THUGS, louts, bullies, thieves and violent extortionists at the top of some of Australia's most powerful unions have been put on notice after a two-year probe into union corruption.
In his final report, released yesterday, royal commissioner Dyson Heydon said union officials and the executives of some companies had been complicit in misconduct and referred 45 officials and organisations - including Victorian state MP Cesar Melhem - to police.
He also recommended former Health Services Union national secretary Kathy Jackson be investigated over allegations she used union funds for her own purposes and obtained property and financial advantage by deception. 
Opposition Leader Bill Shorten and former prime minister Julia Gillard, who both faced the commission, escaped official sanction, but Mr Heydon questioned their conduct.
Mr Heydon said union corruption was "not the work of a few rogue unions or a few rogue officials", and his inquiry had uncovered only a "small tip of an enormous iceberg".
The report made 79 recommendations to reform union governance. CONTINUED PAGE 6 FROM PAGE 1 Recommendations included measures to improve auditors' independence, more transparency in enterprise agreements, and the creation of a stand-alone regulator.
In his report, Mr Heydon said: "It is clear that in many parts of the world constituted by Australian trade union officials, there is room for louts, thugs, bullies, thieves, perjurers, those who threaten violence, errant fiduciaries and organisers of boycotts." In an effort to combat the "culture of disregard for the law" within the militant Construction Forestry Mining and Energy Union, Parliament could move to ban union bosses deemed unfit to serve.
Mr Heydon's six-volume report recommended the Australian Workers Union face an investigation over deals with private companies, referred construction giant John Holland Pty Ltd and Chiquita Mushrooms to prosecutors; and recommended stronger jail terms for union officials who break the rules.
Prime Minister Malcolm Turnbull said the report was a "watershed" moment for the union movement.
"If the lessons of this report are learned, the trade union movement will emerge much stronger," he said.
"They can take this opportunity to support these recommendations and undertake real and lasting reform." The Federal Government will again try to gain Senate support to re-establish the Australian Building and Construction Commission, and a new Registered Organisations Bill will be introduced into Parliament early next year.
Employment Minister Michaelia Cash also vowed to introduce extra legislation to strengthen the Bill, which has already been rejected by the Opposition three times.
But Labor and union leaders continued to attack the findings of the two-year probe.
Opposition employment spokesman Brendan O'Connor denied corruption was widespread in the union movement and said the commission was a political witch-hunt intended to attack the opponents of the Government.
He said criminal activity should be met with the full force of the law, but insisted that instances of misconduct were "isolated".
CFMEU national secretary Dave Noonan said any matters of substance in the report could have been dealt with by Federal Police.
"We have always said that we will co-operate with the police in investigating any allegations of corruption," he said.
"In the construction industry there are plenty of real issues that need investigating. Safety is at an all-time low.
"The focus of the Turnbull Government should be on these issues ... rather than on attacking workers' pay and conditions and waging war on the low-paid through the eradication of penalty rates." Australian Workers Union Victorian secretary Ben Davis said the findings dealt with the past and did not reflect current activities of the union or of the branch: "This report is a political document which, at first reading, reaches conclusions which are as unreasonable as they are predictable." A police investigation into Mr Melhem, who resigned as a government Whip in   June, is expected to put pressure on the State Government and could ultimately end his parliamentary career.
An MP convicted of an offence carrying a maximum sentence of at least five years in jail can no longer hold a seat.
Mr Melhem said yesterday he would fight to clear his name, declaring that he is "not going anywhere".
Premier Daniel Andrews, whose Socialist Left faction has welcomed the CFMEU back into its ranks, described the recommendations as "serious".
But he said it was not appropriate to comment on a matter that may end in court. Opposition spokesman Robert Clark called for the Premier to expel Mr Melhem from the party, saying: "Cesar could do the right thing and resign from the Labor Party but if he doesn't Daniel Andrews needs to act." He denied the royal commission was a witch-hunt, saying it had been key to uncovering corrupt behaviour.annika.smethurst@news.com.au