Credit card sex scandal threatens to derail Gillard's fragile government

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The Independent Online

When you have a parliamentary majority of one, the last thing you want is a sex scandal enveloping an MP in a marginal constituency. But that is Julia Gillard's situation, just over a year after the inconclusive election that brought her Labor government to power in Australia.

Police are investigating allegations that Craig Thomson, a Labor backbencher who used to be national secretary of the Health Services Union, used his union credit card to pay thousands of dollars to a Sydney brothel. He has denied any wrongdoing and claims that another person, whom he has not named, took the card and forged his signature.

With support for Labor at rock bottom – an opinion poll yesterday put it 14 points behind the conservative coalition – the affair has the potential to topple Ms Gillard's government. If convicted of theft or fraud, Mr Thomson would have to quit parliament, triggering a by-election that Labor would almost certainly lose. The coalition would then either take government or there would be fresh elections.

Last week it was revealed that Labor had paid legal fees of about A$90,000 (£57,000) incurred by Mr Thomson in relation to a defamation action against the The Sydney Morning Herald. The gift saved him from bankruptcy, which would have forced him to resign his seat. He dropped the legal action in May, just before it was due to go to court. The SMH aired fresh allegations this week, publishing excerpts from court documents that appear to show that Mr Thomson's credit card was being used at the same time that calls were made to an escort agency.

The scandal relates to a period before Mr Thomson entered parliament in 2007, but still has the potential to be highly damaging.