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Blackmail charges brought against Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU) leaders John Setka and Shaun Reardon were dropped by Victorian prosecutors on May 16 in a major embarrassment for the federal government’s trade union royal commission, police and prosecutors.

Prosecutors dropped the charges against Setka and Reardon at a pre-trial committal hearing in Melbourne Magistrates Court, in a backdown that raises serious questions about the decision to charge the two men and the credibility of the Royal Commission into Trade Union Governance and Corruption, called by then-Prime Minister Tony Abbott in 2014.

Prosecutor Ray Gibson told the court: “After a careful assessment of the evidence we’ve heard, I have instructions to withdraw the charges against both accused.”

Setka and Reardon’s legal team agreed, as did magistrate Charlie Rozencwajg, who said: “I think it’s a very sensible resolution to this matter.”

Setka and Reardon were charged in 2015 after an investigation by a joint Victorian and federal police unit, following a referral by the royal commission.

The charges stemmed from allegations the pair had threatened to blockade Boral plants and trucks if the company did not stop supplying concrete to Melbourne worksites run by construction giant Grocon. At the time, the CFMEU was fighting for the right to appoint occupational health and safety representatives at Grocon sites.

The prosecution had alleged the blackmail took place during a meeting between Setka, Reardon and Boral executives Paul Dalton and Peter Head in Melbourne in April 2013. The decision to drop the charges was partly based on the performance of Dalton and Head during cross-examination in the committal hearing.

Dalton faced intense questioning by defence barristers about his decision to destroy his original handwritten record of the meeting. Head was grilled about whether he knew that Boral had called the meeting with an aim to “do a deal” with the union to lift its ban on cement deliveries.

Authorities also believed  may have weakened the prosecution. Freehills played a key role in assisting the company deal with the union and the prosecution, including in helping to redraft witness statements.

Outside court, Peter Gordon, who represented Setka and Reardon, said the decision to drop the charges ended a "dark chapter" in Australia's political and union history.

Boral's credibility had been "shredded" during the court process: "What we do know is that gross and unlawful distortion took place, and that's the only way in which these charges could have ever been brought."

He said the 2013 meeting had been distorted by Boral and its legal team, who now deserved to face charges themselves: "It’s been exposed that neither of Boral’s men took the coffee shop conversation as any kind of threat at the time, did not view it as any kind of threat for over a year and after a year their recollection got changed.

“It got changed only after various lawyers got involved, lawyers for Boral, lawyers for the ACCC, lawyers for Dyson Heydon’s royal commission … all of these lawyers were given their riding instructions by men who were on a mission for the extreme right of our politics.”

On the steps of the Magistrates' Court he and Reardon had been the victims of a politically motivated witch-hunt intended to criminalise trade union activity.

He said the case against them was a conspiracy that at times involved Abbott, Senator Eric Abetz and former Victorian Attorney-General in the Napthine government, Robert Clark.

“Our job is to preserve life, to make sure that our members go home to their families every night and that’s all we were trying to do,” he said. “They were trying to criminalise that.”

The backdown supports the union movement’s long-held claim that the royal commission and associated police investigations amounted to a political witch-hunt. The CFMEU was a key focus of the trade union royal commission's final report released in 2015, in which Commissioner Dyson Heydon said the union acted in "wilful defiance of the law".

In a statement, Victorian Trades Hall secretary Luke Hilikari said: “John and Shaun have been dragged through the mud for standing up for health and safety in one of our most dangerous industries. It is disgraceful that these trumped-up charges got this far.

“It’s crystal clear that Boral executives were working hand-in-glove with the Turnbull government in an attempt to destroy the Australian union movement. Today, they’ve failed.

“The entire process was a politically motivated farce from start to finish, designed to humiliate two men who have spent their lives standing up for workers.

“John, Shaun and construction workers right across Victoria have faced three long years of public harassment and bullying at the hands of the Turnbull government, the ABCC, the ACCC and the Royal Commission into Union Governance. This is beyond a joke. This is a national disgrace.

“John, Shaun and workers right across Australia deserve a grovelling apology for this mess. Malcolm Turnbull should be the first to apologise, followed by Michaelia Cash.

“Fighting for health and safety is not a crime. It’s about saving lives.”