Australia Police Probe Lawmaker, Potentially Threatening Gillard Majority

Australian lawmaker Craig Thomson resigned as chair of the House Economics Committee as police indicated they will probe allegations he misused his union credit card to pay prostitutes, an inquiry that could threaten the government of Prime Minister Julia Gillard.

Thomson advised the committee’s secretary today he would step down and said he continues to reject claims of wrongdoing, according to an e-mailed statement sent by his media officer, David Gardiner. Thomson will continue to serve as a member of the panel, it said.

“The current circumstances will clearly distract from the important work of the committee,” Thomson said in the statement.

Thomson’s future is critical because Gillard’s Labor Party rules with a majority of one seat. If he is forced to resign, there would need to be an election in his New South Wales division and losing the seat could bring down her government.

Liberal party Senator George Brandis “has provided information to police in relation to a number of matters concerning a federal Labor MP,” New South Wales police said in a statement. “This correspondence has now been referred for internal assessment to determine whether a criminal offense has occurred.”

Escort Service

Brandis sent police documents relating to transactions on a credit card belonging to Thomson when he was head of the Health Services Union before he entered parliament in 2007. The documents, copies of which were obtained by Bloomberg News, outline payments charged to the card for an escort service in Sydney in 2005 and 2007.

Gillard’s Labor Party holds 72 of 150 seats in the House of Representatives and relies on the support of three independents and one Greens Party member to pass laws.

“I’ve certainly spoken to Craig Thomson,” Gillard told Australian Broadcasting Corp. radio today. He “is doing his job as the local member in this parliament.”

Support for the party has fallen to record lows in opinion surveys as Gillard backed down on a promise before the election not to introduce a carbon tax.

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net

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