By ABC's Quentin Dempster

Posted Fri Aug 2, 2013 5:07pm AEST

Photo: Under British justice Messrs Obeid and Macdonald must receive the benefit of any reasonable doubt.

In any prosecution for criminal conspiracy, the Crown must prove there was an agreement between Eddie Obeid and Ian Macdonald. This, then, is the prosecutorial chase, writes Quentin Dempster.

Independent Commission Against Corruption commissioner David Ipp QC has found that there was an 'agreement' between then mineral resources minister Ian Macdonald and Eddie Obeid MLC which caused the creation of a coal exploration licence (EL) soon known as the Mount Penny tenement.

The Obeids had bought Cherrydale Park rural property in the Bylong Valley and made inquiries through Macdonald about any existing ELs over it. This was the genesis of the 'agreement', Ipp found, which resulted in the Obeids extending their interests in adjoining properties Donola and Coggan Creek with the help of their friends and business associates.

As they used these properties to leverage their way directly into the entity Cascade Coal, which was eventually awarded the EL, they derived a windfall benefit of $30 million with a then legal requirement of another $30 million, and with more in the event that Cascade Coal sold the EL asset to the ASX-listed White Energy for $500 million.

Now, while all the political aficionados in NSW and Australia are watching, some with barely disguised glee at the public naming and shaming of once powerful figures, sober reflection should indicate that there is more at stake here than schadenfreude (malicious pleasure in observing injury to others).

It was bemusing to note that at his mansion-front news conference on Thursday morning, at which he denounced the ICAC as a disgrace and a star chamber and poured obloquy on its officers, Mr Obeid appeared well aware of his possible escape route.

"There was no agreement," he asserted stridently.

There was no proof of any agreement which existed between him and Ian Macdonald. In any prosecution for criminal conspiracy, the Crown must prove there was an agreement. Under British justice Messrs Obeid and Macdonald must receive the benefit of any reasonable doubt.

This, then, is the prosecutorial chase. David Ipp lays out in evidentiary detail all pieces of evidence (emails, documents, reports, telephone numbers called, interrogation transcripts both in camera and public) on which he came to the concluded view (p143):

The Commission is satisfied that there was an agreement between Mr Macdonald, Edward Obeid Sr, and Moses Obeid whereby Mr Macdonald acted contrary to his public duty as a minister of the Crown by arranging for the creation of the Mount Penny tenement for the purpose of benefiting Edward Obeid Sr, Moses Obeid and other members of the Obeid family.

Eddie Obeid's Labor Party recruiter Graham 'Richo' Richardson is also aware of the possible escape route through the legal battle over admissibility of evidence in criminal trials.

On Thursday August 2, in his column in The Australian, Mr Richardson delivered an entertaining mea culpa:

I was the person who sponsored Obeid in the NSW upper house. So there it is! Look no further - I am to blame. The buck stops here.

But significantly, the oft-investigated Mr Richardson also cut to the prosecutorial chase:

Conspiracy is the charge of last resort when there is not enough evidence for a specific complaint. You don't read about many conspiracy trials because directors of public prosecutions are aware of how big a leap is required to satisfy the burden of proof.

Proof beyond reasonable doubt? It is true the ICAC did not produce any phone tap or covert video surveillance of Macca and Eddie actually verbally agreeing that the Mount Penny EL would be created.

Had there been this evidence, a conspiracy conviction would be more certain. They would have been caught starkers and chockers, a technical term for evidence of the highest probative value.

But there is substantive evidence from document seizures that the Obeids had maps and lists of mining companies which were highly confidential and should never have left the security systems of the Department of Mineral Resources.

That, with a timeline of telephone traffic and individual actions, may, in the hands of a skilled prosecutor, convince a jury that there was an agreement and both parties were acting within that understanding.

Helpfully, David Ipp QC lays out the case law as a guide for the NSW DPP, Lloyd Babb SC, to consider when he comes to decide if he can substantiate charging Mr Macdonald and Mr Obeid with the common law offence of conspiracy to defraud (p145 Operation Jasper report):

Conspiracy to defraud encompasses an agreement by fraudulent means to cause a public official to act contrary to his or her public duty even where no economic loss has occurred. In such cases it is sufficient to show that there was an intention to enter into an agreement to use dishonest means to influence the exercise of a public duty for the purpose of obtaining an advantage.

David Ipp rejected submissions he received from lawyers for the adversely named and published his research of all the relevant cases on the points of conspiracy and agreements:

Many submissions made to the Commission suggested that it would be required to prove dishonesty as a discrete element of the offence. Those submissions are wrong.

Although agreement is the essence of conspiracy, agreement does not have the same meaning as in a contract. What is required to establish an agreement for the purpose of a conspiracy is that the parties acted in concert in pursuit of an understood unlawful object.

Mr Ipp quotes one case:

What the Crown generally seeks to prove in such a case are facts that go to establish that two or more persons acted in concert to achieve an unlawful object, or to achieve a lawful object by unlawful means.

The agreement is to be inferred from those facts, which may be the 'separate acts of the individuals charged which, although separate acts, yet point to a common design and when considered in combination justify the conclusion that there must have been a combination such as that alleged in the indictment.

While we wait to see if DPP Lloyd Babb SC takes up the greatest contemporary challenge to the rule of law in the jurisdiction of NSW to charge Ian Macdonald and Eddie Obeid with conspiracy to defraud, or another suggested charge (misconduct in public office), Peter Hastings QC, head of the NSW Crime Commission, has a decision to make.

He has the power to seize funds and assets that he suspects are the proceeds of crime. He has the power to apply for court-ordered seizures before any prosecutions take place.

Within the next few weeks the O'Farrell Government will have to decide on the future of the ELs now found by the ICAC to be tainted by corruption. David Ipp will deliver a separate report on this question to the government.

The cancellation of ELs would be a bombshell to the minerals industry of NSW. But this may be necessary if the Government is to start to repair public confidence in government itself, particularly at a time when it is making contentious decisions on economic grounds on coal seam gas exploration and extraction to the distress of many farmers and land owners fearing impacts on precious aquifers.

While the ICAC's multiple findings of corrupt conduct this week mark an historic moment in this state's Rum Corps culture, more is to come.

The evidentiary trail is leading to other areas of influence peddling for monetary advantage and may go beyond the insular 'maaates' of the NSW Australian Labor Party into other political networks.

We wait, with hope, for a new era of integrity, enforced, as needs be, by the rule of law.

Quentin Dempster presents 7.30 NSW on ABC1. View his full profile here.

A possible escape route for Eddie Obeid - The Drum (Australian Broadcasting Corporation)