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Scandal Threatens Gillard’s Labour Party

Australia’s opposition is pressing Labor Party lawmaker Craig Thomson to respond to claims he misused his union credit card to pay prostitutes in a scandal that could threaten Prime Minister Julia Gillard’s government.

Thomson, a former national secretary of the Health Services Union, last night resigned as chair of the House Economics Committee and said he continues to reject claims of wrongdoing, according to an e-mailed statement sent by his media officer, David Gardiner.

The coalition today lost a motion in parliament that would have forced Thomson to comment to the lower house, and now wants the backbench lawmaker to make a public statement on the allegations. Should Thomson resign over the issue, forcing an election in his New South Wales constituency when his party’s popularity is at a record low, Gillard’s one-seat majority may evaporate and the government fall.

“It is very important the matter be resolved and that this boil for the government be lanced,” opposition Liberal-National leader Tony Abbott told Australian Broadcasting Corp. radio today.

New South Wales police yesterday said they would investigate information provided by Liberal party Senator George Brandis, who has submitted documents relating to transactions on a credit card belonging to Thomson when he was head of the union before he entered parliament in 2007.

‘Questionable Financial Transactions’

The documents Brandis sent to police and obtained by Bloomberg outline a A$2,475 ($2,597) transaction on April 9 2005 to “sales” provided by Keywed Pty Ltd, trading as Sydney Outcalls, and then a transaction on Aug. 16, 2007, for A$385 to the same firm.

The Health Services Union today referred to NSW police an investigation of its finances between 2002 and 2007, when Thomson was the group’s national secretary. Fair Work Australia, the national workplace tribunal, is already conducting an investigation in that period over suspected misuse of funds, the union said in an e-mailed statement.

“The HSU first became aware of questionable financial transactions in May 2008 as a result of an exit audit conducted following Craig Thomson’s departure,” HSU National Secretary Kathy Jackson said in the statement. “The National Executive has today resolved to refer the matter to the NSW police and co- operate with any subsequent investigation.”

Support for the government fell one point to 43 percent and the opposition’s rose the same amount to 57 percent, according to a Newspoll survey of 1,147 people from Aug. 19 to 21 published in the Australian newspaper yesterday. Thomson holds his Division of Dobell, north of Sydney, by 5.07 percent according to results of the August 2010 election.

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 for a majority. The next national election is due in late 2013.

To contact the reporter on this story: Gemma Daley in canberra at gdaley@bloomberg.net

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

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