By ABC's Quentin Dempster Updated Thu 17 Apr 2014
Photo: Barry O'Farrell (right) was brought before ICAC after he was mentioned by Nick Di Girolamo. (AAP)
The Liberal Party has suddenly lost a five year political advantage in New South Wales, and there are likely to be more ramifications from ICAC than the resignation of Barry O'Farrell, writes Quentin Dempster.
The Independent Commission Against Corruption in New South Wales is turning into a subversive force.
To be 'subversive' in this context means to overthrow, overturn or upset the way government business is done in this jurisdiction.
Such is its current power through various tactics and coercive techniques, there is now a backlash. Because of this, the ICAC and its investigators cannot afford to make any mistakes.
All the circumstances surrounding the resignation of NSW Premier Barry O'Farrell on Wednesday, after he dug himself into an evidentiary hole under oath, will be trawled through. Some news reports made it look like O'Farrell resigned only because he did not declare an expensive gift - a bottle of Grange - from a lobbyist. But there is more to it than that.
At a glance
- ICAC events amount to an unprecedented institutional and political challenge to the State of New South Wales
- Incoming premier Mike Baird also has questions to answer about his relationship with Nick Di Girolamo
- A Baird government must commit itself to implementing David Ipp QC's reform recommendations delivered late last year
- Corruption does not stop at the NSW border: momentum is likely to build for a federal corruption commission
Just back from China with Prime Minister Tony Abbott, O'Farrell and his lawyer John Agius SC were trying to check the record. O'Farrell told the ICAC when he was recalled on Wednesday (after he'd announced his resignation) that first he had to answer questions about cases of wine, bottles of wine and then one bottle. He went into the witness box on Tuesday and gave the same answer on the Grange he'd given by text message to the Telegraph's Andrew Clennell on March 6. He had no recollection of the Grange. (Someone had tipped off Clennell to ask the premier about this in March).
The ICAC's counsel assisting, Geoffrey Watson SC, had already declared there were no allegations of corruption affecting O'Farrell but they needed to interpose him as a witness after Nick Di Girolamo, former chief executive of Australian Water Holdings, said under oath that he had organised this expensive gift to be delivered to O'Farrell's Roseville home. Apart from saying he and his wife Rosemary were certain they did not receive the Grange, O'Farrell also declared he could not recollect a 9.20pm (April 20 2011) telephone call logged from his mobile to Di Girolamo.
On Tuesday night the Grange was a 'mystery' after both Di Girolamo and O'Farrell had given evidence under oath. On Wednesday morning Di Girolamo produced to his lawyer, then to the ICAC and then to O'Farrell via Agius the handwritten thank you note and fountain-pen addressed envelope. Confronted with this O'Farrell fell on his sword, called a 10am press conference, and resigned the premiership.
Back in the witness box, he repeated his evidence of having no recollection of the Grange but had to confirm it was his handwriting on the thank you note.
Significantly Watson SC declared that he had not set out to ambush O'Farrell by some mean tactic. The hand written note was not from the holdings of the ICAC. Di Girolamo had gone home and found it in his papers on Tuesday night.
Like most players in the Liberal party, Mike Baird will have to answer questions about his relationship with Di Girolamo and his role in the appointment of Di Girolamo to the board of the State Water Corporation.
Di Girolamo and former minister Chris Hartcher, under investigation in the next ICAC inquiry, denied they were the source of Clennell's March 6 inquiry.
Mike Baird, 46, O'Farrell's Treasurer since the change of government in 2011, is the next premier of NSW.
Like most players in the Liberal party, he will have to answer questions about his relationship with Di Girolamo and his role in the appointment of Di Girolamo to the board of the State Water Corporation when there were concerns over Di Girolamo's qualifications for such a post.
All these events and the powers of ICAC, which is a creature of an Act of the NSW parliament, amount to an unprecedented institutional and political challenge to the State of New South Wales.
Already there are Supreme Court actions on ICAC findings from affected parties and investors in the coal mining industry. They lost fortunes when the O'Farrell government revoked their 'tainted' exploration licences. These cases will play out later this year. Already one case, apprehended bias, has survived a High Court challenge.
Lies in politics
There's a strange gap between the lies politicians tell us for a living and the lies we can't forgive, writes Jonathan Green.
And at the moment the Office of the Director of Public Prosecutions, with added specialist resources, is assessing admissible evidence handed to it by ICAC investigators from last year's inquiries into the relationship between Labor figures Eddie Obeid and Ian Macdonald (since expelled).
Because outgoing ICAC commissioner David Ipp QC, a former Supreme Court judge, was so insistent that a 'criminal conspiracy' existed between these two and that a prosecution would result in a conviction on existing case law precedents, we are expecting Obeid and Macdonald to be charged any day now.
But until they are and the rule of law is applied to what has been alleged to be corruption on a colonial Rum Corps scale, the ICAC continues as a star chamber cheered on by the public and the media.
The latest public investigations, Credo and Spicer, expose influence peddling and political slush funding involving office bearers and fund raising functionaries at the highest levels of the NSW Liberal Party - Arthur Sinodinis, Paul Nicolaou, Michael Photios and Nicholas Di Girolamo among others. They expose an alleged attempt to siphon Sydney Water's customer cash flows in north-west Sydney to a consortium of vested interests via an entity - Australian Water Holdings - under the guise of a 'public private partnership'.
It has emerged that soon after Di Girolamo had the Grange delivered to the O'Farrell residence in April 2011, he was registered as a lobbyist for Kores, the South Korean coal company which was seeking to develop its massive Wallarah 2 long wall mine under a contentious catchment in the central coast.
O'Farrell had famously told the locals in 2009 that there would be no mining in the catchment - "No ifs, no buts ... a guarantee". But in government Kores got the nod from the director general of Planning, Sam Haddad, and a Planning Assessment Commission is now merit assessing the mine on social, environmental and economic criteria. The locals are furious and feel betrayed.
Some of the state's business shakers found their private conversations replayed on the nightly TV news. Any half bright skullduggers seeking to peddle influence now will not be operating on traceable mobile phones.
After years of relative somnolence and exposure of low level malfeasance in government agencies and the occasional expenses rorting by MPs, the ICAC started to confront high level corruption involving ministerial discretion from 2010.
Its evidentiary leads into Obeid Corporation, the focus of its current multi-party investigations, started from discovery of the Obeid family's extensive interests - coal, water, harbour foreshore property and marinas - arising from Moses Obeid's contract dispute litigated by the City of Sydney Council over an Obeid power pole scheme. Many of the businesses were reliant on government concessions.
When the government looked like changing in 2011, trenches were dug, and influence was peddled to targeted individuals on the other side. Raids with search warrants, subpoenaed telephone records and compulsory in camera interrogations have enabled ICAC investigators and their analysts to amass a significant amount of documentary evidence. Although the ICAC used its telephone intercept powers during its Operation Jasper investigation into the Obeid-Macdonald coal mining 'conspiracy', this tactic is now of limited use. Some of the state's business shakers found their private conversations, with colourful expletives and profanities, replayed on the nightly TV news. Any half bright skullduggers seeking to peddle influence now will not be operating on traceable mobile phones.
The latest investigations are expected to have far reaching impacts on the NSW Liberal Party as well as the Labor Party, still lying politically unconscious on the mat. The Liberal Party has lost a five year political advantage in NSW with the allegations that its high officials were willing participants in an audacious strategy to scam millions from the public utility Sydney Water.
Another honest premier falls
Premier Barry O'Farrell had been cruising to victory and a second term before "Grangegate" hit, writes Alex Mitchell.
When he goes to the state election in March next year the new premier and his party will be in a defensive and contrite position.
The Baird government will be trying to get on the front foot. But to do this it will have to commit itself to implementing David Ipp QC's reform recommendations delivered late last year. They include amendment to the ICAC Act to make the NSW Ministerial Code of Conduct applicable under that Act.
This will correct a deficiency identified when former Liberal premier Nick Greiner won his Supreme Court appeal against then ICAC Commissioner Ian Temby QC's corrupt conduct finding arising from the so called Metherell Affair in 1992. (Greiner had appointed dissident Liberal Terry Metherell to a public service position to create a politically advantageous bearpit vacancy). The court of appeal determined that while an MP's conduct could be examined by the ICAC, a minister's could not.
If the Ipp reform goes through it will change the way ministers make decisions, particularly if under various Acts they are deemed to be the 'consent authority' on contracts, concessions and planning instruments where, with the stroke of a pen, they can enrich an applicant. If a minister's discretion can be externally monitored by the ICAC, the minister and his/her officials will have to be able to demonstrate to the ICAC the processes by which the decision was reached. Issues like unfair advantage or special access to lobbyists and party donors will then come in to play. ICAC investigations where corrupt conduct has been found to have occurred demonstrate that ministers are not always 'honourable' in the discharge of their duties to act at all times in the public interest.
Perhaps the Canberra press gallery should start asking our national political leaders if they will establish a national ICAC as a corruption counter measure.
Former ICAC commissioner John Mant says this reform is overdue given what has been exposed, resulting in public cynicism about and distrust in government itself.
If the reform is achieved in New South Wales and what is now broadly known as 'NSW disease' is at last confronted, there should be momentum to extend the ICAC investigative model to other jurisdictions including the Commonwealth Government. Corruption does not stop at the NSW border. It is likely to exist wherever ministerial discretion and vested interests converge. Given that the Liberal Party as well as the Labor Party is under investigation and with public confidence in government clearly at stake, perhaps the Canberra press gallery should start asking our national political leaders if they will establish a national ICAC as a corruption counter measure. Watch them bag the ICAC as a star chamber and duck for cover.
In his 1989 report, Queensland's Tony Fitzgerald QC, declined to recommend an ICAC as a standing solution to that state's endemic political and police corruption. He recommended an 'independent' Criminal Justice Commission as part of a broader response and not an 'autonomous' ICAC model with its potential for abuse of its coercive powers. The NSW ICAC was established in 1988 after years of folklore about the political corruption infecting the state from the Askin era through to the Wran era.
Twenty-five years later it seems to be emerging that the ICAC's inquisitorial model - with the educative benefit of public hearings with websites for daily transcripts and exhibits, but with its procedures justiciable before the Supreme and High courts - could be the more effective model.
There are months and years of challenges ahead as the NSW ICAC takes on corruption at the highest levels of government. The 'prize' is the restoration of public trust in government.
In a recent issue, The Economist magazine exposed 'cronyism' on a worldwide index where networks of influence, oligarchs and easily-manipulated governments systematically undermined the public interest.
It was pleasing to see that Australia did not rate a mention on that index. The pain we are going through at the moment will help to keep us off any future index.
Quentin Dempster presents 7.30 NSW on ABC1. View his full profile here.
The star chamber that took down a premier - The Drum (Australian Broadcasting Corporation)
