Call girl scandal could bring down Gillard’s government

Australian police are investigating whether a government Labour MP committed a crime by allegedly using a union credit card to pay for prostitutes – if proven, the scandal could bring down the government.

Julia Gillard, the Welsh-born prime minister, clings to power with one seat, thanks to the support of one Green and three independent MPs. If Craig Thomson is forced to resign, her party is almost certain to lose the by-election in the New South Wales constituency of Dobell, forcing a general election.

Mr Thomson is facing claims that he misused his union credit card, spending thousands on escort services and other personal expenditures, including wrongly funding his political campaign.

But the MP insists another person had access to the card and forged his signature. Mr Thomson has refused to identify that person. And he has not explained why some bookings to escort services were accompanied by his driving licence.

Last night, following the announcement of the police inquiry, Mr Thomson resigned as chairman of a parliamentary economics committee, but, for now at least, he remains an MP.

He said in a statement he was standing down to avoid disrupting the work of the committee.

“I continue to reject claims of wrongdoing. I will continue to serve as a member of the committee as it undertakes its important work,” he said.

On 9 April, 2005, a Mastercard issued in his name as head of the Health Services Union was used to pay an amount of A$2,475 to a Sydney escort service which provides girls to call on men in their hotel rooms. Other evidence has shown prostitutes were paid for in Melbourne on the union credit card.

In further damaging claims, a court affidavit has alleged his mobile telephone was used to contact escort agencies recorded on his credit card.

The complex matter, in which the Health Services Union is pointing to misuse of the card by Mr Thomson, is already the subject of an investigation by Fair Work Australia, the official industrial relations body.

Now, following a letter from the shadow attorney-general, George Brandis, calling on New South Wales Police Commissioner Andrew Scipione to investigate the scandal, police yesterday officially announced they would do so.

Mr Brandis, a senior counsel, said the fresh allegations against Mr Thomson could carry a two-year jail term. If convicted, Mr Thomson would have to leave parliament and the government would fall.

Mr Thomson has continued to claim the allegations were “incorrect and false”.

“There is a Fair Work Australia inquiry under way in relation to these matters, which I am confident will clear me of these claims,” he said.

Mr Thomson took out a defamation action against the Fairfax newspaper group, publishers of the Sydney Morning Herald. But when he ceased that action, the New South Wales Labour Party paid his huge legal fees to save him becoming bankrupt – and having to resign as an MP.

The deepening political scandal swirling around the beleaguered MP has prompted opposition leader Tony Abbot to describe as “a protected species”.

Ms Gillard has stuck by Mr Thomson, however. “Let’s remember here in this very parliament we’ve had members of parliament … investigated by the Australian Federal Police and ultimately the police found they had no case to answer,” she said.

Still, the police inquiry will add to Ms Gillard’s woes as she struggles badly in opinion polls.

A survey this week showed Labour’s popularity has fallen to record lows, down two points to 27 per cent, while Ms Gillard’s own popularity was down 4 per cent to a catastrophic 29 per cent.