Fears are growing in labour movement circles that the NSW police probe into Craig Thomson could spell the end for his former union, as the house of cards that has let well-paid officials sup for decades from their members’ teat collapses.

Yesterday, Health Services Union national secretary Kathy Jackson announced that she would refer allegations of criminality inside the union to the NSW Police. But union insiders say the likely upshot of the probe, overseen by tenacious former National Crime Authority investigator and chief commissioner Andrew Scipione, is that the pockets of all current and former HSU officials — and not just Thomson — will be turned inside out.

Scipione won’t need to look far. Crikey readers will recall that Jackson’s ex-husband, factional handmaiden and former HSU state secretary Jeff Jackson was accused of an eerily similar misuse of members’ funds at brothels and gastro pubs like The Lincoln in Carlton in a 2009 Pitcher Partners investigation.

(Crikey‘s highlight was the $5,000 shunted to Jeff Jackson’s good friend and protégé Alex Hicks to campaign for Barack Obama in 2008 while she was on unpaid leave).

One senior figure in the right wing of the Victorian ALP told Crikey this morning that if paid police investigators are given carte blanche, the tendency would be to turn rip the union’s files from their filing cabinet hidey holes with devastating effect.

“There’s an old saying no one who spends anyone else’s money is ever safe. Even if you don ‘t do anything wrong you will get turned over, when the members did what they did to Jeff, this is just tit for tat. I don’t know if Kathy is that stupid or venal, but that [a probe without fear or favour] is certainly something you can count on.”

The implications, in addition to forcing a byelection in Dobell and bringing down the Gillard Government, would be to reshape the power dynamics of the ALP.

Whoever controls the 70,000-member national HSU also controls a spot on the ALP National Executive. At the Victorian ALP state conference in May, the HSU sent 20 delegates who pledged to vote in a 190-strong bloc controlled by David Feeney. Kathy Jackson continues to sit on the Victorian ALP’s powerful administrative committee that appoints the party’s state secretary.

A total wind-up the HSU would lead to a windfall gain for the Left, with the cleaners’ and janitors portion of United Voice potentially picking up 40,000 paid members (assuming that 20,000 jumped ship completely).

A bitter Jackson rival and former Victorian office bearer was in no doubt that the scandal could spread far and wide, telling Crikey that bodies were buried everywhere.

“When Craig Thomson goes down — and he will go down — he’s not going to go down by himself. When they’re finished with that union there won’t be too many people standing today….Kathy’s conveniently forgotten you can’t set yourself up as a moral barometer without facing the heat yourself.”

“I hope they shut the whole place down,” they added.

When the HSU’s national executive met in Sydney yesterday, the role of ALP Vice President and current HSU national president Mike Williamson was unclear. Speaking to the media, Jackson claimed Williamson has chaired the start of the meeting on the phone from Newcastle.

But Labor insiders question Williamson’s eagerness to tow the Jackson line. Their relationship has been described as a “marriage of convenience” following the joint putsch last year to wind up the Victorian branch and create a new super “East Branch”. Williamson was Craig Thomson’s mentor during his 20-year term at the union and his daughter Alex works as a spinner for Julia Gillard.

Critics continue to zero-in on Williamson’s directorship of mysterious services firm United Edge, which advertises mobile phone deals for members in official HSU literature.

The union has teetered in the past. In August 2009, the Federal Court, with the Victorian No. 1 branch bankrupt and in crisis, appointed an administrator and told Fair Work Australia to arrange for fresh elections. The clean-out resulted in a Jackson triumph following one of the most ugly election campaigns ever fought, but this time there would be no guarantee of history repeating.

An alternative theory is that Jackson decided to call in the cops as a stop gap to halt the tide of revelations that were on the verge of snagging the HSU’s ruling clique. If she failed to act, angry members may have forged a reform ticket and demanded fresh elections.

As she noted yesterday, the Fair Work investigation which commenced in 2009 is still being worked through. Uncomfortably for Jackson, her partner Michael Lawler is a member of Fair Work Australia and a vice president of the Australian Industrial Relations Commission.

When called on the conflict by the ABC’s Alison Caldwell in 2009, Jackson responded that the industrial registrar conducting the Thomson probe was its own statutory office and could only be told what to do by the AIRC president.

But with the NSW police now also on the case, Fair Work’s efforts could fade into irrelevance as Jackson’s hand grenade quivers at the HSU and federal Labor’s feet.