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Issue #1605      August 7, 2013

Deep implications of NSW corruption inquiry

Last week the NSW Independent Commission Against Corruption (ICAC) brought down three damning reports into corruption within former Labor governments in NSW. The reports are based on one of the most intensive corruption investigations in Australian legal history.

Eddie Obeid arriving at ICAC hearings.

The inquiry found that former mining minister Ian MacDonald and Eddie Obeid, former MP and leader of the dominant right-wing faction in the NSW parliament, and Obeid’s son Moses had all acted corruptly with regard to the creation of a series of mining tenements over land at Mount Penny near Mudgee in the NSW Hunter Valley.

The land included most of Cherrydale, a farm belonging to Obeid and his family, as well as parts of adjacent properties partly-owned by Obeid and others.

The Obeids are already receiving $30,000 per month for access to the properties. For the sale of the mining rights to Cascade, Obeid’s firm received $60 million, comprising a 25 percent stake in Cascade and a $30 million payment. They could also receive up to $100 million if the O’Farrell government grants a mining licence to Cascade.

MacDonald, known as “Sir Lunchalot” for his lavish wheeling and dealing dining habits, was also found to be corrupt for having received the services of a prostitute in exchange for having provided introductions between businessman Ron Medich and mining company representatives. Medich and his offsider Lucky Gatellari were also found to be corrupt for arranging the prostitute’s services.

The Mount Penny tenements were purchased from the Obeids by Cascade Coal, a company in which Obeid is a shareholder. Other major shareholders included Travers Duncan, John Kinghorn, Richard Poole, John McGuigan and John Atkinson, all of whom who were found by ICAC to have misled officials about the Obeid family’s involvement in the Mt Penny purchase. Several of them were also directors of White Energy, a publicly-listed company that tried to buy Cascade Coal but were forced to withdraw.

The Commission has recommended that the NSW Department of Public Prosecutions (DPP) should lay charges against all of those found to have acted corruptly, except for Gatellari. Former NSW treasurer Eric Roozendaal was cleared of corruption charges because of insufficient evidence.

It is not clear whether the O’Farrell government will act to invalidate the Mt Penny tenement, deny Cascade coal the right to mine, or take action to recover any of the profits that Obeid has received from the deal.

Cascade has a licence to carry out exploration for coal. It lodged a mining application in 2010, but this has not yet been approved. The O’Farrell government could reject Cascade’s application to mine, but has given no indication that it will do so.

The government has said that before it takes any action it will first have to consider the evidence from the ICAC inquiry hearings. Meanwhile, Obeid and MacDonald have stated they will seek a judicial review in order to appeal against the findings.

The ICAC is now conducting a second inquiry into matters concerning former Labor ministers Michael Costa, Tony Kelly and Joe Tripodi, and their relationship with the firm Australian Water Holdings, (AWH) in which Obeid has a financial interest.

AWH carries out major works for Sydney Water, and at one stage it appeared that the firm would succeed in a bid to take over a privatised part of Sydney Water’s operations. That would also have been of considerable financial benefit to Obeid.

The corporate culprits

Obeid became known as “He who must be obeyed”. One of the few MPs to take him on was former Premier Nathan Rees, who bitterly denounced Obeid and Joe Tripodi, and was then ousted from power.

Apart from angry denunciations of the Fairfax journalists who were attempting to find out the truth about his business dealings, the subjects of his few parliamentary speeches were almost solely concerned with matters in which he had a real or potential financial interest.

Obeid saw nothing wrong in a situation where he wielded enormously disproportionate power from his small office (Room 1122) in State parliament. He was only a backbencher, yet his skill at manipulating obligations resulted in an ability to ensure not only ministerial appointments but even the position of state premier for those he favoured.

When interviewed after some of his former parliamentary colleagues had testified against him, Obeid angrily declared that they had no right to have done so because he had given them their ministerial positions.

That and other statements have revealed a mindset in which honesty, capability and a commitment to the welfare of ordinary Australians didn’t rate a mention, whereas patronage, bribery, favouritism and mutual backstabbing, with a view to amassing personal wealth, were seen as the natural order of things.

Although attention has focused on Obeid and his cohorts, corruption is not limited to the Labor Party. Like the Fitzgerald inquiry into the rule of the former Bjelke-Petersen government in Queensland in the 1990s, the ICAC inquiry is already proving to have major implications for all Australian political parties and their relationship with the corporate world.

Last week the O’Farrell government was forced to terminate the appointment of one senior minister for not declaring “a conflict of interest”. This is undoubtedly the tip of the iceberg. One of the big differences between the Liberals and the Labor right wing is that the Liberals are far more careful to conceal their ambitions and to avoid the blatant proclamations of entitlement to power, such as Obeid’s denunciation of those who testified against him in the ICAC hearings.

But above all, the responsibility for the corruption revealed by the ICAC is shared between Obeid and his corhorts on the one hand, and the corporations involved on the other. But even more importantly, we must introduce a more humane and inherently honest political economy if we really want to tackle the injustice, corruption and greed which breeds like a malignant growth under capitalism.   

Next article – Australia & asylum seekers – The myths and the facts

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