Mick Gatto, a Melbourne-based underworld figure, faces mounting allegations of orchestrating a complex network of corporate entities to evade taxes and manipulate Victoria's $109 billion Big Build infrastructure program. The accusations emerged during testimony before the Queensland inquiry into the RTBU ( RTBU stands for Australian Workers Union, though the text refers to CFMEU, which is the Construction, Forestry, Mining and Energy Union). Geoffrey Watson, SC, the author of a controversial report titled Rotting from the Top, testified that Gatto used dummy directors to control a web of labor hire and traffic management companies, leveraging his connections within the CFMEU to secure lucrative contracts. According to Watson, the M1 Trades and Labour Group, owned by Michael Portia and Tony Paragalli, was established through a corrupt process that allocated 25 shares to Gatto. This move was necessary because the group could not obtain an enterprise bargaining agreement from the CFMEU. The arrangement was confirmed via an affidavit by Portia. Watson described the situation as a "pretty damning point," highlighting how the CFMEU allegedly required Gatto's influence, a so-called "standover man" and "fixer", to establish a viable building business. Gatto, currently under investigation by both federal and state police, has consistently denied owning the M1 Group companies or engaging in any wrongdoing. However, Watson claimed that Gatto siphoned over $1 million from these enterprises, which held substantial contracts for traffic management services on state government infrastructure projects. Simon Wilson, KC, representing M1 Group, argued that the companies were always under the control of Portia and Paragalli, asserting that Gatto's involvement was never documented in filings with the corporate regulator. Watson countered that Gatto's failure to comply with regulatory requirements, such as submitting accurate documentation to ASIC, was deliberate. He emphasized that his conclusions were based on factual evidence rather than speculative assumptions. Furthermore, Watson alleged that Gatto attempted to obscure his involvement in one company by transferring ownership to another controlled by his daughter, Sarah Awad. During heated exchanges, Wilson sought to undermine Watson's credibility, labeling his report as an "engineroom of inference and speculation." Watson, however, defended his findings, citing specific instances of tax evasion and illegal phoenix activity. One company was described as a "classic tax dodge model" that sought to avoid paying a $13 million tax debt. Other M1 Group subsidiaries reportedly operated while insolvent or engaged in phoenix activity, where one company collapses and another takes over its assets. In March, reports indicated that Victoria’s Labour Hire Authority had initiated proceedings to revoke the license of an M Group subsidiary. Despite these actions, no formal measures have been taken against the firm, and it continues to operate under its current licensing status. Watson admitted during cross-examination that his initial report overstated Gatto's role as the sole owner of M1 Group. He clarified that while Gatto likely holds significant control, it is probable that Portia and Paragalli also hold partial ownership. Watson reiterated his stance, stating that all available evidence supports the claim that Gatto exerts considerable control over the M Group companies. He also criticized the Victorian government for suggesting that he had recanted his findings, despite the ongoing legal challenges and threats of litigation from M1 Group representatives. As the inquiry progresses, further scrutiny of Gatto's financial dealings and corporate affiliations will remain central to determining the extent of his alleged involvement in systemic corruption.
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