Labour hire firm paid Mick Gatto more than $1m to secure work on Big Build, CFMEU inquiry told

A labour hire company accused of being a front for underworld figure Mick Gatto paid him more than $1m over nine years, with its lawyer telling an inquiry it did so to secure work on Victorian government Big Build sites where the construction union had influence.

Integrity expert Geoffrey Watson SC appeared before the Queensland inquiry into the Construction, Forestry and Maritime Employees Union (CFMEU) on Friday, defending his Rotting from the Top report, which alleged Gatto controlled several M Group companies through “dummy directors” Michael Portia and Tony Paragalli.

Watson alleged the companies received “favourable treatment from the CFMEU” on Victorian government Big Build projects and “showered with benefits” due to their connection to Gatto. Gatto, Paragalli and Portia have previously denied the allegation.

On Friday, Watson said he “probably shouldn’t have said Mick Gatto owned them [the companies]” and “should have acknowledged that it’s probable that Paragalli and Portia also own part of it”.

But he stood by his central allegation that Gatto “controls” the companies.

“More than ever, it is my view that all the evidence points to Mick Gatto controlling the M Group companies,” Watson said.

Watson said since his report was completed, he has seen bank accounts that showed M Group companies paid Gatto $1.04m between 2016 and 2025, with payments becoming “larger and more regular” over time.

This included $65,000 in payments over six weeks in April 2020 and a single payment of $77,000 in July 2022.

Watson said M Group paid Gatto $200,000 in the first half of 2025, while M Group Trades and Labour entered administration in May owing $13.7m in tax.

“While a company is running up a tax debt of $13m, it is paying Mick Gatto $200,000,” he said. “It was paying Gatto in preference to its employees. It was paying Gatto in preference to its tax debt.”

M Group’s barrister, Simon Wilson KC, said while Portia and Paragalli “may have done business with Gatto”, they were not “frontmen” for him.

He said M Group did not dispute it “paid Gatto a substantial amount of money over a substantial number of years” but argued it did so “to protect its income sources”.

Wilson said the company had won tenders but was then blocked from starting work by a larger CFMEU-aligned group.

“They’d win a tender, start to put people on the site, and they’d be blocked out by bigger groups,” he said. “They had to get Gatto to come in and say, ‘Come on, these people can be in.’”

Watson responded that the payments amounted to paying Gatto to “fix contracts”.

Wilson also argued that if M Group was genuinely Gatto’s company, it would not have needed to make the payments.

after newsletter promotion

The pair clashed frequently during Watson’s cross-examination, prompting Commissioner Stuart Wood KC to repeatedly intervene.

Watson’s third and final appearance at the inquiry comes after Jacinta Allan was forced to step down as premier this week after she lost the support of Labor caucus, due in part to her failure to act on the corruption scandal.

Her successor Ben Carroll’s first act as premier on Tuesday was to commit to a royal commission into the construction industry.

The newly appointed administrator of the CFMEU, Michael Crosby, told ABC’s 7.30 on Thursday night though he was “sceptical about royal commissions”, it was “encouraging” that Carroll’s proposal would examine the entire construction industry rather than focusing solely on the union.

“We will fix this union up. It’ll be back in the fold of the union movement as a powerful, strong, ethical union. That’s not going to last if it’s sitting in an industry riddled with corruption,” he said.

He said he believed there was “still criminality” in the sector as a result of “fixers” who are “holding themselves out as able to have some influence about who gets contracts and who doesn’t.”

Watson on Friday also revealed that “nobody” from the Victorian Labor government has contacted him despite criticising his estimate that corruption in the construction union cost taxpayers up to $15bn.

“They made [statements] to the press without asking me anything about how I arrived at the report or what I did to achieve it,” he said.

“They were bitterly critical remarks. It’s hard to interpret them as anything less than suggesting I made it up.”

The Victorian government has been contacted for comment.