Bankrupt whistleblower Kathy Jackson must pay the Health Services Union more than $1.4 million she used for personal shopping, travel and her divorce.
The court order comes after Jackson was labelled a hero for blowing the whistle on disgraced former Labor MP Craig Thomson and corrupt union boss Michael Williamson.
Federal Court Justice Richard Tracey on Wednesday said unchallenged evidence presented at the civil trial against Jackson “substantially supported the claims made by the HSU”.
Jackson declined to take part in the trial after declaring bankruptcy at the 11th-hour.
She has been ordered to pay $1,338,626 in compensation for damages and $67,912 in overpaid salary.
The HSU claimed Jackson set up an unauthorised slush fund in 2003 with money paid from the Peter MacCallum Institute.
Jackson nominated herself as the only person authorised to access the National Health Development Account, and then transferred $284,500 from branch accounts to the fund over more than six years.
“Ms Jackson used the money in the NHDA account for a range of purposes, including part of a divorce settlement, holiday expenditure, retail purchases and cash withdrawals,” Justice Tracey said.
Other money was spent on political campaigns.
Jackson also charged $305,828 to union-issued credit cards for travel, food, alcohol and entertainment.
And the balance of cash withdrawals, used to pay branch committee of management members $100 each at meetings, was kept by Jackson in a kitty and helped pay off her mortgage.
Jackson kept a false record of the withdrawals in a general ledger, marking them down as “honorarium”, “professional development” and “conference/seminar” expenses, Justice Tracey said.
She cost the union $34,725 when she hired a lawyer without authority in 2012, and a $63,000 honorarium she signed off for herself should not have been paid, Justice Tracey said.
Jackson and Williamson cost the union more than $400,000 when they signed an unauthorised employment contract for former HSU national secretary Robert Elliott.
Jackson was paid an annual salary of $170,000 to run the union, the trial heard last month.
Chris Brown, current HSU national secretary, said the findings shattered Jackson’s reputation as a whistleblower.
The union will try to recoup its money from Jackson’s bankrupt estate.
“Many HSU members are among the lowest-paid workers in the country, delivering essential services and caring for the most vulnerable members of our community,” he said in a statement.
“Kathy Jackson knew this, yet she spent their money on lavish banquets running into tens of thousands of dollars, extravagant family holidays and luxury goods – among other things.”
A joint state and national police taskforce continues to investigate Jackson’s conduct.