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Issue #1657      September 24, 2014

NSW Liberals in a state of corruption

Ten Liberal members of the NSW parliament have now been forced to resign from leading party positions, and in two cases to quit parliament, because of allegations of misconduct concerning the receipt of illegal election fund donations or other inducements.

Tony Bandle’s plea of ignorance is no excuse in the eyes of the law.

The allegations have emerged from the current inquiry of the NSW Independent Commission Against Corruption (ICAC) into illegal political activities, including the receipt of donations from organisations banned from contributing to political parties.

Those moved to the backbench include former energy minister Chris Hartcher, former junior ministers Darren Webber, Marie Picarra, Chris Spence and Garry Edwards, and former Premier Barry O’Farrell. Two backbenchers, Tim Owen and Andrew Cornwall resigned from parliament.

O’Farrell alledgedly misled the ICAC over receipt of a gift from Nick Di Gerolamo, chief executive of Australian Water Holdings, the firm owned by disgraced former Labor MP Eddie Obeid. The others are alleged to have received funds from property developers, who are banned from making political donations in NSW, via the Canberra-based Liberal organisation the Free Enterprise Foundation (FEF). Another MP, Craig Baumann has also been implicated.

Property developer and former mining magnate Nathan Tinkler is said to have contributed $120,000 to the Liberals. He later sought government support in a campaign against Labor MP Jodi McKay, who opposed Tinkler’s proposal for a coal loader at a Newcastle industrial site. Tinkler claims the ICAC inquiry has ruined his coal business and demanded it withdraw allegations against him.

Two weeks ago FEF trustee Tony Bandle claimed he was unaware that the firm Elmsley Land Development (ELD) was involved in property development, or that under the 2009 NSW law it was illegal to accept political donations from such businesses.

Prior to the 2011 elections ELD gave $20,000 to FEF, which then passed an equivalent amount to the NSW Liberals. The Foundation is said to have received about $500,000 in donations prior to the 2011 NSW elections.

Bandle also claimed that no other member of the Liberals had told him such activity was illegal, even though Paul Nicolaou (NSW Liberals’ chief fund-raiser, with whom Bandle had close and continuous contact) was the very person who thought of channelling funding from prohibited donors through FEF.

Bandle’s plea of ignorance is no excuse in the eyes of the law. He and others are likely to face charges in the light of the inquiry’s findings.

Background to the inquiry

The ICAC inquiry commenced with an examination of the illicit involvement of former Labor politicians Eddie Obeid, Joe Tripodi and others in the lease of a Hunter Valley coal mine, and in the firm Australian Water Holdings (AWH).

However, the spotlight suddenly turned on the Liberals when it was revealed that former Assistant Federal Treasurer Arthur Sinodinis had been hired by Obeid to assist in dealings with the new state Liberal government, in order to gain a particularly lucrative NSW government contract for AWH.

The Liberals had been overjoyed when revelations emerged several years ago that members of the NSW Labor government had been involved in corrupt dealings over property development.

But in 2009 the Labor government of Premier Nathan Rees passed legislation prohibiting the receipt by political parties of election funding from property developers. That didn’t suit the Coalition at all, because approximately one third of its electoral funding was coming from developers.

They therefore decided to channel donations from banned businesses through the Canberra-based Free Enterprise Foundation, which claims discretionary powers to allocate donations to various worthwhile causes.

As the ICAC testimony has demonstrated, the money it received was directed to Liberal Party campaign funds. Prior to the 2011 elections the Foundation directed a total of $500,000 to the NSW Liberals. Some money was also funnelled through a company called Eightbyfive, set up by Chris Hartcher’s staff assistant Tim Koelma.

Federal Liberals in the dock

The scandal involving NSW Labor politicians was largely confined to the state caucus, in which the Obeid group exerted wide influence. However, the group’s members were clearly involved in dealings which offered financial gain to them rather than the party, and Labor can claim credit for having subsequently passed the Rees anti-corruption legislation.

The Liberals, on the other hand, appear to have been involved in dealings that benefited the party itself. ICAC has evidence that the idea of channelling illegal donations through FEF came from NSW chief fundraiser Paul Nicolau, and that many other Liberals were aware of the FEF money-laundering arrangement.

Former assistant federal Treasurer Arthur Sinodinos, who was involved with AWH and Obeid, prepared a list of donors prior to the 2011 election. Nicolaou solicited donations from some of them, and the Liberals’ federal director Brian Loughnane was fully aware of the FEF arrangement.

Moreover, Loughnane’s wife Peta Credlin, Tony Abbott’s chief of staff, is on close terms with the firm Brickworks, which made a $180,000 donation to the NSW Liberals via FEF in 2010 and 2011. She also worked closely with Brickworks in the struggle to abolish the carbon tax. The federal Liberals attempted unsuccessfully to get evidence about Credlin’s involvement with Brickworks suppressed.

Brickworks also paid $150,000 over three years from 2009 to fund a position for researcher Matt Crocker in Premier Barry O’Farrell’s office. Crocker is now chief policy advisor to NSW Premier Mike Baird.

Prior to the 2011 election property development firms made donations to the federal Liberal office, including Westfield ($150,000), Walker Corporation ($100,000) and Meriton ($50,000), but the money was then directed to NSW via FEF.

Federal Liberal MP Karen McNamara is also implicated in illicit funding for NSW MP Darren Webber, now on the back bench.

The inquiry has released a stench of corruption from both state and federal levels of the Liberal Party, and has led to calls for the establishment of a federal judicial equivalent of ICAC.

It remains to be seen what if any impact, the latest ICAC revelations have on the forthcoming state elections.

Next article – Indigenous leaders urge PM to step in

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