The home and office of Federal MP Craig Thomson have been raided by NSW police executing warrants for their Victorian counterparts, who are investigating claims Mr Thomson misused hundreds of thousands of dollars of union funds.
TONY JONES, PRESENTER: Police have seized personal documents and computer files belonging to former Labor MP Craig Thomson in morning raids on his home and office.
The now independent Member for Dobell says he's done nothing wrong and is cooperating with what he calls a "broad investigation" into the Health Services Union.
And his lawyer has attacked Tony Abbott for calling Mr Thomson's character into question, issuing a threat to sue for defamation.
Political correspondent Tom Iggulden has more from Canberra.
TOM IGGULDEN, REPORTER: At 7:00 am, detectives from the Fraud and Cybercrime Squad arrived at Craig Thomson's New South Wales Central Coast house with a search warrant.
Before lunch, they'd also raided his electorate office, altogether seizing boot-loads of files on paper and on hard disk.
DAVID CHRISTEY, NSW POLICE: The warrant has been issued on information that's been provided by the Victorians and the items that have been seized will be returning to Melbourne with them.
TOM IGGULDEN: It's Victorian police most closely investigating Craig Thomson's alleged misuse of up to half a million dollars of union money to pay for prostitutes, airline tickets and election expenses.
JOURNALIST: Victorian detectives are specifically investigating you and your involvement.
CRAIG THOMSON, INDEPENDENT MP: As I said, there is an ongoing Victorian investigation in relation to the national office of the union ...
JOURNALIST: No, into you!
CRAIG THOMSON: Of the national office of the union for which I have made my comments here today.
TOM IGGULDEN: Mr Thomson says he's cooperating with police.
CRAIG THOMSON: I reiterate that I have done nothing wrong and am very confident that at the conclusion of this investigation that will be the conclusion that the police reach as well.
TOM IGGULDEN: And the former Labor MP played down the drama of today's early morning police raid.
CRAIG THOMSON: This is part of a routine investigation.
JOURNALIST: It's hardly routine, people - police coming knocking on your door.
CRAIG THOMSON: Well, I'm sorry, I'm sorry, in terms of an investigation of this nature, it is.
JOE HOCKEY, SHADOW TREASURER: It's a very serious issue when police raid a Member of Parliament's home. They weren't going over for a morning cuppa tea.
TOM IGGULDEN: Wayne Swan says Coalition MPs too have been under police investigation.
WAYNE SWAN, TREASURER: Well this is not the first time this has happened. For example, Mr Laming, the current Member for Bowman, was the subject of some allegations some time ago and they were handled by police.
TOM IGGULDEN: But this morning's raids revived Opposition attacks on the Prime Minister for using Mr Thomson's vote to stay in power.
TONY ABBOTT, OPPOSITION LEADER: I wish the Government had been as diligent about protecting the money of low-paid union members as the NSW and Victorian police have demonstrated themselves to be.
This must stop and it must stop today.
TOM IGGULDEN: Mr Thomson's lawyer was fuming at the Opposition Leader's remarks.
CHRIS MCARDLE, LAWYER: We will not tolerate out client being condemned by innuendo or aging student politicians mouthing off. This is unacceptable conduct. Our client is an innocent man.
TOM IGGULDEN: And Mr McArdle issued a threat to Tony Abbott and to others casting doubt on Mr Thomson's innocence.
CHRIS MCARDLE: We've already started suing one person and we will not stop. So the way not to get sued is to not defame my client.
TOM IGGULDEN: But Mr Abbott says he's on safe legal ground.
TONY ABBOTT: Look, he hasn't been arrested, he hasn't yet been charged, there has been an adverse finding made against him made by a quasi-judicial body, the Fair Work Australia Tribunal.
TOM IGGULDEN: But the lawyer wasn't done there, saying the media had been tipped off about the raid, with one broadcast van arriving at Mr Thomson's house just minutes after police.
CHRIS MCARDLE: Someone, somewhere in the background is manipulating the institutions of the state for their own political purposes.
TOM IGGULDEN: Victorian police were also critical. "I share Mr McArdle's outrage at the media's apparent knowledge of these activities this morning," said one senior officer. "I would love to know how the media knew what was happening."
Mr Thomson's wife apparently agrees, running over television equipment as she drove off.
Not for the first time, the attention on Mr Thomson distracted from bread-and-butter political issues, like today's release of inflation data. Numbers for the so-called "carbon tax quarter" show that for the three months to September, prices rose at their fastest rate for a year and half.
But the Treasurer's comfortable with the annual inflation rate now at 2 per cent.
WAYNE SWAN: OK, well today's figures confirm that inflation remains contained and this is despite the modest impact of the carbon price that we had always anticipated.
TOM IGGULDEN: But with a 15 per cent surge in electricity prices, the Opposition's zeroing in on the carbon tax.
JOE HOCKEY: They wanted to increase the price of electricity, now they've got their wish and they're pretending it's not happening.
TOM IGGULDEN: Electricity users are concerned about rapidly rising power prices.
BRIAN GREEN, ENERGRY USERS ASSOCICATION: If we do not see any change, I cannot see industry and manufacturing continuing in Australia. We will be priced out of world competitiveness.
TOM IGGULDEN: But the ACCC chief agrees with the Government that the carbon price is not the main culprit and that overinvestment by power generators is the biggest reason.
ROD SIMS, ACCC: Half of your bill is paying for those poles and wires, so how they're regulated is of crucial importance to your electricity bill and it's crucial that we get the regulatory arrangements right.
TOM IGGULDEN: An argument sure to spark more debate in Canberra.
Tom Iggulden, Lateline.
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