‘Gatto tax’: How plastering company payments to underworld figure hurt buyers

Victorian apartment buyers are forking out a “Gatto tax” as plastering, precast and other businesses allegedly pay gangland figure Mick Gatto for CFMEU-backed, privileged access to the state’s high-rise housing sector.

While previous public scrutiny has focused on Big Build firms paying Gatto to access the Allan government’s infrastructure projects, a fresh leak from inside the Gatto network has exposed multiple subcontractors allegedly paying him to get favoured treatment in the state’s apartment market.

The payments from high-rise subcontractors to Gatto have continued months after Premier Jacinta Allan claimed success in cleaning up the state’s construction sector and at the same time as her government has controversially thrown its support behind an apartment building surge in an attempt to tackle the housing affordability crisis.

The revelations come as a leaked transcript separately reveals a newly appointed CFMEU boss warning up to “90 per cent” of Victoria’s commercial plastering sector may be involved in unlawful behaviour involving alleged financial crime and worker exploitation.

“The problem in plastering is bleeding out into other profiles: painting, tiling, cleaning, cladding, formwork. It needs to stop. It needs to stop,” CFMEU boss Jason Deans said in a recent meeting with hundreds of union delegates, adding the clean-up job was far from done.

“We are not going to fix the plastering [industry] in five minutes. It is going to take 18 months or two years.”

A Gatto empire insider said that plastering company Rising Star Interiors has paid the underworld identity almost $1 million as part of a retainer that has continued into 2026, while another plastering company, Ultimate Interior Group, made multiple payments to Gatto over the past six months.

All up, six Melbourne plastering firms are said to have paid Gatto to advance in Victoria’s construction sector, while tiling, concrete, piling and precast firms have also hired him.

Rising Star Interiors failed to respond to questions. Ultimate Interior Group director Xing “Andy” Wu said he was unaware his plastering firm had paid Gatto though he had met him.

“I’m not comfortable answering your questions,” he said.

Other large plastering firms have given suspected inducements to now former CFMEU bosses close to Gatto, including Derek Christopher, who was accused of serious corruption in the Watson report tabled in Queensland’s royal commission into the union.

Christopher is now paid as a part-time adviser by one of the biggest plastering firms in the state and still wields influence inside the union through loyal delegates.

Another Victorian plastering giant is owned by a family with deep ties to the Mokbel crime crew, mafia boss Rocco Arico and disgraced ex-union chief John Setka.

A construction industry source said plastering accounted for about 6 per cent of the costs in a typical apartment project.

In his recent address to delegates, Deans warned that rotten relationships between the CFMEU and the plastering sector also needed to end, saying: “If there has been any unhealthy relationships with these companies, they stop today.”

‘I thought maybe if I engage him, I won’t have any issues.’

Brandon Groves, Lux Precast director

Precast firm Lux, which has worked on more than two dozen apartment blocks and towers in Melbourne, has paid Gatto this year as part of an ongoing retainer that has earned Gatto at least $700,000 in the past six years.

Lux Precast director Brandon Groves said his concrete panel manufacturing company paid Gatto to manage disputes with the union at its Dandenong South factory.

When pressed on what problems had arisen for Gatto to fix, Groves initially said his company didn’t have any, but then provided the example of the union demanding the employment of a “peggy” or site cleaner.

“He just dealt with that and sorted that out, because we didn’t need it, we weren’t big enough to have a peggy on site,” Groves said.

He dismissed the suggestion that problems had been contrived for Gatto to “fix” for a fee.

“I haven’t seen any of that, so I can’t comment on that. [It] definitely hasn’t happened for me,” Groves said. “I haven’t had any issues with the union. But I thought maybe if I engage him, I won’t have any issues. Do you know what I mean?”

Gatto declined to comment.

Multiple builders of multi-residential projects, including Hawthorn firm D5 Build Group, have also placed Gatto on their payroll this year, with six other Melbourne multi-storey apartment block builders paying Gatto well over $2.5 million in total between 2023 and early 2026.

D5 Build founder Serg Djurovic said he was told to pay Gatto after the CFMEU shut down his projects and pressured him to install a delegate on his site in Richmond.

“I was told that if I want to fix the issue I’d have to have a chat with Mr Mick Gatto,” he said. “If I had any other options, I wouldn’t do it.”

Djurovic believes the union saw his five-storey Church Street project as part of its territory as it was in the inner city and slightly larger than his other projects.

Its demands to install a health and safety delegate on the site stopped once Gatto became involved, he said.

“If the delegate was really there for health and safety, he should’ve stayed,” Djurovic said.

He said he felt he couldn’t contact authorities because he believed they would consider the issue a civil matter, or the union would claim his site was unsafe.

“I’m a small business in the scheme of things,” he said. “Where was the law to help me out?”

Construction industry insiders claim Gatto and the CFMEU’s suspected control of the plastering sector has not only enriched the gangland figure, and allegedly corrupt ex-union bosses, but meant only select firms have prospered in the high-rise housing sector and created an uncompetitive market propped up by unwitting apartment buyers.

“Buyers are all paying a Gatto tax, which is the cost added on not just via his fees but by the uncompetitive market he [allegedly] helps create with his buddies in the union,” one veteran construction industry source who has had multiple dealings with Gatto said.

Two long-time CFMEU members said the plastering industry was broken and that the cost of dealings involving people such as Gatto was paid for by “all Victorians wanting [to buy] an apartment”.

The revelations highlight the ongoing failure of the Allan government to stop the infiltration of gangland figures in Victoria’s construction sector.

Amid growing calls for a royal commission, the heads of Victoria Police’s specialist Taskforce Hawk said recently the force was largely powerless to clean up the construction sector without legislative change.

They also highlighted, before CFMEU chief Deans’ recent and yet-to-be-tested call to action, that select dishonest CFMEU officials have given suspected unlawful operators in Victoria’s plastering sector a green light to operate in a controlled market, even as workers were ripped off and bosses became wealthy.

In his delegates’ address, Deans estimated that as many as nine out of 10 commercial plastering industry workers operated as “sham contractors” on individual ABNs and had been recruited by contractors through industrial-scale worker supply chains.

“They pay cash all the way down. It could be ten-tiered, it could be deeper. It needs to stop, but it’s going to take time,” he said, urging the CFMEU delegates to campaign against company bosses engaged in these practices.

The Age is not suggesting the companies named in this article are engaged in sham contracting or the other practices called out by Deans.

Deans said companies and builders “are going to squeal” in response, but that “these builders have enabled this. They have let this go. They knowingly know that these plastering companies are paying 20 to 30 per cent under EBA rates,” he said.

The Victorian government describes sham contracting as a financial crime involving an employer who “disguises an employment relationship as a contracting arrangement” in order to “avoid certain taxes or shirk responsibility for employee entitlements such as minimum wages, superannuation, workers’ compensation and leave”.