Linton Besser May 2, 2013 - 1:45PM
Torrid interrogation ... Peter Braham SC, who questioned Mike Chester at the ICAC inquiry. Photo: Wolter Peeters
A director of NuCoal Resources Ltd, the company that owns a Hunter Valley exploration licence at the centre of a corruption probe, has been forced to resign from the company after admitting he "improvised" in his testimony before the inquiry.
Mike Chester, a former principal at a subsidiary of Opes Prime, which collapsed in 2008 owing more than $630 million, resigned last night from NuCoal.
In a short statement to the market, the company said his departure was "effective immediately". He was one of a number of investors in the company which the ICAC has declared are under active investigation for corruption.
Mr Chester had invested $23,000 in Doyles Creek Mining, the company to which the former resources minister Ian Macdonald issued a coal exploration licence without a tender just before Christmas in 2008.
The proposal was described publicly as a "training mine" but it has since become clear that a significant commercial mining operation was always intended at the site.
The Independent Commission Against Corruption is investigating this licence allocation because the company's chairman at the time was John Maitland, a friend of Mr Macdonald's and a Labor party figure.
Mr Maitland's profit from the deal amounted to shares worth as much as $14 million.
During a torrid interrogation by counsel assisting the ICAC, Peter Braham SC, Mr Chester denied that his investment reaped him a $1 million windfall but accepted he had made a "significant amount of money".
Mr Chester told the inquiry that although the NuCoal prospectus given to potential investors valued the licence at $100 million, a fair value would have been $5 million.
He also said he was "improvising" when he previously gave incorrect answers to Mr Braham, potentially a criminal offence under the ICAC Act.
Fairfax Media has been told that after giving evidence, his colleagues on the board of NuCoal demanded his resignation. The company is lobbying to be allowed to retain its exploration licence and apply for a mining lease to allow the mine to proceed.
On Tuesday, documents were tendered to the inquiry which showed Mr Chester had attended a critical meeting with Mr Maitland and Craig Ransley, another investor under investigation, in November 2007 - about a year before Mr Macdonald overrode his department's protests and directly issued a coal licence to the company.
Confidential file notes taken of the meeting show Mr Ransley wanted to ensure a return by avoiding having to compete at a public tender for the exploration licence.
"Don't want to spend $1m. Don't want to have to go to tender. No guarantee of return for shareholders," the file note says. "So we are in 'prefeasibility' study. With 'spin' for training mine."
The inquiry resumes tomorrow with Greg Combet, the federal minister for climate change, scheduled to give evidence.
Eddie Obeid recalled to give evidence
ALP powerbroker Eddie Obeid will be recalled to give evidence before the ICAC.
In a statement, the corruption watchdog said his recall was at his own request.
He is under investigation over a coal deal involving Mr Macdonald that provided benefits worth as much as $100 million to his family.
"Mr Obeid is being recalled because a complaint has been raised on his behalf that evidence given by a particular witness, Mr Alan Fang, had not been put to Mr Obeid snr," the statement said.
"Irrespective of whether or not it was necessary to do so, the Commission has decided that Mr Obeid Sr should be recalled so that these issues can be raised with him by Counsel Assisting the Commission."
He will appear in the witness box on May 13.
