THE former Labor MP Craig Thomson faces being hit with $450,000 in fines and compensation payments to his old union under Federal Court proceedings brought against him by Fair Work Australia that include fresh claims about the use of prostitutes.
If the court finds against Mr Thomson, it would not disqualify him from Parliament because the alleged breaches are civil, not criminal, matters.
However, if he is bankrupted by paying fines, compensation and legal costs, he would be disqualified, and the Gillard's government's hold on power imperilled.
Mr Thomson said the decision to take him to court was expected but he would fight it.
He criticised Fair Work Australia, the industrial watchdog, for "going out of its way" to lodge the action in Melbourne, when it could have done so in NSW, where he lives and where he spent most of his time as a union official.
"Given I am in NSW and all of these things have been in NSW, they are deliberately trying to ratchet up the costs for me, my legal team and any witnesses we may call," he said.
The proceedings are another unwanted distraction for the government, which only last week endured the loss of Peter Slipper as speaker.
An Essential Media poll, the first taken after last week's chaos, showed the vote for both major parties was largely unchanged, the Coalition had a strong lead and Julia Gillard's and Tony Abbott's approval ratings had increased.
Ms Gillard maintained a clear lead as preferred prime minister, leading Mr Abbott by 43 per cent to 36 per cent.
Mr Thomson, who was suspended from the ALP in late April, faces civil action in the Federal Court over a range of offences allegedly committed when he was the national secretary of the Health Services Union between 2002 and 2007, before he entered Parliament as the member for the central coast seat of Dobell.
The general manager of Fair Work Australia, Bernadette O'Neill, said the statement of claim, which follows on from the findings of the Fair Work Australia investigation released in May, contains new allegations about the misuse of union money relating to escort services.
These include allegations Mr Thomson withdrew $800 using his union credit card at ATMs on the central coast and in Melbourne on April 12 2006, flew to Melbourne and used the money to pay for services from the escort agency Boardroom of Melbourne.
Fair Work Australia also alleges that in the same month, he withdrew money with the credit card and purchased escort services from Young Blondes Escort Agency and/or Confidential Models Escort Agency.
About two months later, he allegedly withdrew money using his union Mastercard in Melbourne to use services of the Miss Behaving escort agency.
The court statement alleges 25 breaches of union rules, which carry no penalty, and 37 breaches of duties of officers of registered organisations, which are punishable by fines of up to $6600 each.
If the court finds against Mr Thomson on all 37, he could face $244,200 in fines.
Fair Work Australia is also pursuing him to compensate his old union for up to $200,000 for spending HSU money on prostitutes, cash advances, travel for his wife and getting himself elected to the seat of Dobell in 2007.
Mr Thomson maintained his innocence yesterday and will seek to have the case thrown out when he first appears on December 7.
The government, which now requires the votes of five of the seven cross-benchers – including Mr Thomson and Mr Slipper – to win a vote, needs Mr Thomson to stay in Parliament until at least June, by when it would be too late for a byelection because a general election is due in spring.
The opposition's workplace spokesman, Eric Abetz, said Mr Thomson might try to delay proceedings to stave off the possibility of bankruptcy.
"I fear that he will seek to delay matters until the next election at least," Senator Abetz said.
Mr Thomson is awaiting the outcome of a Victorian police investigation into his alleged wrongdoing.