By ABC's Quentin Dempster Friday 22 August 2014
Photo: Tim Owen was once the Liberal Party's great coup, but no more. (ABC Nick Gerber)
The ICAC is delving ever deeper into the Liberal Party as the tangled web of deception becomes clearer and the careers of MPs are shredded, writes Quentin Dempster.
"Oh what a tangled web we weave when first we practise to deceive" - Sir Walter Scott.
Follow the money.
The Independent Commission Against Corruption (ICAC) in New South Wales is following a money trail of prohibited donations deep into the Liberal Party.
On Wednesday, August 6 a mild-mannered solicitor Hugh Thomson, the former campaign manager of the Liberal Tim Owen 2011 campaign for the state seat of Newcastle "rolled over".
That is to say he accepted an inducement from the ICAC that he would not be recommended for prosecution for any criminality unless he gave false evidence. Thomson signed a 70-page statement with accompanying documentary evidence - emails, text messages, bank statements showings electronic fund transfers, cash transactions and tax invoices from entities supplying services to the Owen campaign.
The ICAC alleges routing of cheques from an entity under the control of businessman Nathan Tinkler (Boardwalk Resources). Boardwalk Resources was a property developer prohibited by the NSW Election Funding, Expenditure and Disclosures Act from donating to any NSW registered political party.
In 2010, to the amazement of the Liberal Party, the prospect of actually winning Newcastle, a then historically safe Labor seat, became more real. Tim Owen, former deputy commander of Australian forces in Iraq and Afghanistan, was willing to stand for the seat.
With a candidate of Owen's stature a victory against the Labor incumbent Jodi McKay, a former TV journalist, could be realised. The NSW ALP was on the nose with voters. While some would vote for the Greens in protest at the ALP's exposure as an endemically corrupt culture, the bulk of Labor's traditional supporters were going to vote Liberal in a punitive swing across the polity.
To the resentment of the Liberals, in 2009 then Labor premier Nathan Rees had famously banned donations from property developers after what became known as the "dirty, sexy, money" scandal in Wollongong.
"Not another cent," Rees had intoned dramatically, "and we'll put that ban into law". In Wollongong the Labor-dominated city council was exposed as easily manipulated by a "table of knowledge" (plastic table and chairs outside a beachside kebab shop), regular informal meetings between corrupt property developers and council officers where the facetious agenda was to "advance Wollongong into tomorrow".
From 2008 when this scandal hit Labor's NSW, voter intention polling started to plummet.
Evidence so far to ICAC has indicated that business started to direct its funding support to the Liberal and National parties in an increasing momentum from 2009, including from property developers.
The ICAC's current Spicer inquiry into the solicitation, receipt and non-disclosure of prohibited donations arose from the earlier Operation Credo, in which a private entity Australian Water Holdings (once headed by former Liberal Party state president and treasurer Arthur Sinodinos) was shown to have donated money to a Liberal Party central coast slush fund EightByFive.
That inquiry resulted in the standing aside from the parliamentary Liberal Party and resignation from Cabinet of Chris Hartcher (Terrigal). Mr Hartcher once jokingly described himself as the "godfather" of central coast Liberals. Also implicated were Hartcher recruits-turned MPs Darren Webber (Wyong) and Chris Spence (The Entrance).
In Operation Spicer the money trail has exposed and now destroyed the political careers of Tim Owen (Newcastle) and Andrew Cornwell (Charlestown). They resigned from parliament after admitting their own misconduct - Owen through giving false evidence about what he did with $10,000 in cash he received from property developer Jeff McCloy (until recently the lord mayor of Newcastle); and Cornwell through his acceptance of an inflated price from a Rex Newell painting from property developer Hilton Grugeon and other cash.
The destruction of these two cleanskins has devastated the Coalition Government of young Premier Mike Baird. Baird had become the premier of NSW in April after the sensational resignation of the Liberal's election-winning leader, Barry O'Farrell.
O'Farrell fell on his sword when he was confronted with his own fountain-pen signed thank you note and forced to admit that he had accepted an undeclared $3000 bottle of Grange Hermitage from then AWH chief executive and Liberal fundraiser Nicholas di Girolamo.
AWH was lobbying the Government for a public-private partnership to eventually take over the services and billion dollar cash flow of the public utility Sydney Water in the metropolitan north west.
Baird, a competent and personable character, was seen as the Liberal Party's best hope to keep the show on the road and a more saleable leader than "Robbo", Labor's shaved-headed former trade union boss.
Where does this now go? Mike Gallacher, an Upper House Liberal, resigned as Police Minister in the Baird Cabinet after he was implicated in the slush funding operation from property developers. He will be one of ICAC's next major witnesses. He denies impropriety.
Exactly what was the nature of Gallacher's relationship with Nathan Tinkler? Did he solicit a substantial donation from Tinkler's Boardwalk Resources? What knowledge, if any, did he have of Boardwalk Resources' cheques being routed via the federal Liberal Party's Free Enterprise Foundation and re-directed back to NSW in contravention of NSW law and Liberal Party federal policy?
Geoffrey Watson SC, the ICAC counsel assisting, has said: "...during 2010 and 2011 members of the Liberal Party of NSW used the Free Enterprise Foundation as a means of washing and re-channelling donations made by prohibited donors. We said this was done for the purpose of avoiding the impact of the Election Funding Act and that the purpose was to disguise the true source of the money."
The ICAC will be examining most or all of the members of the Liberal Party's state finance executive.
So what started as the exposure of the corrupt culture of the Australian Labor Party now extends to an investigation into the collective integrity of the Liberal Party of Australia.
Primarily it is about the Liberal Party's tangled web of deception - covering up prohibited money.
A multimedia version of this piece appears on the ABC's new tablet app The Brief, which can be downloaded here.
Quentin Dempster presents 7.30 NSW on ABC TV. View his full profile here.
Following the money down the ballot hole - The Drum (Australian Broadcasting Corporation)
