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A $60 MILLION construction project supported by the state and federal governments and employing foreign workers on controversial temporary work visas has been closed after it received 39 infringement notices.

The workers are among 40,000 expected to arrive in Australia this year on the business visas designed for employers who cannot find local workers with specific skills.

But documents obtained by the Herald reveal that those at the site in Wetherill Park, where ABC Tissues is constructing a tissue-paper mill and plant, did not meet the most basic criteria for eligibility for the so-called 457 visas.

It is also understood that at least until August 4 they were being paid in China, in breach of the visa conditions, by a Chinese Government-owned company acting as a labour hire firm.

ABC Tissues is owned by Henry Ngai, who attracted a high-level show of support when construction began last year, with the Attorney-General, Philip Ruddock, taking part in the sod-turning ceremony.

The Australian Manufacturing Workers Union says that between their arrival in February and May the foreign workers were not covered by workers' compensation insurance, which is also a breach of the regulations.

Workers on 457 visas should be skilled and fully qualified for the work they have travelled to undertake, and be able to comply with local safety laws. But at the ABC Tissues site there were forklift drivers and electricians without appropriate licences.

The site was closed by ABC Tissues a fortnight ago after a showdown with the workers' union and inquiries by WorkCover.

Australian workers on the site said none of the Chinese workers could speak English, read safety signs or follow emergency procedures. Many had to be trained to perform the most basic tasks.

One Australian tradesman said he was stunned to see one of the guest workers make a non-compliant Chinese power tool fit a socket by stripping the cord and inserting naked wires straight into the plug.

During a meeting on August 4, ABC Tissues' general manager, Ming Ly, told a group of union officials and senior ABC managers that the workers were being paid in China, rather than in Australia.

Mr Ly could not nominate a bank account, specify how much they were being paid or confirm that superannuation was being paid.

ABC Tissues is one of the leading suppliers of tissues and toilet paper in Australia, with factories in Sydney, Brisbane and New Zealand and total revenues of more than $196 million last year.

The Chinese workers, thought to number about 50, were hired by a Chinese Government-owned business, the Hunan Industrial Equipment Installation Company, which is supplying labour to an Italian company, A. Celli, which in turn has the contract to build and install the mill for ABC Tissues.

Since May, the project has been at the centre of tensions between ABC Tissues, the two overseas contractors, and the workers' union over the Chinese workers.

In June the Prime Minister, John Howard, told Parliament that Mr Ruddock had played no part in theDepartment of Immigration's decision not to act on claims that immigration rules had been breached at the site. It is not clear who, if anyone, had made such an allegation.

Mr Howard said the Department of Immigration was investigating the site, but union officials and local workers interviewed by the Herald said they have seen no evidence of such an investigation.

Both Mr Ruddock and the state manager of the Department of Immigration's Migration Assistance Scheme, David MacLeod, attended the sod-turning ceremony last September. A spokesman for Mr Ruddock said he had attended because of his close links with the Chinese community.

Mr Ngai is known for his generous charity donations and good relations with all levels of government.

In the past year, Mr Ngai has been thanked for donations to various causes by the NSW MP, Peter Wong, and the Queensland Premier, Peter Beattie. Last year he accompanied the Mayor of Fairfield, Nick Lalich, and other councillors and staff to Shantou in China's south to help forge a sister-city relationship, contributing $10,000 to their costs.

The mill project has been supported by the NSW Government's major projects unit, which assists business developments that benefit the state by providing employment.

Australian workers at the site were stunned when the Chinese workers arrived unannounced in February.

They were housed nearby and driven to work each morning by bus, each wearing matching overalls and shiny new red helmets.

One local worker told the Herald that soon after they arrived the new workforce opened shipping containers stored on-site and unloaded masses of equipment shipped from China, including thousands of boxes of new tools, scaffolding, ladders and safety equipment that did not meet Australian safety specifications.

Another told how he saw a Chinese worker swaying high in the air as he welded a pipe he was tied to as it dangled from a crane.

"We'd see people on the roof, 20 metres in the air, and you couldn't even yell at them to get friggin' down," he said.

One local worker said he feared someone had died when he came across a group standing around a man prostrate on the ground. In fact the man was using a pipe to blow dust from a newly drilled hole. "It was straight out of the 1930s."

Despite the evidence of breaches of workplace and immigration regulations, workers on site said they had been told by management that a further 21 visas for overseas workers had been approved.

The Australian workers said it was impossible to maintain a safe site with two workforces labouring side-by-side unable to communicate.

They were also angered that the day the Chinese arrived, negotiations with local subcontractors to work on the mill's installation ended.

The state secretary of the union, Paul Bastian, said it was absurd that in the eyes of the Department of Immigration the Chinese workers were in Australia plugging a skills gap, while WorkCover was not satisfied they were safe to work unsupervised. He said the site revealed how poorly policed the 457 program is.

A spokesman for WorkCover said the agency was investigating the insurance and workers' compensation situation on the site, but could not say how they could prosecute a foreign company in the event it broke the law.

The Department of Immigration would not discuss specific cases, a spokesman said last night.

ABC Tissues executives did not respond to the Herald's repeated attempts to contact them.

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