wrongdoing. The royal commission announced by Carroll may clarify whether broader corruption extends beyond the CFMEU to other industry players, though Watson warned that ‘fixers’ like Gatto continue to operate with impunity. The inquiry’s findings could also determine whether Allan’s critics in the Labor Party will face further scrutiny for their public attacks on Watson’s methodology, which he described as ‘bitterly critical’ and suggestive of fabricated claims.