The best friend of the disgraced former mining minister Ian Macdonald has been exposed as a secret shareholder in a company awarded a lucrative coal licence by Mr Macdonald in 2009.

In a stunning revelation, on the eve of a major corruption inquiry into the former ALP state government, Greg Jones, a former Labor aide, has admitted he used others to hide his shareholding in Cascade Coal.

Associates of Mr Jones say that throughout 2009 the former eastern-suburbs wheeler dealer boasted that he was involved in a ''mining deal'' with his best mate Mr Macdonald and that it was ''a sure thing''.

''This is going to be a multi-bagger,'' he boasted to one. A ''bagger'' was Mr Jones's short-hand for a ''bag of money'', the associate said.

In May Mr Jones categorically denied having any interest in Cascade. ''It has nothing to do with me. I am not in there,'' he told the Herald. ''I have never been in mining.''

But in an interview with the Herald, Mr Jones, who has since received a summons to appear at the Independent Commission against Corruption inquiry, dramatically reversed his position.

He admitted that he held 12.5 per cent of the shares in Cascade. He said he had used others to hold the shares in case people drew ''the wrong conclusions'' about his friendship with Mr Macdonald and his business associates John Kinghorn and John McGuigan, who were Cascade directors. He said he had not discussed his interest in Cascade with Mr Macdonald until after the tender closed.

Mr Jones suggested that it was because of prying journalists that he had to hide his shareholding. ''Because you know someone, it must be underhand … It is not a crime knowing people,'' he said from Singapore yesterday.

The ICAC is also examining the circumstances in which Cascade paid the Obeid family millions of dollars for an option over the land, which the family had bought prior to Mr Macdonald announcing the tender.

Cascade then tried to sell its exploration rights for $500 million to the publicly listed White Energy, which shared several directors with those on the privately owned Cascade.

White Energy's shareholders were aghast and the deal, which would have netted the Cascade investors about $50 million each, collapsed.

Mr Jones's secret shareholding was purchased by his accountant and business partner Bill Sweeney in September 2009, only days before Cascade was awarded a coal exploration licence for Mount Penny, near Mudgee.

The beneficial owners of a further substantial shareholding remains a mystery. Lost Ark Nominees, a company associated with the stockbroker Brent Potts, owned 600,000 shares.

When asked who was in the Lost Ark group, Mr McGuigan has previously said, ''There's a bunch of … you know, well-known business people.'' He refused to elaborate.

Mr Jones, 59, and Mr Macdonald, 63, have known each other for more than 30 years, having worked in the office of the then housing minister Frank Walker in the early '80s. The pair were among a coterie of staff members who were exposed for running up entertainment bills of more than $18,000.

Mr Jones, who moved to Hong Kong last November, denied boasting to friends that his mining deal was a ''sure thing''.

''I have very little knowledge about mining, so I have no idea whether it is a goer or not,'' he said. Mr Jones and others are due to give evidence later this year.

Minister's Best Mate Was In On Coal Deal

from Crikey ….

Corrupted by cheap cars? NSW Labor men in the dock for day of reckoning

MARGOT SAVILLE

EDDIE OBEID, ERIC ROOZENDAAL, IAN MCDONALD, NSW INDEPENDENT COMMISSION AGAINST CORRUPTION, NSW LABOR

The best show in town opened this morning, as the NSW Independent Commission Against Corruption commenced a five-month inquiry into corruption allegations involving three former NSW Labor ministers.

Although this inquiry involves coal mining leases and the gift of a car, these are just the minor manifestations of a culture that infected and ultimately destroyed the NSW Labor government, run by the ruthless "NSW Right" faction under the motto of "whatever it takes."

For 16 years, the interests of the NSW voters were distant in the mind of factional bosses like Eddie Obeid and Joe Tripodi, who divided up the spoils of office to their followers, watched over by their mates at Labor Party HQ in Sussex St.

But once Labor lost power in the 2011 landslide election it was only a matter of time before the day of reckoning would come. Today it did. Like a chicken being swallowed by a python, these corruption allegations have been slowly working their way through the system and have finally seen the light of day. The names of former premiers Morris Iemma, Nathan Rees and Kristina Keneally are also on the witness list. In other words, it's a lawyers' picnic.

ICAC has in fact been conducting three separate inquiries concerning corruption allegations involving the former minister for primary industries and mineral resources, Ian McDonald, the former minister for mineral resources Eddie Obeid and the former minister for roads and commerce, Eric Roozendaal.

The most damaging allegations involve the granting by McDonald in 2008 of 11 coal mining licences, many of which went to family members and associates of Obeid. The Obeid family had bought land in the area nine months before the licences were granted, and were able to sell out at a considerable profit. Other allegations centre around the issuing of an invitation to a company associated with former union boss John Maitland.

This will be the second ICAC outing for McDonald, aka "Sir Lunchalot", who has previously starred in an inquiry in which he was said to have received "massage services" from a sex worker paid for by property developer and now murder suspect Ron Medich.

Commissioner David Ipp QC said this morning they were leading off with the Roozendaal car issue to make it clear the former NSW treasurer was not involved in the coal mining matters. Today's inquiry is examining the circumstances in which Obeid's son Moses provided Roozendaal with a Honda CRV car in June 2007 when he was on the front bench.

Roozendaal has previously confirmed Moses had organised the car for him but said his actions had all been "completely kosher" and that he had paid for the car himself. While the Obeids paid $44,800 for the car, there is evidence Roozendaal paid $34,000 for it - no doubt he will be asked to explain this when he gives evidence.

I can imagine allowing myself to be compromised by an Aston Martin, or a Karmann Ghia - but a Honda CRV? That's a car with CUP HOLDERS, people. Silvio Berlusconi would be appalled.

In his opening statement, counsel assisting Geoffrey Watson SC said that "there were some curious features as to how the Roozendaals come to own the Honda CRV and how much they paid for it".

The whole incident was referred to ICAC on the basis of an allegation that Moses had arranged the car as "some kind of payback for favours that Roozendaal had performed, or would perform, for Eddie", he said.

While that allegation might be right or wrong, he said, it is "problematical when it is recognised that Mr Obeid and his family are very active businessmen, involved in a number of different enterprises, many of which could benefit from different types of decisions that a minister might make".

When Roozendaal collected the car from an Obeid associate, Geoffrey Watson continued, he collected the keys and drove off, without paying money or signing paperwork: "The fact that Mr Roozendaal would not ask for rego papers is especially difficult to fathom -- he was, after all, the minister for roads."

Although the sum at stake is small, he said, "no one could doubt the issue of the importance of principle. Gifts and favours usually require reciprocation. If a minister accepts a financial benefit from a person upon whom he could confer a favour, that is worth investigating. If a person confers a benefit upon a minister then the motives of that person are worth investigating".

The hearing continues, with both Mr and Mrs Roozendaal and Moses Obeid due to give evidence next week. Eric was in the public gallery this morning, looking fairly calm and collected. But did he catch the bus in from Bondi? Any sightings of the former Labor heavyweight, on public transport, will be gratefully received.

meanwhile, across the street ….

NSW Liberal MP Scot MacDonald will be referred by the NSW Greens to the Independent Commission Against Corruption for allegedly accepting gifts from gas company Santos, after praising coal seam gas drilling in NSW.

Mr MacDonald had been a member of a state government inquiry into the industry, and made many statements about the benefits of the industry during the inquiry hearings.

His statement on a dissenting report in the inquiry concluded: "It is difficult to reach any other conclusion than the coal seam gas industry should be developed as quickly as possible."

Days after the inquiry delivered its findings in May, he accepted flights and accommodation in Tasmania from Santos to speak at a forum alongside Santos officials on the topic of coal seam gas and agriculture.

Mr MacDonald, a member of the legislative council from the NSW Northern Tablelands, declared the flights and accommodation on the pecuniary interests register.

The NSW Greens said they will now refer Mr MacDonald to ICAC over the free flights and accommodation.

Mr MacDonald has released a statement saying: "I was quite open about attending the conference and appearing on the panel discussing coal seam gas.

"I complied with all parliamentary guidelines. I have spoken many times before and after the inquiry into coal seam gas about the importance of gas to NSW households and industry. I have consistently said we need to ensure gas supplies for this state if it can be shown CSG can be extracted safely and landholders are treated respectfully.

"It's a shame Mr Buckingham would prefer to try and personally smear me, rather than engage in serious debate on coal seam gas," the statement said.

NSW Greens MP Jeremy Buckingham said Mr MacDonald has also held a coal seam gas forum in his home town, Armidale, and invited Santos to speak.

"We think it's outrageous that, while the Parliament was still considering the Coal Seam Gas Inquiry Report, he accepted a gift from one of the largest coal seam gas companies, Santos," Mr Buckingham said.

"The risk is that there will be a public perception that Mr Macdonald may be unduly influenced by his relationship with Santos and the gift he has accepted when considering on the inquiry report, as well as legislation and regulations related to the industry.

The Greens will allege that Mr MacDonald breached the Parliamentary Code of Conduct.

"I will refer the matter to ICAC to investigate," Mr Buckingham said.

Mr Buckingham this morning broke the Greens’ boycott of controversial broadcaster Alan Jones’s 2GB breakfast show to criticise Mr MacDonald on air. He said Mr MacDonald had been "appalling in his one-eyed approach" to CSG.

Santos is currently seeking to develop a major gas field in the Pilliga woodland, in north-west NSW

Liberal MP accused of taking gifts from coal seam gas company 

The family of ALP heavyweight Eddie Obeid has been involved in tens of millions of dollars worth of real estate developments across Sydney and NSW over the past 20 years, including joint ventures with a major property group, a corruption probe has been told.

Some of the developments, ranging from a shopping centre at Top Ryde to a huge subdivision near Port Macquarie, would have required extensive liaison with government authorities during the period in which Mr Obeid was one of the most powerful figures in the NSW Labor government.

Yet for the two decades that Mr Obeid was a member of the Legislative Council, the only revenue he declared was his parliamentary income.

The Independent Commission Against Corruption heard yesterday that Mr Obeid's five sons operated distinct parts of the family empire. One son, Paul Obeid, confirmed he was responsible for its property development arm.

He also admitted the family continued to operate a series of waterfront cafes at Circular Quay and this was the responsibility of his brother Damien.

In May a Herald investigation revealed that, since 2003, the Obeids had deliberately hidden their ownership of these cafes and the fact they controlled the three state government leases from which these businesses operated, and they did so by using another man's name on the paperwork.

It also revealed that Mr Obeid snr had interfered in the way his caucus colleagues had managed the leases, including efforts to seek a better deal.

Paul Obeid conceded yesterday that it was beneficial to be on friendly terms with powerful state politicians: ''Of course it would be handy to know decision-makers,'' he said.

The ICAC inquiry is examining the circumstances surrounding the purchase of a Honda CRV - at a $10,000 discount - by the state's former treasurer Eric Roozendaal.

The car was initially paid for by brothers Rocco and Rosario Triulcio - who own and run the Challenge Property Group, the property group with which the Obeids are partnered - before they were reimbursed through an Obeid family account.

The Triulcio brothers were grilled for hours in the witness box on Friday about the 2007 Honda purchase. Counsel assisting the commission, Geoffrey Watson SC, alleged the Triulcios's involvement in the transaction was a ''sham'' to hide a financial benefit the Obeid family had conferred on Mr Roozendaal, who was then the state's roads minister.

Paul Obeid told the inquiry that his brother Moses - the most senior of the five brothers - had told him he had found a buyer for the car. ''He said it was Eric,'' Paul Obeid said.

The inquiry was then told that, during a previous private examination by the ICAC Commissioner David Ipp, QC, Paul Obeid had conceded that Moses Obeid had sold the car to Mr Roozendaal ''to do him a favour''.

The Obeids paid $10,000 towards the new car, the inquiry established, but Mr Roozendaal failed to declare any such gift on his pecuniary interest disclosure.

Rocco Triulcio, who now drives a Ferrari but had previously owned a Mercedes CLS and a 7-series BMW, confirmed to the inquiry that, since he built a kitchen for the Obeids in 1990, the two families had become tight business allies on a series of developments, including those in Elizabeth Bay, Delhi Road at Ryde, Blackwall Point Road at Chiswick and Top Ryde.

Other ventures included a large-scale subdivision at Lake Cathie near Port Macquarie that the Obeids had been pursuing for more than a dozen years, and an Indonesian coalmining project, the inquiry heard.

The inquiry was shown financial records that demonstrated repeated and ongoing transactions between the Triulcio businesses and the Obeids. Earlier this year a court was told by one of the Obeid sons that Mr Obeid snr was a member of the myriad trusts that received the flow of money from the family's businesses.

Spotlight On Obeid Family Empire In Real Estate

close by ….

high rolling ….

When the O'Farrell government unveiled its new policy for dealing with major infrastructure projects brought to it by the private sector - so called unsolicited proposals - in January it barely raised an eyebrow.

That's largely because it didn't make much of a fuss; the policy was added to the Department of Premier and Cabinet website with little fanfare.

The first real focus came in July when the Roads Minister, Duncan Gay, announced the government was examining a proposal by Transurban to build a tunnel between the M2 and F3 motorways.

But even then the policy - via which the government can choose to deal exclusively with one company on a project without going to tender - didn't provoke controversy.

The news that it will be applied to James Packer's plan for a $1 billion hotel and high roller casino at Barangaroo has changed all that.

Suddenly the O'Farrell government is battling accusations it is bending over backwards to accommodate private sector interests at the taxpayer's expense.

The fact is that governments are inherently conflicted when it comes to the issue of public private partnerships and in particular the unsolicited proposals process.

There's no question there are real issues of commercial confidentiality in play when a private company brings an idea to government asking it to become a partner in the project.

But a government also needs, first and foremost, to be seen to be committed to the public interest. Any whiff that it is favouring the private sector over the interests of the voters is political poison.

In the case of the Packer proposal, that risk is particularly apparent.

From the time Packer's plan was unveiled in the media earlier this year, O'Farrell has walked a fine line between supporting what he genuinely believes is a project that will be good for Sydney - the six-star hotel - and reinforcing the need for proper process.

Unfortunately for the Premier, the government's clash with Crown's biggest competitor, Echo Entertainment, during the Star casino scandal left many interpreting O'Farrell's support as taking some revenge.

The likelihood that a second casino licence to facilitate the project would not be put to tender only strengthened that impression.

In August last year O'Farrell announced his preference for the controversial ''hotel over the harbour'' at Barangaroo to be relocated onto the main site.

Barangaroo's developer, Lend Lease, had approval for the hotel, but all the signs are it would agree to the Premier's wish.

Enter Packer, who stitched up a deal with Lend Lease, to build the hotel in its new location at Barangaroo South. Now he is insisting that without the revenue a casino will provide him, the project cannot proceed.

The unfortunate upshot for O'Farrell is that if he does anything that leads to Packer not getting his casino - by refusing to issue a second licence or putting it to tender - he will kill the deal between Lend Lease and Packer.

And he potentially ends up back at square one in a fight with Lend Lease about moving the hotel facing costly legal action or a humiliating backdown if it refuses.

One of the O'Farrell's government's greatest advantages over the Labor opposition remains the perception that when in power it got too close to the private sector - in its case, the property development industry - at the expense of the public interest.

But by allowing himself to be forced into dealing exclusively with Crown and not putting the casino licence to competitive tender, O'Farrell is wide open to the charge that he is committing the same offence.

Casino Cosiness Not A Good Look With Punters

and, a final word from Mike Carlton …

There’s nothing wrong in principle with James Packer having a glitzy new casino in Sydney. That's the business he's in and it's a free country.

If planeloads of Chinese billionaires, the so-called whale gamblers, want to fly here to throw their money at him, by all means let them. We are told the joint will be for them alone, invitation only. There'll be no buses trawling the western suburbs for local suckers to empty their pay packets into the pokies as they do at the hideous Star Casino. So far so good.

It's how it's happening that matters. What sticks in the craw is the stampede to get the thing off the ground. Our ground. To point out the bleedin' obvious - but it seems necessary to do so - Barangaroo is public space, owned by the people of this state, who are entitled to the final say in what happens there. Yet before a sod has been turned, the normal checks and balances have been tossed overboard into the harbour mud.

Barry O'Farrell has flung himself into the Packer embrace with orgasmic whoops of delight, like a nymphomaniac at a Bulldogs' end-of-season frolic. ''I'm a lover, not a fighter,'' he trilled when asked about a new casino licence last week.

The opposition and the unions have been squared away by the helpful Packer fixers Karl Bitar and Mark Arbib, famous in their previous incarnation for building the NSW branch of the Labor Party into the powerhouse of talent, policy and vision we see today. Why, the union that represents hospitality workers, United Voice, will even have an office in the new pleasure dome. How convenient. And a bar and restaurant tab too, I hope.

The love affair is mutual. ''I'm incredibly grateful to the Labor Party for not playing party politics and I'm incredibly grateful to Premier O'Farrell and the Liberal Party for doing what it has done,'' young James told a room of admirers at the Museum of Contemporary Art last week.

Well he might be. Clearly, the rules of the game give the Packer plan all the aces.

As the Herald's state political editor, Sean Nicholls, reported on Thursday, the government's guidelines for permitting a development like this to avoid going to tender have been secretly watered down. As if by magic, this happened a week after Packer's private meeting with the Premier and two weeks before he put in his formal ''unsolicited proposal''. What exquisite timing. If only the rest of us could get such swift approval for our unsolicited proposals for humble new carports and backyard granny flats.

So the deal is done. The government will pretend that everything will meet the closest scrutiny, ho hum, but this is the ham-fisted mob that managed to lose $1 billion from the state budget in the space of a month. It seems likely James won't even have to pay for a new casino licence.

We can only hope that when the Palazzo Packer does go up it has some civic and architectural merit.

Former New South Wales premier Morris Iemma will be the first witness to give evidence at what is expected to be one of the nation's most explosive corruption inquiries.

On Monday Geoffrey Watson, counsel assisting the Independent Commission Against Corruption, will deliver the opening address for the second of three inquiries into serious allegations of corruption involving former Labor ministers.

Operation Jasper, which is expected to run for several months, will examine the circumstances surrounding a decision made in 2008 by the then mining minister Ian Macdonald to open a mining area in the Bylong Valley for coal exploration.

The commission will investigate whether that decision was influenced by former Labor powerbroker Eddie Obeid.

The first witness, Mr Iemma, will start giving evidence at 10am on Tuesday. He will be followed by another former premier, Nathan Rees, who is currently the shadow police minister. Next on the list will be former planning minister Frank Sartor.

The evidence of the three senior ALP figures, who are assisting the corruption commission, has been the subject of much speculation. Just how frank the trio might be is causing some trepidation within Labor ranks.

Mr Rees's premiership came to an end in late 2009. His fate was sealed when months earlier he forced both Joe Tripodi and Mr Macdonald from the cabinet.

"Should I not be Premier by the end of this day," Mr Rees famously said on December 3, 2009, "let there be no doubt in the community's mind, no doubt, that any challenger will be a puppet of Eddie Obeid and Joe Tripodi."

In September 2008, Mr Macdonald invited companies to apply for 11 coal exploration licences being opened up in NSW.

Fairfax Media has previously revealed that several licences were awarded to a $1 company run by a 36-year-old Bankstown mortgage broker, Andrew Kaidbay, who had no experience in the resources industry.

Mr Kaidbay is an associate of both Mr Tripodi and the Obeid family, and was the director of three resource companies in which the Obeids' majority shareholding was hidden via a nominee company.

The commission will also examine whether the decision to open the area in the Bylong Valley to mining was influenced by Mr Obeid and if confidential information regarding the tender process was given to people associated with the successful bidder, Cascade Coal.

Fairfax Media recently revealed that one of Mr Macdonald's closest friends, Greg Jones, was a secret investor in Cascade Coal.

The Obeid family paid $3.65 million for a farm in the Bylong Valley, about 80 kilometres east of Mudgee, nine months before the tender opened. Mr Obeid's son Moses encouraged associates to buy other properties in the area, telling them, "we can't be seen to be buying them all".

Those who did buy farms included Justin Kennedy Lewis, a long-time associate of Moses Obeid, and accountant John Campo, whose major clients are the property-developing Triulcio brothers, Ross and Rocco.

The Triulcios and the Obeids have been close business associates for years. The two families had a starring role at the corruption commission this week.

The Triulcios struggled to explain why they had paid $44,800 for a new Honda for their sister Nata Re. But before Mrs Re had ever set eyes on the car it was re-sold to former Labor treasurer Eric Roozendaal for only $34,000. The Obeids paid the $10,800 shortfall.

Mr Roozendaal will sit as an independent in State Parliament having been suspended from the ALP in the wake of allegations raised at the ICAC that Mr Roozendaal's car deal was a reward for favours done for Eddie Obeid - an allegation both men denied.

John Cherry, a tax adviser to the late Kerry Packer, is also on next week's witness list. In November 2007, Mr Cherry sold his 624 hectare property Cherrydale Park, with its sweeping gardens and an artificial lake, to the Obeid family company Locaway.

Also on next week's witness list are Justin Lewis, the Triulcio brothers and John Campo.

NSW Ex-Premier Iemma to Face ICAC Inquiry

and, from Mike Carlton ….

Eric Roozendaal has committed the mortal sin of politics: he has made himself look ridiculous.

You can get away with a lot in public life, most of the time. Ignorance, greed, ruthless ambition and bare-faced deceit are par for the course and largely tolerated by the rest of us, who understand this is the way the political world works. Gosh, it even happens in journalism occasionally.

But when a politician becomes a figure of fun, a laughing stock, the game is up. There is no way forward and no way back. And poor Eric has hit that wall, painfully so. The week's proceedings before the Independent Commission Against Corruption in the mysterious matter of the el-cheapo Honda CRV were hilarious in all their low-rent detail and convoluted attempts to explain the inexplicable.

Whether or not there was corrupt conduct is a matter for the commission, which will make its decision in due course.

But by his own admission, Eric was a roads minister so dopey that he ''wasn't au fait'' with registering a car. When, after more than a month, he got around to providing the transfer of ownership form, some of the details were false. ''Slackness,'' he called it. This former treasurer had to concede that he was ''pretty hopeless'' with his personal finances.

Best of all, the $10,800 knocked off Eric's purchase price and helpfully picked up by the ever-generous Obeid family was not a benefit. It was ''a saving''.

How the mighty have fallen. There was a time when Eric Roozendaal was master of all he surveyed from his perch in Sussex Street as the ALP's state secretary. He could make or break political careers with a phone call or a snap of the fingers, and make 'em and break 'em he did. Now he's killed off his own career, an outcast from the party and the machine he once dominated.

Time to go, Eric, while we're still laughing. Go now. Quit the Legislative Council to make way for somebody who might have something to contribute to Labor politics in NSW. As I'm sure you know, there's usually a job for fallen ALP apparatchiks with the Packer organisation, although with your old mates Karl Bitar and Mark Arbib already on the payroll it might be a bit crowded these days.

But either way, Eric, thank you and good night.

Labor kingpin Eddie Obeid is the latest high profile citizen to join the ranks of those claiming to be victims.

The well-known fish & chip shop owner has denied allegations of corruption, claiming he had a rectal examination recently & was given the ‘all clear’. Mr Obeid said he couldn’t remember who had carried-out the procedure but he knew it wasn’t any of the brothers from the St John of God order, a Catholic organisation caught-up in the latest public outcry about a church cover-up of child sex abuse.

Responding to suggestions that he had organised a financial benefit for former Labor government purse-snatcher, Eric Roozendaal, Mr Obeid said he ‘didn’t deal in Hondas’ & the whole thing a was a ‘load of old abalone’. When asked about the origin of his own late model Mercedes vehicle & that driven by his wife, Mr Obeid said they were just ‘loan cars’ from a family trust & they were only driving them as a favour; to show solidarity with Alan Jones.

When asked about the millions of dollars that had flowed through his family trusts, Mr Obeid said that he had never benefited from these trusts & didn’t know anything about their activities or decisions: that was the whole point of setting them up in the first place.

When quizzed about the coal licences granted to private companies linked to his family, Mr Obeid became exasperated & said it was all a horrible misunderstanding & he went on to explain that the purpose of these licences was to allow him to dig holes so he could grow tomatoes on his family farm, just like everybody-else does. ‘What the frack do they think I was doing?’ he asked.  

Mr Obeid said that he had never received any money from any source, other than his salary as a parliamentarian. When asked where all his money had come from, Mr Obeid said that ‘he’d always had money’ but couldn’t remember where it had come from. He said that he would regularly come home from late night sitting of parliament & find envelopes stuffed with cash on his front door mat, but there were never any notes saying who had left these envelopes. Mr Obeid said that he didn’t think that there was anything odd about this & that it just showed how kind & generous some people could be: not like horrible journalists or those wicked god-botherers from ICAC.  

When asked to explain his plans to spend $2 million on renovating his family home, Mr Obeid said that the fact that he had to spend such a large amount on renovations was clear evidence that claims that this run-down property was worth more than $10 million, simply weren’t reasonable. Anyway, the property belonged to his wife. When quizzed about how his wife had acquired the multi-million dollar property, Mr Obeid said that he didn’t know – that his wife hadn’t told him, but that it was possible that she had won it at Barangaroo. When it was pointed-out to Mr Obeid that Barangaroo hadn’t been built yet, he said that perhaps she had won it playing housie.

And in a late-breaking development, Police are remaining tight-lipped about reports that a horse’s head had been found in one of the Obeid family cafes at Circular Quay. Mr Obeid dismissed the reports, saying that his establishments only dealt in flake & that he was more concerned about the fact that a person or persons unknown were out ‘to get him’ & had been regularly leaving smelly prawn heads inside the hubcaps of his Mercedes, which was drawing unnecessary, unwanted & hurtful attention to him & his family.

Mr Obeid claimed that the forensic procedure that he was expected to submit to by ICAC was an unnecessary abuse of process & a waste of taxpayers’ time & money.

Brandishing a DVD of ‘The Godfather’, Mr Obeid said: ‘I will be f…ing vindicated’.

Amid the 54 lawyers who jammed the benches on Monday when the NSW Independent Commission Against Corruption opened its long-heralded public inquiry into corruption allegations at the Labor Party’s top, a trim, silver-haired figure in a dark suit and black boots slid gently into the far back row.

Ian Temby has the timelessly good-looking face of a lawyer who has long enjoyed the top drawers of his profession; a quarter of a century ago he was the commonwealth’s first Director of Public Prosecutions. He left that job in 1989 to become the Independent Commission Against Corruption’s founding chief - picked for the job by the freshly elected NSW Liberal premier Nick Greiner, who believed that Temby was the man to confront, finally, the layers of corruption that had blighted NSW during the dozen years of the previous Labor governments.

Temby did not, as Greiner and his ministers had wished, turn the commission’s newly-acquired draconian powers - to compel witnesses to speak and to bug their conversations - on the NSW Police’s corruption-bloated under-belly. Instead, in a most spectacularly lethal spectacle of blow-black, Greiner very soon found himself before the commission and Temby over his attempts to engineer a by-election to shore up his government’s numbers in Parliament.

Though Temby did not find Greiner had behaved corruptly, he damned him anyway, concluding that had a jury heard the facts it would have found Greiner fell short of expected standards of honesty and integrity. The findings - no matter that they would be later overturned in court - shattered Greiner, prematurely ended his political career, and deeply embittered by the Liberal Party toward Temby and the commission.

Greiner’s fall would set the Labor Party up for another 15 years in power.

Hence, when yesterday the ruddy Geoffrey Watson, QC, counsel assisting the commission, appealed for the commission’s galleries to brace themselves as he began to lay out the scale of the corruption that may have flourished within the Labor Party’s latter years in office, Greiner might have allowed himself a small smile. What is to be revealed over the coming months will take the public deep inside the NSW Labor Cabinet room, Watson said, and is the result of the most complex and important investigation ever undertaken by the commission. The public inquiry phase of the investigation - now beginning - will decide if what occurred was indeed corruption.

Watson clearly sees the potential. Earlier he told the crowd: “If it is corruption, then it is corruption on a scale probably unexceeded since the days of the Rum Corps.”

Temby, in the back row, winced in apparent disbelief at the analogy. He has a client - a “minor player” is all he would say - in these proceedings.

Yet, as Watson’s outline of the inquiry continued, the scale of it was indeed breathtaking. Watson said that the former NSW Labor minister and factional warlord, Eddie Moses Obeid - and his family - may have reaped $100 million as a result of decisions taken or influenced by one Ian Michael Macdonald, also a former NSW Labor minister, whose working and personal relationship with Obeid will be a big focus of the public inquiry in the coming weeks.

Yet, said Watson, the importance of the inquiry will not be the vast sums of money involved; it will instead be the identity and rank of the public officials involved and the way they made decisions. “We will go inside the NSW cabinet room. It will examine political and personal allegiances inside and outside the cabinet. The critical decisions, which will come under consideration, were made by a minister and made at a ministerial level.”

The critical decisions to be examined were made by Macdonald when he was the NSW minister for mineral resources between 2005 and 2010 - a period when he had oversight of NSW’s coal resources, and when the practical effect of his decision-making was, in Watson’s words, to confer massive cascading profits on Eddie Obeid and his family. Obeid and Macdonald will tell the inquiry, Watson said, that the profits came about by accident and were a product of coincidence.

At the core will be questions about how the Obeid family came to acquire ownership and interests in farming properties in rural NSW which would soon after see their values soar once they were declared by the government to be within new coal exploration areas. One farm owned by the Obeids in NSW’s Bylong Valley quickly quadrupled in value to $13 million after they bought it.

But beyond the farms, Watson revealed that the Obeid family had also secretly negotiated a substantial share in the mining company which eventually was awarded the mining exploration licence over their properties - a transaction the Obeids had tried to hide but which was unraveled by the commission.

“It was a very good deal for the Obeids,” Watson said. “They outlaid $200,000 to recover $60 million.”

In what might be read as a warning to the those under investigation about how much the commission already knows, Watson said the public inquiry was not starting with a blank page. Secret investigations have been running for months and already more than 100 witnesses have been interviewed, search warrants executed, computer hard drives seized and tens of thousands of documents acquired.

On Tuesday two star witnesses will give evidence in public. They will be two former NSW Labor premiers, Morris Iemma and Nathan Rees. They are accused of no wrong-doing and will have no allegations to answer. Instead, we can expect they will attest to the power, influence and reach of Eddie Obeid within the NSW Labor Party.

For this inquiry - as stunning as the sums of money and the characters may be - is not simply about Eddie Obeid and Ian Macdonald. It appears poised to examine in public how power within the NSW Labor Party has operated.

Watson said that among the revelations from former premier Iemma will be how Obeid lobbied to influence the make up of Labor’s Cabinets - in particular his lobbying for Ian Macdonald’s inclusion. Also will come the tale of how Obeid and his followers within the party were so enraged by Iemma’s Cabinet changes that they organised to bring down his premiership.

Iemma’s successor as premier, Rees, will, likely on Tuesday, tell the inquiry that immediately upon becoming premier, he was lobbied by Obeid to put Macdonald in charge of the planning ministry. Rees did not do as they wished. He, too, was removed when Obeid organised the numbers against him, but not before Rees had time to famously declare that whoever replaced him would be a puppet of Obeid.

The inquiry will continue public hearings until mid-December and resume in late-January.

It will undoubtedly be ugly and sapping for the already-crippled Labor Party in NSW. And of course it will be deeply unhelpful to the Federal Labor Party next year - election year.

But it will be the best show in town.

A 21st Century Rum Rebellion

from Crikey ….

'I think I can help you with that': Obeid pulling the NSW strings

MARGOT SAVILLE

EDDIE OBEID, IAN MACDONALD, NSW INDEPENDENT COMMISSION AGAINST CORRUPTION, NSW LABOR

If revenge is a dish best served cold, then the former enemies of New South Wales Labor powerbroker Eddie Obeid are having the best meals of their lives.

Former and current NSW politicians Morris Iemma, Nathan Rees, and Frank Sartor appeared at the NSW corruption watchdog yesterday, all with a glow of self-righteousness. Sins have been committed, but it is now time for confession, absolution and eventually retribution. No wonder they looked smug.

The Independent Commission Against Corruption is conducting the largest investigation in its 25-year history. It will spend the next five months examining the circumstances under which former NSW Labor minister Ian Macdonald made or influenced government decisions which may have allowed the Obeid family to "acquire profits in the order of $100 million".

We have known all along, of course, the last Labor government was run by the henchmen of the NSW Right for their own benefit, not in the interests of citizens. But it was still gratifying to hear it in person. The hearing room was packed yesterday with people keen to hear the three pollies describe the way they were lobbied and bullied for favours by Obeid and his fellow powerbroker, Joe Tripodi.

Nathan Rees, who appeared particularly cheerful, described the way he sacked Tripodi and Macdonald from the ministry and then feared for the worst. "I thought they would come at me before the end of the [parliamentary] session," he said. "And did they?" he was asked. "Every which way!"

In fact, he lost the leadership over it to Kristina Keneally, who he infamously labelled a "puppet" of Obeid and Tripodi.

Former planning minister Frank Sartor described a meeting he had with Obeid when he was weighing up whether to enter politics.

"What do you want to retire on?" Obeid asked him. About a million in superannuation "would be nice", Sartor replied. "I think I can help you with that," Obeid replied.

Sartor told the Commission he declined the offer, saying he didn't want to enter Parliament feeling as if he was "owned" by Obeid. And in what could be the understatement of the year, he described 2009 as a "tawdry time" for Labor; "not our finest era".

Iemma and Rees described the way they were continually lobbied by the Obeid-led faction, The Terrigals, to elevate Ian Macdonald to the planning portfolio. They both resisted, but in the end, Macdonald didn't need to be planning minister to be of service. As minister for mineral resources, he was just as useful.

ICAC is examining whether Macdonald rigged public tenders for coal exploration licences to confer "massive cascading profits" on the Obeid family, thus depriving NSW taxpayers of tens of millions of dollars in revenue. Macdonald, of course, has already starred in a previous ICAC inquiry, receiving the services of a s-x worker which was paid for by property developer and murder suspect Ron Medich.

Ironically, the Central West farmer, nicknamed "Sir Lunchalot" for his excessive appetites, has long had firm views on ICAC. In 1988, as a newly-minted member of the Legislative Council, he spoke out on the bill which created it, saying it could lead to a "political witch hunt":

"The extraordinary search warrant provisions, the denial of legal professional privilege, the absolute secrecy clauses, the ouster of the ombudsman's jurisdictions, the failure to provide for an absolute right of legal representation, are but some of the denials of our basic freedoms. All in all, I think it fair to say that there has never been a more potentially dangerous bill presented to this Parliament."

And how did Macdonald actually know, in 1988, that "the Commission will spend much time examining the workings of the Labor Party"?

What we really want to know, and are hoping to hear, is how the NSW Labor Party allowed Obeid and his cohorts to turn it into the poster-child for bad governance, leading to an unprecedented loss in the NSW election in 2011.

In his 1988 speech, Macdonald quotes approvingly from the 17th century statesman Francis Bacon: "Revenge is a kind of wild justice, which the more man's nature runs to, the more ought law to weed it out." But Bacon, who was charged with corruption and resigned in disgrace, is wrong. We need to weed out bad politicians and public officials and make an example of them. And revenge can be awfully sweet.

The inquiry continues.

from politicoz ….

The spidery handwriting of a careful solicitor could be the undoing of three sons of Labor powerbroker Eddie Obeid.

The detailed notes were aired during an ICAC corruption hearing yesterday as a smoking gun that shows secret state government mining plans were leaked to the men three months before they were announced.

The coal deal involving the family of Labor powerbroker Eddie Obeid has taken a sensational turn with claims of blackmail, extortion, underworld figures, a famous footy player and the ''infamous Mr Fang''.

Arlo Murray Selby, 40, looked decidedly unwell as he sat fidgeting in the witness box of the Independent Commission Against Corruption.

Wearing bright blue striped braces and navy and white chalk-striped trousers, Mr Selby resembled a 1930s gangster.

As his evidence was prised from him it became clear the Obeids' coal deal involved some remarkably murky dealings.

Placed before Mr Selby was a five-page document signed by him and dated January 2011. The document detailed astonishing intricacies of the Obeids' 2008 coal deal, which was to net the family $100 million, the commission has heard.

The document claimed Mr Selby's longtime associate Moses Obeid had approached him to contact the underworld figure and debt collector Harry Calleia to fund the family's property purchases in the Bylong Valley. The inquiry has heard the three farms acquired by the Obeids and their associates happened to be right in the middle of a coal exploration area. ''His whole family had inside information in relation to the valley … the land was literally gold,'' Mr Selby in his statement.

His statement also claimed the Obeids had settled on Alan Fang from Tianda Resources ''to act as a front for the Obeid interests in the 2008 coal licence tender. But due to Mr Fang being publicly linked to then mining minister Ian Macdonald, Moses Obeid said it was ''too risky'' so there had to be a change of plan.

The statement also claimed Moses said: ''The outcome of the tender process is already guaranteed as we have the NSW Minister [Mr Macdonald] onside, hes [sic] in on the deal and that’s how we can guarantee we will win whatever tender we go for.’’

Mr Selby said Mr Fang was known   as ‘‘the infamous Mr Fang’’ and was a ‘‘heat seeker’’ for the Chinese government.

The statement also suggested Moses arranged for then Labor ministers Michael Costa, Joe Tripodi and Ian Macdonald to attend a Lehman Brothers board meeting.

The commission has heard Gardner Brook, then a Lehman   banker, was working with the Obeids to find a ‘‘front’’ company to disguise their investment in the bid for coal licences.

Mr Selby tried to distance himself from his 2011 statement even though it contained details known only to him and Mr Brook.

At the time you signed this statement it was ‘‘truthful and accurate?’’ he was asked. ‘‘I don’t recall my state of mind at that particular time,’’ he replied.  And so it went on.

The unresponsive nature of Mr Selby’s answers resulted in Commissioner David Ipp warning him of the dire consequences of being in contempt of the ICAC.

Mr Selby claimed the statement was part of a blackmail attempt by former Bulldogs front-rower Peter Tunks. ‘‘I think he [Tunks] wanted to use it to threaten people,’’ he said. Mr Selby said Mr Tunks was trying to recover money from Mr Brook ‘‘or even indeed the Obeids’’.

‘‘I think he felt grievous,’’ replied Mr Selby when asked why Mr Tunks wanted to use the statement signed by Mr Selby to threaten people. Mr Selby also claimed that the jailed underworld figure Tony Taylor, a close associate of Hells Angels’ boss Felix Lyle, was threatening him unless he did the statement.

‘‘Like what?’’ asked the commissioner. ‘‘Violence,’’ replied Mr Selby. ‘‘What violence? Break your arms? Kick you in the shins? Stab you?’’ asked Mr Brook’s barrister. ‘‘You know, the usual stuff, yeah, well the usual stuff,’’ said Mr Selby.

Mr Selby said he had met Eddie Obeid several times including at Bar Coluzzi in Darlinghurst but that he was dealing with Moses. ‘‘What were you dealing with him in?’’ asked the commissioner. ‘‘That connotation is obviously not good,’’ replied Mr Selby indignantly before adding, ‘‘property transactions, Commissioner’’.

Mr Selby’s statement also contained the observation that ‘‘as promised’’ the Obeids did win the tender. ‘‘I continued to hang out with Gardner Brook, however, Moses Obeid and his brothers distanced themselves from me as they thought I was too loose and might bring things unstuck.’’

Mr Brook will give evidence today.

Obeids & The Infamous Mr Fang

It Is the most chilling question any witness is likely to hear.

In a sensational twist in the already sensational corruption inquiry starring two former Labor ministers, Travers Duncan, one of the richest men in the country, was asked ''I wonder whether you'll listen to this for us.''

The 80-year-old mining magnate, worth an estimated half a billion dollars, sat expressionless in the witness box at the Independent Commission Against Corruption as he listened to an intercepted phone call in which he was talking to his business associate John Kinghorn.

The pair, along with others, had invested in Cascade Coal, which won a coal exploration licence at Mount Penny in a potentially corrupt government tender run by the then mining minister Ian Macdonald in 2009.

''But John, I have asked a mate of mine in the department and he said the file is totally clean,'' Mr Duncan can be heard saying on the tape.

Only minutes before, Mr Duncan had been asked by counsel assisting Geoffrey Watson, SC, if he had a ''mate ''in the mining department.

After long pause, Mr Duncan, who until then had been combative in the witness box, replied: ''Not that I know of.''

Mr Duncan had also denied ever asking somebody in the department to look at the file on Mount Penny to check whether it was clean.

The next snippet of the taped call was played in which Mr Duncan can be heard saying, ''It's not like NuCoal where the officers recommended a minister not do it.''

This was a reference to allegations Mr Macdonald awarded a coal licence - against departmental advice - to his friend the former union boss John Maitland in December, 2008.

When it was put to Mr Duncan that he had either lied to the commission or he had lied to his friend Mr Kinghorn about having a mate in the department checking files for him, Mr Duncan chose the latter.

When asked why he would lie to his friend and business partner in a private conversation, Mr Duncan replied, ''I have no explanation for it except folly.''

''I'm going to suggest you're lying to me and in fact what happened was you spoke to Ian Macdonald about this - do you accept that?'' Mr Watson asked.

''No, I don't,'' Mr Duncan replied.

Then came the bombshell that this conversation had been recorded on March 17 last year, about 10 days before the most recent state election.

The inquiry is investigating allegations Mr Macdonald provided inside information to the family of controversial former upper house MP Eddie Obeid, which led to the Obeid family secretly investing in Cascade Coal. Cascade Coal subsequently paid $30 million to the Obeids with the promise of a further $30 million.

At the time of this taped conversation, White Energy, which had as its directors several of the owners of Cascade Coal including Mr Travers, was negotiating to buy Cascade Coal for $500 million.

Cascade's only asset was the licence it had bought from the NSW government for $1 million. White Energy abandoned the Cascade takeover in April last year.

In March last year, during the dying days of the NSW Labor government, 70 hectares of Crown land in the Hunter Valley was transferred by the government to White Energy for only $1.

Mr Duncan, who was appointed to the NSW Clean Coal Council by Mr Macdonald, denied he was close to the former minister despite being shown numerous lunch and dinner dates with Mr Macdonald throughout 2009. Mr Duncan's evidence continues.

Taped Call Has Mogul In Sticky Spot

Prominent businessman John Kinghorn has been accused of being "a very dishonest witness" at a major corruption inquiry.

"That is a very upsetting statement, sir," replied Mr Kinghorn to Geoffrey Watson, SC, counsel assisting the Independent Commission Against Corruption, which is inquiring into whether Cascade Coal – which was owned by Mr Kinghorn and six other businessmen – was corruptly awarded a coal exploration licence in 2009 by the then mining minister Ian Macdonald.

The family of controversial Labor MP Eddie Obeid and their associates bought up key farms in the Mount Penny area in advance of the Mr Macdonald announcing that the area would be part of a coal tender, the inquiry has been told.

A combative Mr Kinghorn accused Mr Watson of fabricating allegations at the inquiry and threatened to report him to the Law Society. Mr Kinghorn reacted angrily to suggestions that he had helped his friend Greg Jones hide his shares in Cascade Coal because it would be damaging if it was known that Mr Jones, one of Mr Macdonald's closest friends, had an interest in the very company the minister had awarded a coal licence to.

Mr Watson then took Mr Kinghorn to evidence Mr Jones had given at a private hearing where Mr Jones himself said he had used his friend John Kinghorn to hide his shares "because of my previous relationship with the Minister, Ian Macdonald."

Mr Kinghorn, who founded RAMS home loans, admitted knowing that the Obeid family had secured a 25 per cent stake in Cascade Coal but said that he had no duty to disclose the Obeids' involvement to shareholders of White Energy.

Mr Kinghorn was one of five directors of White Energy who were also investors in Cascade Coal when White Energy offered to buy Cascade for $500 million in late 2010.

Mr Kinghorn has been played a number of intercepted phone calls in which he was heard belittling Graham Cubbin, an independent director of White Energy who was trying to get to the bottom of whether the Obeids were involved in Cascade Coal.

In an intercepted call to Mr Jones, recorded in April last year, Mr Kinghorn was heard saying about Mr Cubbin: "We just got to get there first ... then we'll chop the arsehole's head off."

Mining magnate Travers Duncan has previously told the ICAC that in 2010, when he was informed the Obeids had a 25 per cent shareholding in Cascade Coal, Mr Duncan wanted them out.

Mr Kinghorn agreed today that his reference in one call to the "smell" of the deal, referred to the Obeids' exit from Cascade.

"Think of them [the Obeids] as a dead cat. The dead cat's gone but the smell is still around," Mr Kinghorn told the inquiry.

Combative Kinghorn Hits Back At 'Very Dishonest Witness' Accusation

Amanda Poole sat in the witness box, her tanned arms crossed defensively across her smart black and white dress.

No, she did not work at Arthur Phillip, her husband Richard's boutique investment bank. And no, she did not have ''a position at Arthur Phillip of any kind''.

''Do you work at all?'' she was asked. Again, Mrs Poole answered with a simple no.

For someone without a job, it must have come as a surprise that her taxable income last financial year was just under $6 million, suggested counsel assisting Geoffrey Watson, SC.

But Mrs Poole, a former airline hostess, said she knew nothing about her finances. ''I only ever use my credit card because I get frequent flyer points,'' she told the Independent Commission Against Corruption. It is inquiring into whether Cascade Coal - owned by her husband and six others - was corruptly awarded an exploration licence in 2009 by the then mining minister Ian Macdonald. The commission has heard that the family of former Labor MP Eddie Obeid allegedly used inside information from Mr Macdonald to take a 25 per cent shareholding in Cascade Coal.

Mr Poole's syndicate later negotiated a $60 million payment to remove the Obeids from Cascade.

''It came as a complete surprise,'' said Mrs Poole on learning that her NAB account had been used to channel millions of dollars to the Obeids as well as $1.75 million to an investment banker, Gardner Brook, who was representing the Obeids' interest in the coal deal.

''Didn't you think when you were reading the front page of The Sydney Morning Herald to say, 'hey, it says here that I paid $7.5 million to the Obeid family, what was that about?''' asked Mr Watson. ''I did ask that and my husband said: 'We absolutely or you absolutely did not'.''

Later in the witness box, Mr Poole also denied knowing that the money from his wife's account was going to the Obeids.

Fancy that? $6m Pay, But No Job

A water services company linked to the family of ALP kingpin Eddie Obeid gave shares worth as much as $3.75 million to the former treasurer Michael Costa three years after he stopped a public tender that threatened the company's future.

The share package came with his appointment last year as chairman of the company, an appointment brokered by Mr Obeid and one of his sons.

A Herald investigation has also established that Mr Obeid lobbied his colleagues on behalf of the company, Australian Water Holdings, as it pushed for a billion-dollar privatisation of part of the state-owned Sydney Water Corporation.

The revelations come as an inquiry by the Independent Commission Against Corruption continues to unearth evidence to suggest the Obeids ran a vast but secret enterprise that capitalised on Mr Obeid's political power.

The family's multimillion-dollar interests in coal leases, harbour-front cafes and even a health services company were all furthered by Mr Obeid, who used his influence as head of the ALP's dominant parliamentary faction to lobby ministers.

As a cabinet minister, Mr Costa was lobbied by Mr Obeid in relation to two of these ventures - and now he has confirmed that Mr Obeid also approached him in relation to Australian Water Holdings, a private water company.

Since the mid-1990s, it has received about $580 million from Sydney Water to manage the installation of infrastructure in Sydney's north-west growth centre. The Herald has learnt that the Obeid family has a close association with the company courtesy of its boss, Nick Di Girolamo, a former partner at the Obeids' law firm of choice, Colin Biggers & Paisley.

Mr Di Girolamo is a close friend of Eddie Obeid jnr and has known the Obeid family since childhood when he went to school with Mr Obeid's sons at St Patrick's College in Strathfield.

He denied that any of the Obeids had any interest in Australian Water: ''I have never been involved in a transaction with the Obeids. I have never had anything to do with the Obeids.''

But Mr Di Girolamo conceded he had met Mr Obeid snr several times to discuss the company, that he had employed Eddie Obeid jnr for up to 18 months and at the end of 2010 had received a personal loan from Eddie jnr for an undisclosed sum.

He said that at first he saw Mr Obeid snr ''to say, mate, I have an issue with Sydney Water'' but later said they discussed the potential for a public private partnership.

''I was running it past him [Eddie Obeid snr] in terms to say, from a policy perspective [a PPP] was something that your government would see favourably, you know,'' Mr Di Girolamo said.

''He said, 'I think it's good policy'.'' Mr Obeid jnr had been employed ''helping us with some developers'' because ''he has contacts up in Queensland'', Mr Di Girolamo said.

ICAC has heard evidence that before a coal tender was announced for the Bylong Valley (where the Obeids had bought a farm), the Obeids nominated Mr Di Girolamo at a meeting to act as a front for their stake in a company designated to win the tender.

Mr Di Girolamo said he had never been asked to act in this way by the family. In the end, it was another Colin Biggers & Paisley lawyer, Greg Skehan, who acted as a front for the family in a coal company that won an exploration licence.

Mr Skehan is also a shareholder in Australian Water Holdings, but says: ''As the public records show, I am a non-executive director and a very minor shareholder of Australian Water Holdings''.

Another shareholder is Joseph Georges, a Strathfield real estate agent who has elsewhere acted as a front for the Obeids, disguising the Obeids' interest in the Elizabeth Bay Marina. Mr Georges declined to say whether his investment in Australian Water was on behalf of the Obeids: ''I will keep you guys guessing.''

In a recent book, the former planning minister Frank Sartor wrote that Mr Obeid's son Moses ''had been a paid consultant to a company called Australian Water Holdings'' and that ''Obeid and his son lobbied in support of AWH for some years''. Mr Di Girolamo said Moses Obeid had never been associated with the company.

From about 2006, a dispute erupted between Sydney Water and the company over the project management fees it was charging, and the company's claim that its original 1992 agreement ensured the government could not award this work to anyone else.

Executives at Sydney Water became increasingly concerned at the enormous fees Australian Water was charging. For example, its management fees for the month of October 2008 accounted for about 87 per cent of the $750,000 Sydney Water paid the company. ''The real problem was that there was this ongoing obligation on Sydney Water to give this one company all the work in the north-west,'' a source said.

''[The government] wanted to go to market. It was outrageous.''

In April 2008, Sydney Water advertised a public tender for a contract that would traditionally have been awarded to Australian Water, posing a direct threat to the company.

Mr Di Girolamo immediately met Mr Costa, who as treasurer had ultimate responsibility for Sydney Water.

Sydney Water had advice from Clayton Utz that the work should be publicly contested. Mr Costa then sought another legal opinion from the solicitor-general.

It said a court was ''more likely'' to find for AWH and, in line with its recommendations, Mr Costa ordered the parties attend mediation. The tender never proceeded.

Three years later, in November last year, Mr Costa was appointed chairman of AWH, replacing Liberal Party heavyweight Arthur Sinodinos, and issued with 6,250,000 shares, or 5 per cent of the company.

He said: ''This notion that there is some nexus between activity that occurred in 2008 and then subsequently [when I was approached] in 2011 is absurd,'' and the Herald does not suggest otherwise.

Mr Costa said his appointment came about after Eddie Obeid jnr called him and asked him to meet him and Eddie Obeid snr to discuss the opportunity. They urged him to call Mr Di Girolamo and take the job, he said. ''Eddie junior was the one talking … obviously they think [sic] it is a good idea.''

Mr Costa paid only $1 for the shares but other investors, who had previously bought convertible notes, were issued shares a short time later valued at between 16¢ and $1.92 a share. But on Wednesday, Mr Di Girolamo told the Herald: ''The valuation that we always thought the company was fair was about $75 million''. This would value Mr Costa's shares at $3.75 million.

Mr Costa and the company's chief financial officer, Robert Groom, have since disputed their chairman's valuation, claiming Mr Costa's shares are worth only $500,000.

Mr Costa resigned from the company in early November.

Nathan Rees said that in 2008, when he was the water minister, Mr Obeid asked him to meet Mr Di Girolamo.

And his successor in the portfolio, Phillip Costa, said that during a Parliament House dinner in 2009, Mr Obeid ''told me that his son had an interest in it [Australian Water Holdings]''.

He said Mr Obeid's comments led him to assume ''there was some moves afoot to try to avoid us going to tender.

''As a consequence I didn't want to pursue it any further. I shut down the conversation. I didn't want to go any further down that path. I knew at that stage there was some legal procedure [on foot] by Sydney Water.''

The real potential to earn serious money was AWH's repeated attempts to persuade the government to privatise Sydney Water's activities in the north-west of the city.

 http://www.smh.com.au/opinion/political-news/costa-obeid-and-the-water-firm-20121214-2bf8e.html

It was almost summer holidays again, the crickets were chirping at dusk and the seven special friends had found themselves in an exciting adventure. They'd been hauled before New South Wales' Independent Commission Against Corruption.

Day after day, a horrid gang, the Learned Friends, were taunting them with beastly accusations. Geoffrey, the meanest of the Learned Friends, kept saying they were fibbing. He kept making them remember silly things that had happened long ago.

If you haven't met the Secret Seven, there are three sets of best friends: Travers ''Trav'' Duncan and Brian Flannery, John McGuigan and John ''Atko'' Atkinson, and John ''Kingy'' Kinghorn and Greg ''Jonesy'' Jones - and an investment banker Richard ''Digger'' Poole just for good measure.

The Seven had hatched a brilliant plan. They got their hands on a New South Wales coal licence for $1 million and almost sold it for $500 million. That was after the Mines Department mysteriously got five different letters from five different companies linked to the Seven asking to be allowed to tender. Anyway, after all that to-do, Cascade Coal emerged with the licence.

Suddenly one day, although nobody knows exactly when, they found this fellow Obeid lurking about in Cascade. What a shock! If ''unethical'' journalists from The Sydney Morning Herald, as Kingy calls them, found out more about this they might write ''tripe'' and spoil their plans to sell Cascade to White. Then they wouldn't be able to get richer. Well, things were going swimmingly until this goody-two-shoes from White, Graham Cubbin, started asking silly questions about Cascade. Graham was an independent director of White and seemed to be taking his job of representing White's little shareholders a little too seriously.

Ghastly fellow he was, a real pest. ''We just got to get there first,'' Kingy confided in a phone call to Jonesy intercepted by ICAC, ''then we'll chop the arsehole's head off.''

The lads were no strangers to adventure. Indeed, after telling Geoffrey he would dob him in to the Law Council for fibbing, Kingy reminisced for a moment about the good old RAMS adventure. Ah, those were the days, after his Allco adventure, when he'd sold RAMS home loans to that silly old sharemarket and taken a splendid $500 million in cash just days before the global credit crisis. He would give those Learned Friends a piece of his mind.

There were 1000 gems in the ICAC cross-examinations this week, and there will be many thousands more before Eddie Obeid even gets in the box. We have selected a few, readers, for your edification.

Geoffrey Watson, counsel assisting the commission, to John Kinghorn:

''It wasn't anything to do with the fact that Greg Jones had a previous relationship with Ian Macdonald [mines minister] was it?''

''I've heard you allege that and that is utter tripe.''

''Utter tripe?''

''Utter, utter tripe. Rubbish, rubbish.''

''A lie by me?''

''I think it was a bit of a fabrication by you, yes, because you actually said you had evidence to this effect and I do not believe you do have evidence to that effect.''

Watson to Kinghorn about a meeting of Cascade shareholders:

''So you attended a meeting and voted on an issue of 717,000 shares to Coal and Minerals Group [a vehicle set up to distance Cascade from Obeid] without having even any idea as to why that was being done. Is that what you're telling us?''

''At that point in time, correct.''

''And have a look at the price that was being paid … for the shares: 9.3 per cent of the capital of Cascade Coal was being sold for one ten-thousandth of a cent per share, do you see that?''

''I do.''

''Well, surely you asked the question about that?''

''Yes, I did.''

''At the meeting?''

''No, I did not.''

''Right. You sat there at the meeting thinking, 'Good God, they've just given away … 60 million, yeah, $60 million of value?''

''Mmm.''

"So you just sat there and just thought, 'Dear me, they've just given away $60 million for $71.78'. Is that what you thought?''

''It certainly piqued my interest and I wanted to find out what it was about.''

That bit of testimony is typical. The entire proceedings are spiced with it: misunderstandings, foggy recollections, lack of curiosity, dumbfoundedness, emails received but not read; and this from seven people worth collectively more than $1.5 billion.

Let's close with Winners and Losers so far.

Losers: the Secret Seven - they sustain reputational damage and have no deal, though Poole probably got some banking fees. Likewise, Brent Potts and his ''Lost Arc'' clients have dusted $28 million in the White placement though Pottsie probably got his 5 per cent.

Winners: the Obeids are still up $30 million and there is no smoking gun, yet.

Real winners: the incoming Liberal government in NSW earns big points for a rise in ICAC's funding.

Graham Cubbin can stand tall. A real independent director, doing an admirable job.

http://www.smh.com.au/business/the-secret-sevens-marvellous-adventure-20121214-2bf9e.html

During the previous NSW Labor Government, the chain of power didn't end with the premier. Quentin Dempster chronicles the history of New South Wales’s Independent Commission Against Corruption and investigates the allegations that go to the heart of Labor and the role of powerbroker Eddie Obeid over the past 40 years.

"Power tends to corrupt and absolute power corrupts absolutely" - Lord Acton.

The New South Wales Independent Commission Against Corruption (ICAC), now with added resources (forensic accountants, covert surveillance and telephone intercept analysts), is laying out an evidentiary trail in a public investigation into the relationship between the former state parliamentary Labor Party powerbroker Eddie Obeid and former minister Ian Macdonald.

"It's like a Russian show trial," one prominent barrister privately observed to me on the opening day of Operation Jasper. Targets of the ICAC were made to run the gauntlet of assembled media cameras in Castlereagh and Pitt streets, Sydney, while inside, their reputations were destroyed by counsel assisting, Geoffrey Watson SC, and the whole thing packaged and sensationalised for the evening TV news.

TV cameras are permitted to record the counsel's opening address but nothing else. All the allegations, including Mr Watson's headline-grabbing 'Rum Corp' comparison with the alleged corruption under investigation, could be broadcast. A rebuttal opening address was not permitted from counsel representing those under investigation.

Is it fair?

Not according to the standards usually applied to individuals charged and on trial.

But the ICAC was established in 1988 expressly because of public distress about corruption in the highest places, including the police force itself.

The ICAC's inquisitorial methodology is set down in the ICAC Act 1988, and its rulings and procedural fairness are justifiable before the Supreme Court of NSW. The ICAC is a standing 'royal commission' with coercive powers to secretly record conversations by warrant, to search premises, seize documents and bank accounts, waive legal professional privilege or client confidentiality, and command attendance.

Witnesses do not have the right to remain silent (as in criminal investigations) but evidence they give can be taken 'on objection', meaning it cannot be used against them in any other legal proceedings. As a consequence, when the evidentiary trail gets sticky, recollection of detail by witnesses can often go amiss: "I don't recall."

The ICAC's effectiveness in its task over the past 24 years has been mixed. It declined to investigate 74 matters listed by its originators - then Liberal premier Nick Greiner and his advisor Gary Sturgess - into the Wran era of NSW Labor politics right back to the 'near-murderous' bashing of Peter Baldwin by party thugs in 1980.

Instead, it went on to expose National Party slush funding practices 'conducive to corruption' and the sale of confidential government information, among other good work.

The ICAC came into bitter contention in 1992 when it consumed its creator. In the so-called Terry Metherell affair, its adverse finding against Nick Greiner (he'd appointed the dissident ex-Liberal backbencher to a government job to create a politically beneficial bearpit vacancy) caused the end of Greiner's premiership. (A Supreme Court ruling that the ICAC had exceeded its jurisdiction and that its report was wrong in law came too late. In a minority government at the time, Greiner had to resign when confronted with a declared loss of confidence by crossbench independents.)

Bob Carr publicly stated that he wanted to retain the ICAC because of its public mandate, and remarked privately, 'It keeps my party's criminal faction in check.'

The ICAC made some progress on police corruption in its early years but the separate Wood Royal Commission from 1995 did the heavy lifting, establishing through audacious and highly effective covert surveillance over more than a year that police corruption was endemic.

As a result, oversight of the police was taken away from the ICAC and a new external body, the Police Integrity Commission, was established.

There was a concerted push within the ALP to abolish the ICAC before that party's return to government in 1995 but then leader Bob Carr publicly stated that he wanted to retain it because of its public mandate, and remarked privately, 'It keeps my party's criminal faction in check.'

Over the 16 years of Labor in government in NSW (1995 to 2011), the ICAC exposed low-level corruption in government agencies like the RTA and local government. One minister, Brian Langton, quit after an adverse ruling concerning minor travel voucher irregularities. It named and shamed some other ministers over staffing, expenses and related rorts. It found insufficient evidence of corruption involving Paul Gibson, the then Labor member for Blacktown, after an examination of his relationship with the organised criminal Louis Bayeh. The ICAC suffered a rebuke from the Supreme Court over the Gibson case when then commissioner Barry O'Keeffe was found to have an apprehended bias against Gibson.

The ICAC exonerated Bob Carr in a 2005 inquiry into his office's alleged preferential treatment of Frank Lowy's Westfield in a dispute with bulky goods warehouse rival Nabil Gazal. Carr had departed the premiership some weeks before enjoying this exoneration.

In December 2011, the ICAC delivered a corrupt conduct finding against former Labor minister Tony Kelly over the signing and backdating of a letter relating to the sale of the Currawong site at Sydney's Pittwater. The ALP administrative committee terminated Kelly's party membership. The Director of Public Prosecutions is considering a criminal prosecution.

Also in December 2011, the ALP suspended the party membership of former minister Ian Macdonald after an ICAC inquiry into Macdonald's alleged receipt of benefits from property tycoon Ron Medich, including the offered services of Tiffanie, a prostitute. Mr Macdonald, for 22 years a member of the Upper House and of Labor's 'hard left' faction, resigned from Parliament in June 2010 after a public scandal involving his acceptance of travel upgrades to Dubai. He has denied any impropriety.

The ICAC's most significant headway into major corruption was the Wollongong 'dirty sexy money' property scandals of 2008 where, through covert surveillance and the courage of its protected disclosure informants, it exposed a 'table of knowledge' operating outside a kebab shop where the facetious agenda was to 'advance Wollongong into tomorrow'.

But to the consternation of observers, the ICAC failed to follow the Wollongong corruption into Macquarie Street and the Planning Department itself, instead running what looked like an unnecessary inquiry to clear the Planning Department of innuendo contained in a conversation taped by the financier of last resort, Michael McGurk, who had been murdered in the driveway of his Cremorne home in 2009.

Famously, the ubiquitous Labor power broker Graham Richardson, then a $5,000-a-month registered lobbyist for property developer Ron Medich (in bitter dispute with McGurk, a business associate), expressed to Channel Nine's Laurie Oakes (6 September 2009) his doubts that police would ever find McGurk's murderer, such was the list of enemies McGurk had created.

But after a 13-month Homicide Squad investigation, Richardson's own client, Ron Medich, one of the NSW ALP's biggest 'donor developers', was charged with McGurk's murder and now awaits trial.

Graham Richardson has since found work as a Sky News political commentator and columnist for The Australian. More on Richo shortly.

Morris Iemma and Nathan Rees, under oath, truthfully had to acknowledge that when it came down to it, Eddie Obeid had more power than they did.

At the current ICAC hearings two former premiers, Morris Iemma and Nathan Rees, under oath on November 13, 2012, truthfully had to acknowledge that when it came down to it, Eddie Obeid had more power than they did. They explained that the Eddie Obeid and Joe Tripodi Terrigals sub-faction or 'fraction' dominated the SPLP's formal Centre Unity or Right faction and, through a convention of binding votes to maintain discipline, effectively influenced the entire caucus.

Iemma explained that when he could not get his preferred ministerial reshuffle accepted by the Terrigals in 2009, his position as premier was untenable and he resigned. Rees told how he had sought and won ALP state conference approval to choose his own ministry, but in then using that power immediately to sack Joe Tripodi and Ian Macdonald from his ministry, he enraged the Terrigals and was soon ousted as leader in favour of Kristina Keneally.

Even though Frank Sartor, a candidate for party leadership to replace Nathan Rees, had the support of the ALP's Sussex Street head office against the Obeid/Tripodi Terrigals, the Terrigals won through their 25 to 23 dominance of Centre Unity and hence the entire SLPL full caucus when it was joined by the Left faction. Macdonald rejoined the Keneally Cabinet until his resignation from the ministry and parliament shortly after.

ICAC commissioner David Ipp QC called the two premiers to help him understand the context of Eddie Obeid's power within the SPLP and the relationships which developed over the years as a consequence of that power.

While Iemma said he had had a close working relationship with Obeid, even acknowledging Obeid attended his home and/or his office two to three times a week during his premiership, the subversion, or diversion, or dominance of the Australian Labor Party parliamentary wing by powerful forces through the binding vote convention exposed through this ICAC inquiry may confirm the old maxim that absolute power corrupts absolutely.

The ICAC is investigating allegations counsel assisting has made that Ian Macdonald breached his oath of office as a minister of the Crown to give confidential information and take administrative actions on lucrative mining leases to benefit Eddie Obeid, his extended family and business associates beyond the wildest dreams of avarice ($100 million for Obeid interests alleged in evidence so far).

The investigation has embroiled some of this state's most prominent businessmen, in the publicly listed White Energy and investors in Cascade Coal, an entity which won mining tenements through expressions of interest invited by Macdonald's department: Travers Duncan, Brian Flannery, John Kinghorn, John McGuigan, John Atkinson, Richard Poole and Greg Jones.

The ICAC is investigating allegations that Ian Macdonald gave confidential information and took administrative actions on lucrative mining leases to benefit Eddie Obeid beyond the wildest dreams of avarice.

The ICAC has to determine if there has been corrupt conduct and if so, if there is sufficient evidence to recommend that the DPP consider criminal prosecutions.

Significantly, counsel assisting, Geoffrey Watson SC, has said:

I have already spoken of the financial benefits which have or could be acquired by the Obeid family and by the seven investors in Cascade Coal. In the case of Ian Macdonald it is a little different - we will adduce evidence that had the transaction between Cascade Coal and White Energy proceeded (White Energy to acquire Cascade Coal for $500 million), Ian Macdonald would have received a substantial payment.

Note this: the ICAC says it can produce evidence that Ian Macdonald would have received a substantial payment. We are now waiting for the substantiation of that statement. Macdonald, Obeid and the businessmen all deny any impropriety.

The enormity of the corruption alleged, it is fair to say, has gobsmacked the polity of New South Wales.

In the past two weeks, the ICAC has started to confront the business witnesses with audio recordings from the commission's now substantial holdings of telephone intercepts. Perjury or lying to the ICAC is a criminal offence.

The relationship between Eddie Obeid and Ian Macdonald is intriguing. Geoffrey Watson SC told the ICAC:

There is another motive apart from money - power. Politics is about power. Many want it; few have it. Circles of influence develop. A favour is done; it requires reciprocation. Patronage is conferred; a dependency develops. All of this is normal and only takes on a malign character if bad people hold the power and use it for bad purposes. That happened here. A relationship of patronage and dependence had grown between Mr Obeid and Mr Macdonald. When Mr Macdonald was vulnerable, Mr Obeid exercised his considerable power to aid Mr Macdonald. As I said, a favour is done; it requires reciprocation.

Eddie Obeid, now 69, quit as a member of the NSW Legislative Council in May 2011 after his party had suffered a 16.9 per cent primary vote swing at the March 2011 state election. It was the worst result in both vote share (25.6 per cent) and seats (20) since 1904. There were many identified factors in the party's defeat: too long in office, ministerial self-indulgence, scandal and infidelity, the asset-stripping sale of electricity assets. But fundamental to the party's decline from its dominance of NSW politics was the destruction of trust with its traditional support base, which started with the Wollongong property corruption in 2008.

Here's hoping Graham Richardson can throw some journalistic sunshine on the role of Eddie Obeid inside the Australian Labor Party over the past 40 years.

Eddie Obeid's power broking within the ALP started with his pre-selection to the upper house in 1991. According to investigative journalist Marian Wilkinson's book The Fixer, Obeid was recruited into the ALP by then NSW branch secretary Graham Richardson from 1972. At the time Obeid was an established businessman and publisher of the Arabic newspaper El Telegraph.

Wilkinson reported that Obeid became an effective advisor to Richardson on organising politically within ethnic communities in NSW and across Australia. Originally Obeid himself had made overtures to the ALP organisation to try to resolve a dispute with Marrickville Council over El Telegraph's presses running after hours.

The personal relationship between Richardson and Obeid developed strongly over 20 years, with Wilkinson reporting that Richardson introduced Obeid to his most important business friend, the stock broker Rene Rivkin. Wilkinson also reported that in the early 1990s, Obeid, by then an MLC, had been unable to join Rivkin's consortium of investors in the printing company Offset Alpine, later destroyed by fire.

Eddie Obeid has been reported by the Sydney Morning Herald to have been one of the wealthiest members of parliament, with multiple properties and investments and a fatherly interest in the extensive business interests of his nine children.

As the ICAC now investigates the Obeid-Macdonald relationship, here's hoping Graham Richardson can throw some journalistic sunshine on the role of Eddie Obeid inside the Australian Labor Party over the past 40 years. Suggested headline: "Exclusive. Richo: How I made Eddie Obeid into powerbroker numero uno."

We will all switch on to Sky News or pick up The Australian to hear and see all about it. Surely the editors of these media outlets should be coaxing their star contributor to get cracking on this exclusive.

http://www.abc.net.au/news/2012-12-14/dempster-corruption-allegations-at-the-heart-of-the-alp/4426510

The disgraced former resources minister Ian Macdonald is facing accusations of a cover-up designed to stop Parliament seeing crucial documents that are now at the centre of NSW's coal corruption inquiry.

In November 2009, when Mr Macdonald was the minister in the state Labor government, the Liberals' Duncan Gay called on him and his department to produce all documents relating to the awarding of the Mount Penny coal exploration licence.

Two boxes of documents were delivered, one released publicly, the other available for MPs to inspect. However, Mr Macdonald and his department failed to produce many key documents. Their existence has come to light as a result of the present inquiry into the Mount Penny tender by the Independent Commission Against Corruption.

The inquiry has heard allegations that Mr Macdonald provided inside information on the tender to his upper house colleague Eddie Obeid, which led to the Obeid family gaining a stake worth $60 million in the winning tenderer, Cascade Coal. A secret investor in Cascade was one of Mr Macdonald's closest friends, Greg Jones, the inquiry has heard.

''It's negligent at best and a cover-up at worst,'' says the Greens MP Jeremy Buckingham of the failure of Mr Macdonald and his department to produce the documents. Mr Buckingham has written to the Clerk of the Legislative Council asking for the issue to be investigated.

Mr Buckingham called for a royal commission concerning the granting of mining licences. He also expressed concern that Mr Obeid, also a former resources minister, had granted dozens of licences.

ICAC has heard that in late 2008, after the expressions of interest for 11 exploration licences had closed, Mr Macdonald, against departmental advice, reopened the tender, claiming that additional small and medium-sized companies had written to the department asking to be included.

It has now been revealed that those letters were a sham and that five of the seven letters were sent by people linked to the winning bidder, Cascade Coal. None of these letters was included in the call for papers.

James McGuigan, the 29-year-old son of Cascade investor and White Energy director John McGuigan, admitted lying to the Department of Primary Industries in a letter purporting to be from Redman Mining expressing interest in a coal exploration licence. The title of ''exploration manager'' was one he had made up, Mr McGuigan told the inquiry.

Neil Whittaker, a former chief executive of the NRL, and now an executive with White Energy, also signed one of these letters. The inquiry heard that his letter used a ''dummy letterhead'' in the name of a non-existent company. Another letter was sent from White Energy, a company listed on the stock exchange.

A year after winning the Mount Penny tender, Cascade tried to sell the licence, for which it had paid the NSW government $1 million, to White Energy for $500 million.

Five of the seven Cascade investors were also directors of White Energy but omitted to tell the stock exchange and White Energy's independent directors their private company Cascade had bought out the Obeids' quarter ownership of Cascade for $30 million.

David Blunt, the Clerk of the Legislative Council, confirmed that ''concerns have been raised as to whether the order of the house had been complied with''. He would not confirm whether inquiries were under way but said Parliament would be informed of the concerns when it resumed on February 19.

On the same day that Mr Gay called for the Mount Penny papers to be produced, in November 2009, the Greens MP Lee Rhiannon asked Mr Macdonald: ''Has the minister discussed with Mr Obeid the coal exploration process in this area or in any other areas … does Mr Obeid have inside knowledge of the potential for coalmines to be developed in the Cherrydale Park area, where his family bought land?''

Mr Macdonald responded: ''As usual, it is a bit of a fishing exercise by the Greens. I am pretty sure that the department has conducted this in an appropriate way.''

MP Seeks Upper House Inquiry On Macdonald

A Strathfield real estate agent, Joey Georges, had been in the witness box only half an hour when he was exposed lying about his relationship with the family of the former state Labor MP Eddie Obeid.

Mr Georges, 37, was giving evidence at the Independent Commission against Corruption, which resumed on Monday after a month-long break.

The inquiry is investigating whether the family of Mr Obeid used inside information provided to them by the then resources minister, Ian Macdonald, to make millions of dollars through secret investments in the winning tenders for coal exploration licences.

The former chief of the NSW Minerals Council, Dr Nicole Williams, said Mr Macdonald's 2008 decision to hold an invitation-only tender process for 11 new coal mining areas was outrageous and unprecedented.

The commission heard that Monaro Mining, which had only one full-time employee and no experience in coal mining, won six of the 11 licences. Monaro later withdrew its bids, transferring some to Obeid-related ventures.

Following Dr Williams in the witness box was Mr Georges, a close associate of the Obeids.

''You're regularly in business with the Obeid family, is that so?'' asked counsel assisting, Geoffrey Watson, SC. Mr Georges looked to the ceiling, contemplating. After a moment, he offered ''No.''

And no, he had no business interests with the Obeid family but he often talked to Gerard Obeid about business matters. Only Gerard? ''Sometimes Paul.''

Only Paul and Gerard? ''Yes.''

Mr Georges was later forced to admit that he and the Obeids were effectively business partners in a company which invested in one of the winning tenders for a coal exploration licence.

Mr Georges agreed he'd lied but it was because he was ''confused.''

He admitted that he had invested $400,000 in a deal involving the Yarrawa tenement and that he was aware that the Obeids were behind the deal.

He also denied that his 50 per cent stake in the Elizabeth Bay Marina was held on behalf of the Obeids. When asked to explain why Moses Obeid, another of Mr Obeid's five sons, was constantly at the marina if the Obeids had no interest in it, Mr Georges said: ''Moses lives obviously in Vaucluse and he's always passing in transit and he always assists me with things or matters relating to the marina.''

''But I thought you said you didn't speak to Moses … about business matters?'' asked Mr Watson.

Mr Georges said that was only because Moses turned up at the marina ''all the time''. Moses Obeid introduced him to the marina deal and had access to its financial records but only because he was a friend, Mr Georges said.

Mr Georges' $600,000 investment in Australian Water Holdings, run by another Obeid associate, Nick Di Girolamo, was also queried by the commission.

He didn't know if the Obeids had an interest in AWH but he was aware they had loaned the company money. Eddie Obeid jnr introduced him to AWH.

Witness Agrees He Lied About Obeid Link But Says It Was Because He Was 'Confused'

Controversial former Labor MP Eddie Obeid used some of the millions of dollars in profits from his family's secret shareholdings in coal companies to acquire a $400,000 Mercedes-Benz, while his wife, Judith, made a deposit on a waterfront mansion in Woolwich, a corruption inquiry has heard.

The Independent Commission Against Corruption inquiry, labelled one of the most significant in the state's history, is examining whether the Obeid family received inside information from then resources minister Ian Macdonald that allowed them to make millions of dollars by investing in companies which won lucrative coal exploration licences in the Bylong Valley and in the Hunter Valley.

Mr Obeid's son-in-law Sam Achie has told the commission that the Obeid family, which consists of Eddie and Judith Obeid and their five sons and four daughters, operated as a joint entity. The millions of dollars which came into the family were paid out again to family members as loans through a complicated series of trusts. Mr Achie reluctantly agreed that payments to the Obeid family were in the form of loans as opposed to distributions because no tax is payable on loans.

The inquiry has heard that $15 million came into the Obeid coffers in 2011 and 2012 from their sale of shares in mining tenements.

Before Mr Obeid left Parliament in mid-2011, he used some of those funds to make lease payments on a $400,000 luxury car. The inquiry also heard that Mr Obeid's wife used some of the mining proceeds to make a deposit on a waterfront mansion in Woolwich. The Obeids paid a deposit on a $8.5-million five-bedroom house in Angelo Street, Woolwich, with the sale due to be completed after the March 2011 state election.

The house was being offloaded by Mr Obeid's friend, the financially troubled mobile phone seller Mick Hakim. The house had earlier been on the market for $13.5 million.

When Fairfax Media reported the sale in February 2011, the second mortgagee on the property threatened legal action and the house went back on the market.

The house was eventually sold to another buyer.

Mr Achie told the commission that although his salary as the financial controller of the Obeid Corporation is $55,000 and his wife, Fiona Obeid, does not work, his wife purchased a $1.4 million Hunters Hill house, with plans for a $1 million renovation, because his in-laws "have looked after us in other ways".

Mr Achie's company, Calvin Holdings, is the trustee of one of the major Obeid family trusts, but Mr Achie said he had never read the trust deeds, nor did he know who the beneficiaries of the trust were.

He denied that his positions as trustee was a "sham" but Mr Achie agreed that he gave out money to members of the Obeid family, as he was instructed to do by the Obeid "boys".

The inquiry continues.

Obeid Bought $400,000 Merc With Coal Profits, Inquiry Told

Explosive documents reveal the family of Labor powerbroker Eddie Obeid secretly has a $3.4 million investment in a water company with an exclusive 25-year agreement with the O'Farrell government.

This is despite the company's head, Nick Di Girolamo - a close associate of the Obeid family - denying in December that the Obeids were involved in Australian Water Holdings.

The financial records revealing the stake were tendered on Wednesday to the Independent Commission Against Corruption, which began its hearings last month into allegations that a former NSW minister for energy, Ian Macdonald, provided inside information to the Obeids about coal exploration licences.

The ICAC inquiry follows a long-term investigation by Fairfax Media journalists into the granting of coal licences and, more recently, into Australian Water Holdings.

Mr Obeid's pecuniary interest forms tabled in Parliament have indicated that for many years his sole source of income was his upper house salary of $130,000.

However, documents tendered to the commission on Wednesday revealed that some of the $18 million which has flowed through the Obeid Family Trust No.1 over recent years found its way to Mr Obeid. For instance, in May 2010 Mr Obeid was ''loaned'' $220,000 for the purchase of a unit in Port Macquarie.

The corruption inquiry also heard yesterday that Mr Obeid used some of the $15 million in profits from his family's sale of shares in allegedly corruptly awarded mining tenements to acquire a $400,000 Mercedes-Benz, while his wife, Judith, made a deposit on an $8.5 million waterfront mansion in Woolwich. The sale was due to be completed after the March 2011 state election but did not proceed.

The commission heard that a company controlled by Mr Obeid's son-in-law Hassam (Sam) Achie, the financial controller for the family company Obeid Corporation, was used to receive $15 million. The money, which was paid in two tranches in 2011 and 2012, is alleged to have been part of the $30 million the Obeid family received for the sale of their interests in companies, including one at Mount Penny, which won suspect coal tenders run by Mr Obeid's colleague, the then resources minister Mr Macdonald.

''Did you know that Eddie Obeid snr bought a brand spanking new Mercedes, do you remember that, a $400,000 Mercedes?'' Mr Achie was asked by counsel assisting Geoffrey Watson, SC. ''Did you know that the money came out of the money from the sale of shares in Mount Penny, did you know that?''

Mr Achie replied, ''I know some moneys were put towards the car, yes.''

Mr Achie agreed that the $18 million in the Obeid Family Trust No.1 was given to Mr Obeid, his wife and nine children as loans rather than distributions because no tax is payable on loans.

A summary of the accounts operated by this trust also revealed a $3.4 million investment in Australian Water. Under ''non-current assets'', the trust has listed a $3.4 million loan to ''Aust Water''. It is not clear from the document when the loan was issued, but the ledger was among a suite of files seized in an ICAC raid in November 2011.

In December Mr Di Girolamo said he had met Mr Obeid snr several times to discuss the company, that he had employed Eddie Obeid jnr for up to 18 months and at the end of 2010 had received a personal loan from Eddie jnr for an undisclosed sum.

Earlier this week the corruption inquiry heard that Strathfield real estate agent Joey Georges - another close associate of both the Obeids and Mr Di Girolamo - had invested $600,000 in Australian Water and that Mr Obeid's son Eddie jnr had introduced Mr Georges to the deal.

Since the mid-1990s, Sydney Water has issued the company with contracts worth hundreds of millions of dollars to supply sewerage and water infrastructure in the city's vast north-west. But for many years, the company's central effort has been to try to persuade the former Labor government to sell it Sydney Water's work in the north-west growth centre - a deal worth billions of dollars.

A December report in the Herald also revealed that Michael Costa as treasurer had stopped a public tender that threatened Australian Water's future, three years before being given 5 per cent of the company free and being appointed its chairman.

He did so after receiving legal advice from the Solicitor-General.

The story also detailed that it was Eddie Obeid and his son Eddie who brokered Mr Costa's appointment to the company.

But the revelation of the Obeids' secret interest in the company will also embarrass the Liberal Party. In January last year, Sydney Water issued a 25-year exclusive contract to Australian Water which gives it the sole right to project manage the remaining half-a-billion dollars of water infrastructure work in the north-west growth centre. There was no tender.

Mr Di Girolamo has held meetings with the Premier, Barry O'Farrell, the Finance Minister, Greg Pearce, and the Treasurer, Mike Baird.

For a year until his departure in late 2011, the former finance director of the Liberal Party, Senator Arthur Sinodinos, was the company's chairman. He has said he too has 5 per cent of the company, though his name does not appear on the register of shareholders filed with the corporate regulator. He said this was because his shares were being held on his behalf by Mr Di Girolamo under a ''gentleman's agreement''.

In the past five years Australian Water donated at least $80,000 to the Coalition, and has used Michael Photios, a member of the NSW Liberal Party's state executive, as a lobbyist.

Last year, Mr Di Girolamo and Eddie Obeid jnr were on an invitation list with former Howard minister Santo Santoro for a fund-raising dinner hosted by Paul Pisasale, the mayor of Ipswich in Queensland.

Senator Sinodinos said last night: ''I am not aware of that interest and I don't believe that interest occurred at the time I was associated with the company.''

Asked if it was possible the investment was made prior to his joining Australian Water: ''I believe that should have been disclosed to me if that is the case.''

Mr Di Girolamo's lawyers last night told the Herald to ''refrain from any further attempt to contact our client''.

Revealed: Obeids' $3m Water Stake

For years before he left NSW Parliament in mid-2011, the Labor powerbroker Eddie Obeid entered ''not applicable'' in the section of his pecuniary interest declaration asking whether he had received income from a trust.

But the accuracy of those declarations is being queried following sensational revelations in a corruption inquiry this week about the millions of dollars which have flowed through six Obeid family trusts, including proceeds to the Obeid family as proceeds from an allegedly corrupt government tender.

The riches which abound in the family's coffers have also raised questions whether the Obeids were meeting their tax liabilities.

In November 2011, Independent Commission Against Corruption officers raided the Obeids' Birkenhead Point headquarters as part of their investigations into whether the family made millions of dollars from the allegedly corrupt granting of coal exploration licences by then minister Ian Macdonald in 2008-09.

Among the documents seized was a trust account summary which showed that at the date of the ICAC raid, $18.38 million had flowed through the Obeid Family Trust No 1 to family members.

Giving evidence at the corruption hearing on Wednesday, Mr Obeid's son-in-law, Sam Achie, the financial controller of Obeid Corporation, agreed that the $18 million was given to Mr Obeid, his wife and nine children as loans rather than distributions because no tax is payable on loans.

Mark Leibler, senior partner at Arnold Bloch Leibler, told Fairfax Media: ''There is nothing strange about trusts lending millions of dollars to beneficiaries.''

Referring to the $18 million received by Obeid family members, Mr Leibler said: ''Well someone must have paid tax on that money if it was accumulated by the trust. If no tax has been paid then what you're talking about is straight out fraud or evasion.''

Mr Leibler said that if the income was accumulated by the trust, the trust paid tax at the top marginal rate of tax. More often, the income was distributed to individuals or to companies who were beneficiaries. ''Each of those beneficiaries will be taxed at its own appropriate rate of tax,'' he said.

The Obeids' trusts' documents, which their legal team tried unsuccessfully to suppress, revealed Mr Obeid had credit card bills and other expenses paid by the family trust. In 2010 he received a $220,000 loan from the family trust to buy a holiday unit in Port Macquarie and only days after Labor lost the election in March 2011, the trust deposited $50,000 into Mr Obeid's Commonwealth Bank account.

These payments raise questions about Mr Obeid's pecuniary interests declarations to Parliament. In 2002 the Parliament's privileges and ethics committee cleared Mr Obeid of any wilful wrongdoing over his 154 errors in his pecuniary interest forms.

However, the head of the ethics committee, independent MP Helen Sham-Ho, was furious that Labor had gutted her draft report.

A snapshot of the vast and secret business empire Mr Obeid and his five sons have created were revealed at ICAC this week.

Then there are the 50-odd ''non-current assets'' to which the Obeid Family Trust No. 1 has issued loans worth almost $9 million. Some of these loans have been made to Obeid-associated entities including The Stables, a condominium at Perisher; Milland, which owns a vast estate at Port Macquarie which the Obeids are hoping to develop; and El-Telegraph newspaper.

Evidence Questions Obeid's Pecuniary Interest Statements 

The wealthy businessman John McGuigan has admitted personally negotiating with Moses Obeid, the son of the former Labor MP Eddie Obeid, who wanted a sizeable stake in his coal company.

Giving evidence at the Independent Commission against Corruption, Mr McGuigan said that in late May 2009, he was introduced to Moses Obeid by Greg Jones, a close associate of then mining minister Ian Macdonald.

At that time the government was still considering which companies would win the right to explore for coal in 11 areas the government was opening up for mining.

The commission has heard that the Obeids used inside information allegedly provided to them by Mr Macdonald to acquire key properties in the Bylong Valley which was one of the areas covered by the new exploration licences.

Mr McGuigan, the managing director of Cascade Coal, said Moses Obeid initially wanted a 30 per cent share of Cascade Coal and that he was ''very focused on extracting value'' for their three farms in the Bylong Valley. Mr McGuigan said that he did not want the Obeids to be joint venture partners but that they were adamant that access to the properties would be given in return for a stake in Cascade. In the end 25 per cent was agreed upon. The Obeids later negotiated a $60 million payout for this stake. To date they have received $30 million.

Several weeks after this initial meeting Cascade was announced as the winning tender for the Mount Penny licence.

Mr McGuigan also agreed that a highly confidential document about the government's proposed mining areas was most likely provided to him by the mining magnate Travers Duncan, who was also an investor in Cascade Coal.

The inquiry has heard that Mr Duncan was on friendly terms with Mr Macdonald and the pair often dined together.

Mr McGuigan agreed that the knowledge the Obeids were involved in Cascade Coal would have an impact on any attempt to raise money for a mine at a later date. However, he maintained confidence that the Liberal government would not cancel Cascade's licence. ''My view was and continues to be that the exploration licence, the rights, that we currently have was validly granted and is not and cannot be in question,'' he said.

Commissioner David Ipp then pointed out that the mining minister has an unfettered discretion as to whether to grant a mining lease. At present Cascade has a licence to explore, not to mine.

In other evidence the Obeids' former farm manager Barry Taylor said, ''I only seen Old Eddie three or four times,'' in the two years to March 2010, when he was running their property Cherrydale Park at Bylong.

Mr Obeid snr made a surprise appearance at the inquiry on Tuesday. He and his solicitor watched a live feed of the hearing from a room in the ICAC complex. Members of the public also present said Mr Obeid nodded or shook his head and on occasions muttered what he thought the correct answer was to questions being asked of various witnesses.

Mr Obeid, his wife Judith and son Moses are due in the witness box on Thursday.

McGuigan Negotiated With Moses Obeid

The son of ALP powerbroker Eddie Obeid has admitted that the former resources minister Ian Macdonald provided him with a list of mining companies which included the name of a company which went on to win six of 11 licences subsequently put to tender by the government.

And Moses Obeid conceded that his father, who was head of the faction which picked the ALP's last three state premiers, had been kept informed of negotiations to sell a family farm which sat within one of these licence tenements: "We were not going to hide from him that the family farm was going to be sold ... He knew about it."

The Independent Commission Against Corruption is probing a tender of coal licences conducted under Mr Macdonald's watch in 2008 which has created millions of dollars in windfall gains for the Obeid family, and has alleged that these gains were the result of a corrupt conspiracy.

Early in his evidence, Moses Obeid did accept that information given to him by Mr Macdonald, and decisions later taken by the government, meant his family stood to make more than $75 million.

But Moses Obeid this morning denied knowing at the time that the family was trading on highly-sensitive confidential information. He said it seemed to him that the Department of Primary Industries was "leaking like a sieve".

After receiving the list of companies and passing it on to a merchant banker, Gardner Brook, evidence previously given at the inquiry has established that the Obeid family held extensive negotiations with Monaro Mining before it bid and won its licences.

In sometimes fiery exchanges with counsel assisting the inquiry, Geoffrey Watson SC, Moses Obeid said he "obviously don't know the way that business is done".

"If you're suggesting to me that someone is going to go and spend $6 or $7 million based on what a politician tells you, you're off your rocker," he said.

Earlier, Mr Watson told Moses Obeid he thought he was lying to the Commission.

"I want to suggest to you now in general terms ... that you have not been open or full in respect of the information you received from Ian Macdonald, that you have not told us everything."

Moses Obeid rejected the assertion. The inquiry continues.

Moses Obeid tells ICAC how family stood to benefit from minister's decisions

Keith Enderbury, the ALP's former upper house member for the North Coast, died in 2000 inside an Ashfield apartment that his son had set alight. You don't speak poorly of the dead, so he was remembered on the floor of the Legislative Council several weeks later as a ''dedicated parliamentarian'', and one of his career highlights was omitted. On July 19, 1989, Enderbury was the first MP to be called before the Independent Commission Against Corruption.

The latest politician to face the witness box is one of Enderbury's former upper house colleagues, Edward Moses Obeid, OAM. In the 24 years that have passed since Enderbury palmed a bible and took his place in the witness box, not a few others have followed - ICAC has conducted 153 investigations since its inception. But little has changed.

In 1989, a network of graft and patronage had allowed corrupt politicians to solicit bribes and political donations from property developers. In 2012, a very similar network is alleged to have extracted millions of dollars not from small-time builders, but from some of the wealthiest and most successful mining executives in the country. Counsel assisting ICAC told the public last November that while greed was a perennial motive in such affairs, so too was power. ''Circles of influence develop, a favour is done, it requires reciprocation,'' Geoffrey Watson, SC, said. ''That happened here.''

A real difference perhaps is the notable rise in volume. At the heart of the Tweed inquiry was an alleged $25,000 bribe. On Thursday, Eddie Obeid's son Moses admitted the family stood to pocket $75 million from the affair, accepting the windfall was a result of the access he had - through his father - to the disgraced former mining minister Ian Macdonald.

So enduring is this form of alleged corruption that Watson has even likened the conduct of the Obeids and Macdonald to the sleaze of the Rum Corps 200 years ago. In some ways it is a clunky analogy - the NSW Corps was more famous for its 1808 overthrow of Governor William Bligh than for its illicit trade in rum - but in other ways it cannot be more fitting. As he was being deposed, the former premier Nathan Rees bitterly described Obeid as a puppet-master, a man who could usurp an elected leader almost at whim.

And it is this influence - not the money - that makes the affair so sensational. Obeid had access to every premier, every minister, every Labor mayor in Sydney.

His appearance next Monday has been long awaited. Privately, elders in the party and political observers sheeted home to Obeid much of the blame for the landslide which buried the ALP at the 2011 state election. For almost his entire period in Parliament, Obeid focused not on serving the state or even the party, but on serving himself. He cultivated a cadre of loyal, unthinking acolytes in seats and branches across the state, gradually building an unrivalled powerbase.

It seems clear now that he also spent his time and his influence advancing his family's many business interests.

Morris Iemma told the inquiry that when he was the premier of NSW, Obeid would visit his home several times a week. One former cabinet minister remarked that he must have done so because none of Iemma's staff would be standing around to listen. Certainly, Obeid was not shy about lobbying, including - as has emerged in the past year - on behalf of his family's interests.

In July 1990, ICAC found Enderbury had helped to create ''a climate conducive to corrupt conduct'' on the state's north coast. One can only imagine how the commission will choose to describe Obeid's influence on those around him.

The Obeid family first knew it was under scrutiny in November 2011. Early one morning, authorities showed up to the family's offices at Birkenhead Point with a search warrant. They seized everything they could lay their hands on. Since then, as ICAC has put together its case, the Obeids have sandbagged theirs.

The public got its first taste of the family's defence this week. Like so much of this inquiry, it is complex and astonishing. This was how Moses Obeid summed it up on Thursday:

Some time after the family bought Cherrydale Park for $3.65 million in late 2007, it comes to their attention that one corner of the property overlaps with an existing, but dormant coal lease. It is owned by mining giant Anglo American. And it is a concern, Moses Obeid says, because ''the title encroached … a lucrative lucerne growing area and it in fact had water bores beneath the, beneath the area there [and] any drilling on that part of the land would cause major issues for us''.

This is why, in about May 2008, ''Paul [Obeid] and I both agreed that, look, we needed to find out relatively quickly … what [is] the status of Anglo's [lease]''. So Moses asks his father for help. ''Dad had informed me that he was having breakfast one morning with [NSW Labor MPs] Costa, Tripodi, Macdonald and I believe it may have been Roozendaal … and I said look if Macca happens to show up can you let me know because I just want to ask him and query something about an exploration title. He had called me and said, 'Look Macca is coming, he'll be here in 10 minutes, where are you?' and I said, 'Look, I can come down'. I went down there and I asked Ian to step aside.'' According to Moses, in a phone call two weeks later, Macdonald blurts about an upcoming coal licence tender.

But it is from this point, however, a series of events occurred that Moses Obeid struggles to explain. Over the next six weeks, just as Macdonald expresses to his department a new desire to sell remnant coal deposits in the very same area, the Obeids and their friends work on the purchase of adjoining properties. Barely a month after Moses and Macdonald supposedly had their first discussion about the issue of coal, Macdonald, contrary to advice, creates a new coal tenement called Mt Penny, which stretches over all three properties the Obeids would end up controlling.

While Moses and his brothers are organising deals over access rights for this land for mining companies and setting up hidden vehicles to take a share of the companies that will win their bids (in exchange for ''consultancy, assistance and advice''), Macdonald is calling for the creation of a list of mining companies that will be invited, exclusively, to tender for the new coal exploration areas.

The net effect was that on July 9, 2008, Macdonald read a list of mining companies down the phone to Moses Obeid. One of these - Monaro Mining - would go on to win six of the 11 licence areas in the subsequent tender (and would enter a secret agreement with the Obeid family). Watson asked Moses if he could explain these ''incredible coincidences'', but he could not. He says the list was simply those companies investing in coal at the time, which Moses might like to pass on to an investment bank with which he had a relationship.

''I can't say any more other than, other than if if I were a Minister, I would probably do the same thing to entice a very large investment bank to invest in my state.''

ICAC's version of events is far more sinister. ''A relationship of patronage and dependence had grown between Mr Obeid and Mr Macdonald,'' Watson has said. The implication is clear. By sponsoring Macdonald's career, through scandals and sackings, Obeid had succeeded in putting the minister - and his portfolio - seemingly at his disposal.

Rather than inquiring about leases that might threaten the family farm, Watson has alleged Eddie Obeid effectively instructed Macdonald to open up the area for coal mining. Then, with a supply of inside information about the upcoming tender, the family extracted the maximum possible profit from land access deals and by taking an interest in two of the winning companies now worth more than $60 million.

But now - after six weeks of hearings, scores of witnesses and thousands of documents - the inquiry has finally arrived, exhausted, at its star witness. Everyone wants to know: Will ICAC get its man?

There is considerable evidence. Eddie Obeid senior is enjoying material benefit from the same family trust into which millions of coal-dollars have flowed (including a new Mercedes Benz).

He is informed early in the piece about his sons' negotiations with mining companies over the farm (indeed, one document shows an early bid for the farm from Tianda Resources would not meet Eddie's ''expectations''). And he knows his son is in regular contact with Macdonald (he invites him to breakfast with his Labor head-kickers). But is it enough?

Eddie Obeid has already signalled his intention to challenge any adverse finding in the NSW Supreme Court - a popular pursuit ever since Nick Greiner had his corrupt finding overturned not long after the Tweed affair. Joe Tripodi's sister-in-law, Angela D'Amore, a corrupt former Labor MP, has had a go and failed, and Charif Kazal, a nightclub-owner who was found to have corrupted a Sydney Harbour Foreshore Authority official, is suing ICAC.

Enderbury might be an inspiration. After his adverse finding at ICAC, he refused to resign from the upper house until he was good and ready, stepping down in 1995 after the ignominy had faded.

But Obeid might want to consider what it will cost him to survive the inquiry, because if he does, it could be because he has used his sons as a kind of ring-fence, keeping himself an adequate distance from the action.

Of course, in this case, Enderbury might not be the example he wishes to follow.

All In The Name Of Power & Fortune

Only two days after being sensationally accused of standing to make $100 million out of an allegedly corrupt government coal tender, the family of controversial Labor kingpin Eddie Obeid was back doing what it does best - completing yet another astonishing deal.

As Mr Obeid prepares to be questioned at the Independent Commission Against Corruption inquiry on Monday, it can be revealed that his family received millions of dollars in ''consultancy fees'' relating to the Top Ryde shopping centre and residential complex.

A Fairfax Media investigation has found that in addition to those payments, alleged to have been paid by the Beville group through an Obeid associate, last year the Obeids acquired five residential apartments in the complex at almost half the cost of neighbouring apartments.

And, contrary to testimony given by Moses Obeid at the inquiry on Friday in which he claimed his father had no involvement in the family's business dealings, Fairfax has confirmed Mr Obeid personally negotiated the purchase of the five apartments with Iwan Sunito.

Mr Sunito's company, Crown Group, bought the residential component of the Top Ryde development from the Beville group two years ago.

''He [Mr Sunito] met Eddie Obeid several times last year to discuss the purchase of the apartments,'' said a source, who said the pair was seen late last year meeting at the shopping centre and the residential site above.

On November 14, two days after being accused of being at the centre of the biggest corruption inquiry since the Rum Corps, the Obeids made a 46.8 per cent return when they sold one of the units for $558,000, having owned it for four months.

Another sold in early December for a 43.6 per cent profit.

Land title records show Pope Property Holdings, whose sole director is one of Mr Obeid's sons, Gerard, bought the five units in June 2012. Settlement was on July 16. The prices paid were $350,000, $370,000, $380,000, $390,000 and $410,000.

But three days before the sale was completed, the Obeids obtained a $4 million mortgage from the NAB using as collateral three of the apartments they had just bought for a total of $1.1 million. The fact that the bank valued the properties at a far greater amount than the Obeids paid suggests either the bank vastly overvalued them or the Obeids got an amazing bargain.

The latter scenario appears more likely, with the profit of almost 50 per cent the Obeids enjoyed when they sold two of the apartments late last year.

For years it was rumoured the Obeids had secured apartments in the complex after assisting the initial developer John Beville. Previous attempts to develop the site had foundered because of traffic issues. But Mr Beville's company, Bevillesta, negotiated a solution with the roads authority and paid Ryde Council $18 million for land access to enable a tunnel to be built under the proposed development.

Rocco Triulcio, a close associate of the Obeid family, was questioned at ICAC last year about ''consultancy'' fees for Mr Obeid's son Paul in relation to the Top Ryde project.

''And the particular services for which he was being paid these sums - and it amounted to millions of dollars - was acquiring local government approval for parts of the project. Is that right?'' counsel assisting the inquiry Geoffrey Watson, SC, asked him.

Mr Triulcio denied the payments were for obtaining government approval. They were for Mr Obeid's property development skills. When asked to detail these skills, Mr Triulcio said: ''Over the years of him being involved in developments he [Paul Obeid] obtained a lot of skill sets.''

Mr Triulcio said the payments were part of the contract ''I had with the Bevilles at the time''.

Mr Beville was recently asked about the Obeids' involvement in his Top Ryde development. ''The authorities know what they're doing and it would be inappropriate for me to comment … And if you were in my position, I can't imagine you saying anything different,'' he told Fairfax Media last month.

After Fairfax revealed last year that Ryde Council had previously given an Obeid-related health company a three-year deal worth $300,000 without going to tender, and had contracted Moses Obeid's company Streetscape to provide multi-function poles despite their being twice the price of a second bidder's, the council has ordered an inquiry into any dealings it has had with the Obeids or any of their associated companies.

Eddie Obeid will be in the witness box on Monday.

Family's Shopping Centre Windfall

Former Labor powerbroker Eddie Obeid was warned he could be charged with contempt of court and told to "stop arguing" during bad-tempered exchanges at the Independent Commission Against Corruption today.

In a tense and heated session, Mr Obeid was questioned about allegations he had inside knowledge of mining tenders and colluded with his Labor colleague, the former mining minister Ian Macdonald.

He said he was not involved in any alleged criminal conspiracy to defraud the people of New South Wales, but clashed repeatedly with counsel-assisting the commission Geoffrey Watson and with Commissioner David Ipp.

In the afternoon, after Mr Obeid had avoided answering certain questions all day, Mr Ipp warned Mr Obeid he could be charged with contempt of court.

"Mr Obeid, stop arguing. I'm warning you, answer the question, otherwise you will be held guilty of contempt," he said.

"You persist in not answering the question, deliberately, and interrupting.

"Mr [Stuart] Littlemore is your barrister, you do not have to argue the case yourself.

"If you want me to I'll ask Mr Littlemore to leave the hearing room, because you want to conduct the case yourself. Would you like me to do that?"

Mr Obeid replied, "No I wouldn't."

The ICAC inquiry has previously heard allegations the Obeid family and their associates stood to profit $100 million from mining deals in the Bylong Valley, west of Newcastle.

"It's my intention to submit to the Commissioner that you, you Mr Obeid, engaged in a criminal conspiracy," Mr Watson said as he opened proceedings today.

"You engaged in that with Ian Macdonald, and with members of your family. And the design was to effect a fraud on the people of New South Wales."

Mr Obeid replied: "That's incorrect."

When asked by the counsel-assisting if he thought it was "appropriate for a government minister to put a tenement over a friend's property", Mr Obeid replied: "No."

He said it is "wrong and inappropriate".

After laughter erupted in the public gallery when Mr Obeid was questioned about ethics and responsibility, Mr Ipp warned people to restrain themselves.

"This is not a theatre," he said.

Friends or rivals?

Mr Obeid was questioned about his relationship with Mr Macdonald.

Mr Obeid was the leader of 'the Terrigals', the right faction in the New South Wales Labor caucus, while Mr Macdonald came from the left faction - making them political rivals in theory.

Mr Obeid told the inquiry he regarded Mr Macdonald as a "political" as opposed to an ordinary friend.

But he did concede they had dined together many times and they had been together a lot in social settings.

Mr Obeid told the inquiry he made hundreds of phone calls to Mr Macdonald at a time when the former Labor government was was in turmoil.

He said they were only discussing politics.

Mr Obeid was grilled about whether or not he got inside knowledge about mining tenders from Mr Macdonald.

He said he did not know how confidential maps which were found during ICAC raids came to be in his family's offices.

He also denied being the beneficiary of a family trust.

When asked what he told the ALP about the Obeid family making huge profits from a decision made by Mr Macdonald, Mr Obeid said: "Nothing."

Mr Obeid later admitted he accepted phone calls from journalists.

"From friendly ones who tell the truth." he said.

Obeid Threatened With Contempt Charge As ICAC Erupts

from Crikey ….

BMWs, billiards and flowers: ICAC goes through Obeid's receipts

MARGOT SAVILLE

Things are a little quieter at ICAC today. After yesterday's fireworks, with instructions to answer the questions, threats of contempt and shouted objections from senior counsel, the temperature at the NSW Independent Commission Against Corruption has come down a few degrees.

Whether Commissioner David Ipp QC has read them all the riot act in the headmaster's study, or whether star witness Eddie Obeid has finally seen sense, there's no doubt today's hearing is less hysterical than yesterday.

The Counsel assisting Geoffrey Watson SC has spent most of the morning quizzing Obeid about the huge sums of money flowing in and out of the Obeid Family Trust No. 1. The accounts for the trust were tendered in court immediately after the inquiry saw copies of the former politician's pecuniary interest declarations, which showed that he had only ever declared his parliamentary salary.

Although Obeid (a NSW Labor politician for 20 years) trained as an accountant, he was very vague about the workings of the trust, saying that his sons ran the family businesses because he was "hands off".

Although Eddie appeared to be uninterested in the workings of the trust, which was set up in 1973, the rest of us found it riveting. He was initially not sure if he was a beneficiary and didn't know the details of a $1.7 million loan account in the name of his wife, Judith.

"Your wife has run up a $1.7 million debt, and you don't know whether she has an income, the term of the loan, what interest rate it is or whether she has any capacity to pay it?" asked Watson. "Yes," Obeid replied.

The entries paint an interesting picture of life in a $10 million heritage-listed mansion on the waterside of Hunters Hill, one of Sydney's most prestigious suburbs. There are regular largish payments to the local newsagency (for drycleaning, according to Obeid), regular debits to BMW and Mercedes-Benz, and constant visits from The Pool Doctor and a billiard company. Puzzlingly, a florist in distant Epping seems to receive regular payments (aren't there florists in Hunters Hill?) as does Cheap and Quick Waste Bins.

Although Obeid says the trust was set up to benefit his nine children and their children, this largesse does come at a price. Asked about large sums paid to Rydges Port Macquarie, the former powerbroker said that the entire family spent a month there every January, holidaying together.

Although Obeid, the leader of the NSW Right faction of the ALP for two decades, is less belligerent today, he is still not giving out a lot of hard information. At one stage Commissioner Ipp told Obeid that "we will stay here as long as it takes to get answers to questions from you ... you will be in the witness box until you answer the questions you are asked, do you understand that?"

Later he warned him: "Will you stop trying to obfuscate the matter!"

This could take quite a long time.

Paul Obeid, the second of five sons of controversial Labor powerbroker Eddie Obeid, has admitted encouraging an accountant to lie to The Sydney Morning Herald in 2010.

Mr Obeid said that the lies – denying that the Obeids had any interest in the purchase of two adjoining farms at Bylong – were "white lies ... trivial untruths".

During questioning at an Independent Commission Against Corruption inquiry, Mr Obeid denied that the lies were deliberately aimed at concealing the Obeid family's involvement in a mining tenement that resources minister Ian Macdonald is alleged to have drawn up for the benefit of the Obeids.

Paul Obeid admitted that his family had tried to enter into mining joint ventures with several resources companies, before Mr Macdonald called for companies to seek exploration licences.

However, Paul Obeid denied that Mr Macdonald had created the tenement that covered the Obeids' properties especially for them.

Geoffrey Watson SC, asked: "And it was done with a view to enabling you and your family to profit on Cherrydale Park [the Obeid farm at Bylong]?"

"No, that sounds like a Hans Christian Andersen novel," replied Paul Obeid.

He also said he hadn't lied, but rather had been inaccurate, at a private hearing by the Independent Commission Against Corruption in August 2012.

On that occasion, Paul Obeid was asked whether he had told the people at Cascade Coal whether the Obeids were behind a company called Buffalo Resources.

At the time, the Obeids were using a "front" company to negotiate a stake in Cascade Coal, which had won the government tender to explore for coal where the Obeids had bought up crucial farms.

"Certainly, they knew they were dealing with Obeids," said Paul Obeid on that occasion.

Paul Obeid tried to distance himself from that response, saying his evidence was inaccurate and that he was under pressure.

Several members of the Cascade syndicate have claimed they were not aware that the Obeid family were behind a deal which resulted in the Obeids getting a 25 per cent stake in Cascade Coal. Cascade director John McGuigan has told the inquiry he knew that the Obeids were involved.

The family later sold their share for $30 million, with the promise of a further $30 million, which the Obeids are currently demanding Cascade pay them.

Using the three properties they acquired in advance of the 2008 government tender, the Obeids also have an agreement whereby Cascade will buy the three properties for four times their value if a mine eventuates. This will net the Obeids a further $20 million.

There have been a number of testy exchanges between Commissioner David Ipp and Graham Turnbull, SC, who is representing four Obeid sons: Damian, Paul, Eddie jnr and Gerard.

After patching up their differences, Commissioner Ipp quipped that perhaps the pair needed to see a marriage guidance counsellor.

The commission will not sit on Friday this week, meaning star witness Mr Macdonald will now appear on Monday.

Obeid Son Admits 'White Lies' Over Farms

A corruption inquiry has heard that the former mining minister Ian Macdonald was to be paid $4 million from the proceeds of an allegedly rigged tender he oversaw for a coal mine in which his close friend and the family of Eddie Obeid had a multimillion-dollar interest.

Greg Jones, a close friend of Mr Macdonald, has testified he told the disgraced former mining minister of the involvement of Mr Obeid's family in a mining company that won an allegedly corrupt tender in 2009.

And notes shown during the public hearing have been suggested to show that Greg Jones, a former Labor staffer and lifelong friend of Mr Macdonald, has channelled thousands of dollars in secret payments to his old mate.

Mr Jones said he told Mr Macdonald that he would reap millions of dollars himself from the same mine, and that he could use this money to invest in businesses Mr Macdonald was planning for life after politics.

He admitted lending Mr Macdonald $195,000 during the same period, thousands of which he wrote off and Mr Macdonald never repaid. Mr Jones has also confirmed that his own handwritten notes, shown at the inquiry, correctly recorded that he had given $35,000 "in cash and gifts" to Mr Macdonald.

The Independent Commission Against Corruption is investigating Mr Macdonald's role in the coal tender, including a $75 million windfall that was to make its way to Mr Obeid and his family.

Counsel assisting the inquiry, Geoffrey Watson SC, suggested the same notes show Mr Jones was intending to give $4 million from the mining deal to Mr Macdonald.

''It was his cut,'' he alleged. Mr Jones denied this was the case.

Mr Watson also suggested a mooted forestry deal noted in the document would have led to a $300,000 payment - exactly half the profit from the deal - to Mr Macdonald. Mr Macdonald was the forestry minister at the time, and Mr Jones admitted he wanted Mr Macdonald to get him a meeting to further the deal.

The handwritten notes end with this sentence: "Need one more big mine."

Previously, Mr Jones had said he was angry with Mr Macdonald for resigning from Parliament in the wake of an expenses scandal.

ICAC Inquiry

meanwhile, from the fairies at the bottom of the garden ….

The millions of dollars the Obeid family has reaped from an allegedly corrupt government coal tender has been channelled through a series of trusts to purchase multimillion-dollar houses for a number of the nine Obeid children in the way of tax-free ''loans'', a corruption inquiry has heard.

However, three of the five sons of controversial former Labor powerbroker Eddie Obeid have told the Independent Commission Against Corruption they have either little or no knowledge of how the family trusts work or where the money comes from.

Damning evidence given at the inquiry suggests the Obeids stood to make up to $100 million from a rigged government coal licence tender. The inquiry has heard the Obeid family engaged in a ''criminal conspiracy'' with then resources minister Ian Macdonald, who was to receive $4 million from the deal.

It has also heard that the family have already received $30 million which has gone through a complicated series of Obeid family trusts before being given to Mr Obeid, his wife Judy and their nine children, none of whom work outside the family business.

Gerard Obeid, who is paid $10,000 a month as the family ''gopher'' - driving his four brothers around and running errands - told the inquiry that he did not know he was the trustee of the Obeid Family Trust No.1, nor did he know how he had paid for his $2.5 million house.

Commissioner David Ipp asked where he got the money to buy the house. Gerard Obeid replied: ''It was in the bank, your Honour.''

Pushed to explain where the money had come from, Gerard Obeid said he had no idea.

''The tooth fairy?'' suggested the commissioner.

''You go through life without bothering about things like this, you leave it to somebody else to make sure that you have enough to live on and you're happy with that?'' asked Commissioner Ipp.

''Exactly, exactly, your Honour. I have no idea of how this works,'' said Gerard Obeid.

He rejected the suggestion that ''you knew full well that your family were in cahoots with Macdonald in putting together this mining tenement for the financial betterment of your family''.

Following Gerard into the witness box was his older brother, Damien, who told the inquiry he looks after the family's agricultural interests. Damien Obeid, who is also paid $10,000 a month, was asked about the million dollars the family trust had lent him for his house.

He agreed the loan was interest free and that ''at this stage there is no intention'' of paying back the loan.

The Obeid accounts are looked after by brother-in-law Sam Achie, who receives a $55,000 salary as the Obeid Corporation's financial controller, but bought a $1.415 million house with his wife Fiona Obeid, who does not work. Plans have been submitted for a $1 million makeover of their Hunters Hill home.

When another son, Paul Obeid, was unable to explain the family trust accounts, which showed expenses such as school fees, golf club fees and $300,000 loans to business associates all coming out of the family trust, he agreed the accounts were a ''shambles''.

''Well, it looks like we're going to be looking for a new financial controller,'' he suggested.

The inquiry resumes on Monday.

How Did You Pay For $2.5m Home? Money 'Was In The Bank'

The sensational corruption hearings involving the former Labor powerbroker Eddie Obeid are being hailed as the ''best show in town'' and the unprecedented numbers in the public gallery are testament to that. With their packed lunches and willingness to queue for hours for a seat, some give off the air of festival-goers, while others have the grim countenance of witnesses to a public execution.

This somewhat bizarre atmosphere has come about only because of the Independent Commission Against Corruption's emphasis on the importance of public hearings.

But Obeid's decision on Wednesday to casually drop the names of several federal and state politicians who had stayed free at his family's Perisher ski lodge, has again raised the issue of the appropriateness of ICAC doing its work in the open. Being named as close to the family during the biggest corruption inquiry in the state's history ensured plenty of embarrassing media coverage for politicians past and present. Is this unfair?

While the NSW Opposition Leader, John Robertson, the federal Environment Minister, Tony Burke, and the former federal sports minister Mark Arbib acknowledged they had accepted the Obeids' generous offer, there were flat denials from the former NSW premier Morris Iemma and the federal Workplace Minister, Bill Shorten.

The argument from those critical of the process is that, despite their denials, Iemma and Shorten are likely to have suffered the same reputational damage by being named.

It's not a new concern. The question of the pitfalls of public hearings at the ICAC was canvassed during a 2002 parliamentary inquiry. In its report, the committee identified potential problems.

''ICAC's use of public hearings as an investigative tool in their own right can potentially cause great unfairness, including irreparable damage to the reputation of the individuals that the commission investigates,'' it said.

The group Whistleblowers Australia suggested public hearings had the capacity to ''crucify the witness'', leaving those who step up to expose corruption open to reprisals.

At the time, the ICAC argued it had the ability to suppress the reporting of names if it saw fit and this was an adequate safeguard for those who appeared before it.

The South Australian state government is about to take a very different approach in establishing its first ICAC, reportedly modelled on the highly secretive Australian Crime Commission. There, hearings will be held in private but the commissioner will have the discretion to make public statements about the investigation.

The strident secrecy provisions are already prompting warnings from legal groups and anti-corruption experts that a blanket ban on public hearings will fuel claims that allegations of wrongdoing are being covered up.

It's a similar story in Victoria with its new Independent Broad-based Anti-Corruption Commission, which will generally hold hearings in private. Public hearings will be held only in ''exceptional circumstances''. The decision has been criticised by the Law Institute of Victoria, which has argued for broader flexibility for the commission to go public.

There will always be cases such as those that unfairly dragged Shorten and Iemma into the Obeid mire. And it is true that in some cases the media give more coverage to the allegations levelled against a person in the witness box than to the announcement later on that they have been cleared of any wrongdoing.

But that is no reason for ICAC's operations to be carried out in near-total secrecy. Like any public agency with extraordinary powers, its existence largely relies on maintaining the confidence of the public.

The best way to do that is to shine as much light on the process as possible.

Open doors at ICAC bring air of confidence

What a spectacular parade of greed and deceit there has been at the Independent Commission Against Corruption these recent months.

In they went and out they came: a revolving door of touts, chancers and urgers, scum from the Sydney business world and the swill of the Labor Party.

I had thought counsel assisting the inquiry, Geoffrey Watson, SC, was exaggerating, as barristers will, when he invoked the spectre of the infamous Rum Corps on the first day's play last November. The evidence since suggests this was restrained understatement. We have seen NSW Inc laid bare, rotten to the core

No doubt the business figures involved think of themselves as canny investors, superior men of affairs far smarter than your average bear. Money was their holy grail, other people's money and lots of it. They include John ''Foghorn'' Kinghorn, best known for his exquisite timing in trousering a cool $670 million by selling off his RAMS home loan business shortly before it fell to pieces in 2007. Kinghorn is one of the so-called Magnificent Seven, each of whom stood to make about $60 million with the flick-of-a-wrist sale of coal company A to coal company B.

Another is Richard Poole, amusingly described as an investment banker, and heard on a phone intercept saying ''we want money and we don't give a f--- how we get there''. For all his vaunted financial expertise, he had difficulty explaining the millions sloshing in and out of his wife's bank account.

My personal favourite of this bunch is one John McGuigan who, after repeatedly denying to Watson that he was ''after the shortest route to the biggest pot of money'', was much discomfited to hear himself spouting that very phrase in yet another telephone tap. For all the swagger, some of them appear to be not all that bright.

Then there is Edward Moses Obeid himself, the capofamiglia at the dark centre of it all, with his smug, reptilian face and his brood of oily sons. Eddie is bright. You would have to be, to turn the $200,000 a year in pay and allowances for a member of the NSW upper house into a squillion-dollar octopus run by a bewildering network of trusts, as he would like us to believe. His defining moment came on Tuesday when he blew his cool and snapped at Watson that ''I have spent more money than you have made in your lifetime''. He seemed to be proud of this.

Hooray for the anonymous onlooker in the queuing throng who told him that ''It is not a guard of honour, I assure you''. As Kate McClymont reported, Obeid's brief and my old ABC colleague Stuart Littlemore, QC, momentarily abandoned his Zen-like calm to shoot back: ''I will speak to the commissioner about you''. Grrrrr, Stuart, I bet that frightened him.

The fat lady sings on Monday when the former energy minister Ian ''Sir Lunchalot'' Macdonald will be in the witness box to assist with inquiries. Too much to hope that he'll roll over and reveal all, I suppose.

It's part of life's rich pageant. They should give us all a good laugh.

Mike Carlton

Decisions made by disgraced former mining minister Ian Macdonald stand to enrich the family of his former colleague Eddie Obeid somewhere between $75 million and $175 million, a corruption inquiry has heard.

Just before 3pm on Monday Ian Michael Macdonald swore to tell the truth at the Independent Commission Against Corruption. He also took what is known as ''a section 38'', which means that his evidence is given under objection and can't be used against him in other proceedings, unless he is found to be lying.

Mr Macdonald did not have long to wait before counsel assisting the inquiry, Geoffrey Watson, SC, said acidly, ''I'm suggesting you're a liar and that you're making this up!''

Mr Macdonald was trying to explain that he ordered his department to create the ''Mount Penny tenement'' after he consulted a government-issued atlas, which he no longer has.

Senior geologists have told the inquiry that they had never heard of Mount Penny, which happens to be a large hill on the farm the Obeid family owns in the Bylong area.

Mr Macdonald could only offer that it was a coincidence that in May 2008, the day after he discussed Mr Obeid's farm with him, Mr Macdonald asked his department about coal reserves in the Mount Penny area. The former mining minister also could not explain why the new tenement sat ''smack bang over the top of the Obeid family farm''.

Mr Watson said that he would take Mr Macdonald through 40 particular times and events … ''at the end of it I'm going to show to you that you did this deliberately, you created this tenement with it in mind to profit your friends the Obeids''.

''I don't accept that,'' said Mr Macdonald, adjusting his collar. By the end of the day the commission had covered four of the 40 events.

Demand was so great for Mr Macdonald's starring role at the inquiry that commission staff issued tickets for the 42 seats in the public gallery. Some of those who received tickets had been queueing for two hours before the commission started at 10am.

''Don't worry, I will have a lot to say,'' said Mr Macdonald, with a fixed grin, as he arrived to give evidence about allegations that he stood to receive $4 million for his role in rigging a government coal licence tender to benefit the Obeid family.

One woman, who declined to give her name, declared she was outraged at the influence on his party colleagues of the former Labor powerbroker Eddie Obeid. ''He's very skilful, isn't he?'' she said, begrudgingly. ''Disgusting.''

Nineteen-year-old Tom Woods, fresh from high school and studying arts at the University of Sydney, took a more jaundiced view.

''It's happened before, it's bound to happen again,'' he said. ''These guys with power in their hands being able to misuse it. In that way, I'm not shocked by it.''

The hearings were also ''a bit of entertainment I guess'', for him and a fellow student. ''We heard there were droves of people coming in to see the Labor guys go down in the witness box. We just love the theatre of it so far. It's spectacular.''

The witnesses were not the only focus.

Dorothy, of Collaroy, enthusiastically nominated the ICAC Commissioner, David Ipp, as a major drawcard thanks to his tendency to suddenly inject himself into the proceedings with a biting comment.

''He's like one of those iguanas, just sitting there in wait, with a little tongue that suddenly darts out!'' she observed gleefully.

Ed, 40, wanted to see ''every cent paid back to the state'' in the event of a corruption finding.

Two retired accountants were focused on the implications for family trusts after evidence that Obeid family members received millions of dollars this way, apparently tax free.

Neither had faith that the commission's work would result in criminal prosecutions but held out hopes for an Al Capone-like result. ''In the 1930s they got the gangsters through the taxation system,'' said Patrick, 75. ''And I think that's what's going to happen here.''

Laughing all the way to ICAC: the star witness

from Crikey ….

From the shadows, 'loathsome' Labor Lunchalot fronts ICAC

MARGOT SAVILLE

It's been a stressful morning at the New South Wales Independent Commission Against Corruption for former Labor minister Ian Michael Macdonald. When he slipped into the witness box at 3pm yesterday he looked full of confidence, but today's relentless interrogation is taking its toll.

Yesterday counsel assisting, Geoffrey Watson SC, told the former mining minister he would take him through 40 times and events. "At the end of it I'm going to show to you that you did this deliberately, you created this [mining] tenement with it in mind, to profit your friends the Obeids," he said.

ICAC is investigating allegations Macdonald made improper decisions about mining leases which could enrich the family of his friend and political ally Eddie Obeid by somewhere between $75-175 million. It's been alleged Macdonald stood to receive $4 million in return.

We are now up to point number 14, and it does feel as though the former leading light of the NSW Left faction is slowly sinking into quicksand.

Yesterday he said he had decided that Mt Penny, on the Obeid land, would be the site of a new mining tenement because he had simply found it in the atlas. Today he is denying he instructed the relevant government department to create this new tenement, against expert advice that more investigation was necessary. Two public servants have already given evidence that Macdonald instructed them to "create a Mt Penny tenement".

The former politician is also denying he had told cabinet, the Parliament or his colleagues about the decision, claiming he hadn't known the Mt Penny tenement was on the Obeid's property. "The first time I heard about it was in the paper [The Sydney Morning Herald]," he said.

Heavy-set, bald, with a neck like a rhino, the 63-year-old radiates aggression and disdain in equal quantities, with the occasional flash of nerves. His constant bluster and obfuscation is testing the patience of the commissioner, David Ipp QC, who has described his evidence as "tiresome and time wasting".

There has been quite a bit of argy-bargy at the bar table - "just answer the question!"; "will Mr Watson stop shouting!" - until Watson asked a question about a previous witness, whom he described as an "honest man of great integrity".

"And so am I," Macdonald snapped, bringing the hearing room to a stunned silence. "I won't comment on that," Watson replied.

Macdonald is the biggest star of this inquiry. Last year ICAC investigated his receipt of services from Asian s-x worker "Tiffanie", paid for by property developer and murder suspect Ron Medich. It's alleged Macdonald received s-xual favours in return for introducing businessmen to the heads of government departments. No findings have been made in that matter.

In a way, both Macdonald and Obeid are reminiscent of many of the politicians in Papua New Guinea: their only reason for entering parliament is to gather money to enrich their tribes. In PNG, this behaviour is cultural. But Macdonald does not even pretend to have an ideology, changing allegiances on crucial Labor policy like electricity privatisation simply in order to gain influence. In Parliament for 22 years, he finally left following a public outcry over travel rorts and excessive entertainment expenses, which had earned him the nickname "Sir Lunchalot".

It's a long way from the Housing Commission flat in rural Victoria Macdonald grew up in with his four siblings after their father deserted them. His mother eked out a living as a housekeeper in Catholic presbyteries, impressing on young Ian the importance of education.

He worked hard at school and went to La Trobe University, where he studied history and threw himself into campus politics, joining the ALP. After graduation, Macdonald worked as a research officer in the Senate before moving to NSW to spend a decade working for then-attorney-general Frank Walker, organising to shore up Walker's position with the Left faction. By 1988 he was appointed to the upper house of the NSW Parliament, giving a rather prescient maiden speech in which he expressed misgivings about plans for an independent commission to investigate corruption.

He has his detractors on both sides of the fence. A few years ago, Nationals leader Andrew Stoner described Macdonald as a "repeat offender when it comes to feathering his own nest at the expense of taxpayers and looking after his mates".

But the best description of him comes from an unnamed member of his own party, quoted in 2009. "Macdonald," they said, "was one of the most loathsome people in Australian public life, an orthodox right-winger masquerading under the 'hard Left' banner, a man who operates from the shadows."

Ian MacDonad rose through Labor ranks effortlessly switching allegiances. But the political chameleon has come unstuck.

Labor elder statesman John Faulkner has a reputation for stark candour. Even so, the speech he delivered to a private gathering of the Left faithful at a Chinese restaurant in the Haymarket two years ago left his audience gasping.

The event was a farewell for Luke Foley, the bespectacled, somewhat cherubic-looking party functionary who was leaving his post as the party's assistant state secretary and migrating to the state upper house.

Foley was taking the place vacated by Ian Macdonald, who'd been forced to fall on his sword - finally - by then premier Kristina Keneally over an overseas travel rort exposed by the Herald.

The full, breath-taking panorama of Macdonald's alleged misdeeds had yet to be laid before the Independent Commission Against Corruption.

But enough thunder clouds were rumbling over the man known as '' Sir Lunchalot'' for party hardheads to know more trouble lay ahead.

The left stalwarts gathered that evening were expecting a paean of praise for Foley, one of their rising stars. They were not expecting the other half of Faulkner's message - a ringing condemnation of his own faction for having bred and nurtured Macdonald over decades.

''It [Macdonald's rise] reflects well on none of us in the Left,'' Faulkner chided, in remarks previously unreported outside the party.

''It is a particularly unpleasant reflection for anyone in the leadership of our faction …

''Again and again he received the misplaced and mindless loyalty of the Left, supporting him for year after year in the Upper House.''

Macdonald was, he said, ''our creation'' and a ''terrible indictment of us all.''

As the agony of ICAC drags on, one left-winger confided this week, ''it's the barbecue conversation we are all having. Is it Shakespearean? Is he someone who was genuinely an idealist in the beginning, and it all went wrong, with the power and money? Or was he just always this way? I don't know the answer.''

Macdonald might have sprung from the bosom of the Left, but he prospered through hitching his star to key players on the party's more powerful and numerically superior Right. It was Right powerbrokers such as John Della Bosca, Joe Tripodi and Eddie Obeid who found their separate uses for Macdonald, and whose coat-tails he rode into positions of ever greater trust.

It was on the watch of a right-wing premier, Bob Carr, that he first entered the ministry in 2003. It was another right-wing premier, Morris Iemma, who expanded Macdonald's ministerial empire after the 2007 election, fooled by the man's energy and seeming reliability.

It was a third right-wing premier, Kristina Keneally, who initially restored Macdonald to the ministry after he had been dropped towards the end of Nathan Rees' ill-starred turn in the top job.

Ian Macdonald was a political shape-shifter. He could be, says former Left minister and party historian, Rodney Cavalier, ''anything his audience wanted him to be. He knew the language, he could spout the ideology of the group with blithe conviction.''

And he ''always wanted to be on the inside of the deal - that was central to his nature.''

Raised on a housing commission estate in Victoria, Ian Michael Macdonald knew the travails of life without money. His mother raised five kids single-handed and earned a living housekeeping for Catholic clergy. Once, he told an interviewer, his mother had hidden them under beds, fearful ''the welfare'' was coming to whisk the kids away.

At La Trobe university he cut a dash as a student radical, latching on to the burning causes of the day - the Vietnam war and apartheid. His flair for rhetoric took him to the presidency of the Australian Union of Students in 1974.

By the mid-1970s he'd been talent-spotted by two left-wing senators, George Georges and Arthur Gietzelt.

Georges hired him as a staffer. But Gietzelt had bigger plans. He wanted to plant Macdonald inside the NSW party as a ''purer'' left operative to head off a young John Faulkner for the coveted assistant state secretary's post. As one insider of the time recalls it, Faulkner was ''not enough of a lickspittle'' and ''not enough of a Marxist'' for Gietzelt's liking. But despite the senator's backing, Macdonald couldn't match Faulkner's support and dropped out of the contest.

He had, however, found a berth on the staff of the fast-rising and charismatic young attorney-general Frank Walker, a star in the Wran government. There, fate threw Macdonald together with Greg Jones, also on Walker's staff.

The pair formed the core of a rat-pack, notorious good-time boys, known for roistering lunches and dinners and for overseas trips on the public purse. They experimented with the first ethnic branch stacks in NSW. They found creative uses for ministerial consultants, paid for out of the departmental budget, to run blatant political campaigns. Former housing department staff recall Macdonald consistently lobbying for Housing Department land to be made available to developers. Says one Labor insider of the time, ''People didn't so much see things about Macca as sense things. It was the style of the operation, the sense of the snout in the trough. He always seemed to have money, always seemed to be lunching, dinnering, it always seemed to be expensive.''

When Nick Greiner came to power in 1988 he slammed Walker's office for ''consistent, persistent and widespread rorting of the public purse'' with Jones and Macdonald coming in for special mentions.

Cavalier says ''personal venality is the essence of Macdonald.''

The Jones-Macdonald friendship continued to prosper, outlasting two of Macdonald's three marriages. (ICAC has heard how Jones stood to make up to $60 million from the inside maneuverings over the Obeid family's rotten coal deals, allegedly facilitated by Macdonald who, the ICAC evidence suggests, was to pocket $4 million. They now no longer speak).

Surviving the scandals of Walker's office, Macdonald managed to gain preselection for the Legislative Council in 1988. Key to this was a power base he'd managed to cultivate among some important left unions, particularly the metal-workers, now known as the AMWU.

He'd struck up a particularly close alliance with the union's then assistant secretary, later its head, George Campbell (who went on to become a senator). The union's backing would see him safely through several preselections and would later help save his skin in an internal Left showdown in 2006, when Foley tried to dislodge Macdonald from the Left faction's ticket for the upper house.

Macdonald also became friendly with an up-and-coming Anthony Albanese, now a federal minister. Campbell, Macdonald, Albanese and a later head of the AMWU, Doug Cameron, all ended up in the ''hard'' left after the faction split into two sub-groups in the 1980s. These were loyalties that, for a long time, Macdonald could draw on.

''When Luke Foley tried to move heaven and earth to remove him, the metal workers union saved him'' says Cavalier, now. ''The union bloc vote [inside Labor] guarantees Macdonald is protected from the judgment of the ALP membership.''

Macdonald languished as a factional organiser in the Legislative Council for the first four years of Carr's premiership but his fortunes improved when former state Labor secretary Della Bosca entered the upper house in 1999. Macdonald became ''Della's'' parliamentary secretary and made himself useful on plans to revive the Snowy River and drive through reforms to workers compensation, which were bitterly resisted by the unions.

By 2003, Macdonald had redeemed himself enough to become a minister, accepted by Carr as part of the left ticket for ministry slots.

Those close to Carr say Della Bosca was a key voice supporting Macdonald's promotion.

Says one senior party source, ''Della in particular was a big promoter of the view that Macca was misunderstood. Della would often say that Bob had made a big strategic mistake in not bringing him into the ministry earlier, that it was better to have his rat cunning inside the tent than out. Della would say, that if you needed to take a pragmatic decision in pre-selections, or deliver a union, it was always Macca and his part of the Left that you could deal with, and you would know where you stood.''

Asked about this, Della Bosca told Fairfax Media, ''Ian Macdonald became a minister by a process entirely internal to the Left, over which I had no influence.''

He also said the decision to make Macdonald his parliamentary secretary had been Carr's but that he'd become grateful for it as ''Ian and I, though a political 'odd couple', made a formidable and constructive reformist team.''

Carr made ''Macca'' the minister for agriculture and fisheries, no doubt thinking Macdonald's years of cattle breeding on the side would make him popular in the bush.

After Carr stepped down as Premier in 2005, Della Bosca's power waned. The new kingmaker was Obeid, then a key lieutenant around the incoming premier Iemma. ''Somehow Macca slipped seamlessly from Della's patronage to Eddie's'' said one insider who watched the migration with wry amusement and some disgust.

As Iemma - now a fierce critic of both Obeid and Macdonald - has testified before ICAC, Macdonald initially impressed him as a minister.

''There was never any shortage of events that he would yield up,'' says a former minister. ''He made sure our country cabinets were always well attended, by farmers, miners and regional manufacturers, and there was always a farm lined up for us to visit.''

Iemma added minerals and energy to Macdonald's ministerial responsibilities.

''If there was any culpability by Bob, or Morris'' says one Labor insider now, ''it's that there wasn't any appreciation of how much potential for corruption there was in the minerals portfolio.''

Macdonald survived the transition to Rees' premiership in September 2008 but was under notice he should step down the following year, to honour a deal hammered out inside the Left in the aftermath of Foley's earlier attempt to dislodge him in 2006. Macdonald reneged. Rees dropped him from the ministry anyway in late 2009 (this time backed by Albanese), attracting the revenge of Obeid's forces, which then removed Rees.

It was ultimately only Macdonald's own stupidity that forced Keneally to pressure him out, after she'd initially reinstated him as minister. He'd fiddled the expenses one time too many.

Reflecting back on Macdonald's inglorious career, Cavalier says he believes the former student firebrand might always have been a saboteur, a plant inside the Left. It's cold war language which finds an echo in the stinging words Faulkner uttered two years ago. ''By his final term Ian Macdonald was a fully-fledged - and by then finally public - operative for the Obeid and Tripodi sub-faction of the NSW Right,'' said Faulkner.

''There were no secrets any more. Ian Macdonald had finally come in from the cold.''

A Career Taken To Pieces

and, from Mike Carlton ….

Damn. There I was, fired up to begin this column with a snappy rewrite of Old Macdonald Had a Farm, only to find myself gazumped by Herald readers on the letters page.

I can't better them so we move on, although with some difficulty. Sir Lunchalot is a tough act to follow. His testimony at the Independent Commission Against Corruption has rocketed beyond the reach of parody or satire. The skies above are dark with flying pigs, squadrons of them soaring and swooping in the airy blue, snouts greasy from the slops of the public trough.

''I'm pretty good at geography,'' the former resources minister assured his interrogator, the relentless Geoffrey Watson, SC. You betcha. The state of NSW boasts an area of 809,444 square kilometres and 69 recognised mountain peaks, from the familiar Mt Kosciuszko to lesser-known pointy bits such as Mt Hopeless near Oberon and Mt Warning south-west of Murwillumbah.

Mt Penny is not listed among them. Yet, from the upholstered seclusion of his ministerial office, Lunchalot employed a piercing intuition beyond the powers of lesser mortals to divine that this dot on his atlas was the ideal site for a coal mine. His public servants were instructed to make it so. Imagine his astonishment when he found out - apparently from reading the Fairfax press - that the obscure hillock was smack-bang in the middle of the country seat of his old mate Eddie Obeid. Mt Penny suddenly became Mt Millions. Porkies 12 o'clock high, blue leader.

The commissioner, David Ipp, will make his findings in due course, but the rest of us are entitled to an opinion as well. If you believe the evidence of the Obeid gang and Lunchalot himself, then I have a harbour bridge and an opera house I can let you have very cheaply.

***

Geoffrey Watson's opening allusion to the wicked old NSW Rum Corps is instructive. I did some digging.

Officially known as the 102nd Regiment of Foot, but actually the dregs of the British Army, the Rum Corps plunged headlong into crime and corruption in the infant colony, laying the foundations for that long and crooked line of colourful Sydney business figures and shonky property developers with us still today.

Its commanding officer was Major Francis Grose, who succeeded Arthur Phillip as acting governor in 1792. The ship carrying the honest but ailing Phillip back to England had barely cleared the Heads before Grose was parcelling out hefty land grants to his officers, assigning convict labour to work their farms, and giving them the green light to traffic in imported rum.

The next year, 11 officers chartered a ship, the Britannia, and landed a cargo of rum which cost them five shillings a gallon. After watering it down by a quarter, they flogged it to free settlers, soldiers and convicts alike for 30 shillings a gallon, a nice little earner if ever there was. Rum became the currency of the colony, the officer corps ran the trade as a monopoly, and many an honest man was ruined by it.

Successive governors, all naval officers, were powerless to curb these redcoat thugs. It ended in tears with the infamous Rum Rebellion of 1808, that military coup d'etat masterminded by the sheep farmer and bootleg liquor distiller John Macarthur. A rabble of soldiery, led by the drunkard Major George Johnston, deposed Governor William Bligh and clapped him under house arrest. The joint was run by a military junta until the arrival of Lachlan Macquarie in December 1809.

If this sounds to you not entirely dissimilar to the latter-day workings of the NSW branch of the Labor Party, you may well have a point. An email from a true believer nailed it this week:

''Labor swill indeed,'' he wrote. ''These pricks took over the party I have loved since I was old enough to realise the humanist ideals I profess. I have stood on cold, rain-swept street corners on more occasions than I can count. I have even shed blood, on occasion, but not for that lot … ''

There goes the federal election, then.

Some of the nation's wealthiest businessmen are concerned a corruption inquiry might make findings of serious misconduct against them, including possible allegations of criminal conduct, their barrister told a Sydney court.

Multimillionaire car dealer Neville Crichton and his eastern suburbs property developing mate Denis O'Neil are suing Cascade Coal directors and a raft of other people who have featured in a sensational corruption inquiry.

The pair invested in Cascade Coal in November 2010, later discovering their $13 million investment had ended up in the coffers of the family of Labor kingpin Eddie Obeid.

Cascade has been at the centre of an Independent Commission Against Corruption inquiry.

Cascade, controlled by wealthy business figures including John McGuigan, John Atkinson and John Kinghorn, as well as mining magnate Travers Duncan, is alleged to have won a rigged government coal tender for Mount Penny in the Bylong Valley which covered several properties owned by the Obeids and their associates. The Obeids obtained a secret 25 per cent share of Cascade.

Bob Stitt, QC, is representing Messrs McGuigan, Atkinson and Kinghorn and Cascade Coal in the civil lawsuit taken by Mr Crichton and Mr O'Neil, which had its first day in court on Thursday.

Mr Stitt foreshadowed an application to have the case delayed until the ICAC hands down its findings.

He said possible ''allegations of criminal conduct and serious misconduct'' could be made against his clients and that ''quasi criminal proceedings'' should take precedence over civil proceedings.

Francis Douglas, QC, who is representing Mr Crichton and Mr O'Neil, told the Federal Court yesterday the pair thought they were part of a capital raising for Cascade, but only $6 was raised.

Instead, the two businessmen's millions found their way, via a complicated route, to the Obeids.

Not only that, but Mr O'Neil's $8 million investment and Mr Crichton's $5 million investment was to result in ownership of 280,000 Cascade shares worth $46 each.

The two men later discovered their shares were worth $0.0001 each.

Mr Crichton and Mr O'Neil want their money back, plus interest, and are alleging that many of the same cast of characters involved in the state's most sensational corruption inquiry engaged in misleading and deceptive conduct.

The case has a list of 16 defendants which include investment banker Richard ''Digger'' Poole and his wife, Amanda, whose bank account was used to channel their money through to a company controlled by the Obeids.

Also being sued are stockbrokers Brent Potts and Peter Gray as well as Southeast Investment Group, the front company used by the Obeids to hide their interest in Cascade.

A notable omission in the list of defendants is eastern suburbs wheeler-dealer Greg Jones, who kept his own investment in Cascade a secret due to his friendship with former minister Ian Macdonald.

Mr Jones introduced his friends Mr Crichton and Mr O'Neil to the Cascade deal. In an intercepted call played to the corruption inquiry, he said to Cascade director Mr McGuigan, ''Yeah, you think I'm really feeling terrific about having invited all those guys in through old acts of mateship?''

ICAC heard the proposed 2011 sale of Cascade to White Energy, which would have made Mr Jones and the other Cascade investors up to $60 million each, did not go ahead because of rumours of the Obeids' involvement.

The case will be back in court for further directions in April.

Businessmen Fear Worst In ICAC Inquiry, Says Lawyer

The prominent federal Liberal Arthur Sinodinos was treasurer of the NSW Liberals when the party received more than $30,000 in donations from a company he chaired, Australian Water Holdings, which was bidding for state government contracts.

Despite this, Senator Sinodinos has said he cannot remember the donations made in his time as both chairman and party treasurer.

Australian Water Holdings' links to the Labor powerbroker Eddie Obeid were revealed by a Herald investigation last year. Mr Obeid has been accused by the Independent Commission Against Corruption of conspiring to make tens of millions of dollars from the awarding of coal exploration licences.

Nick Di Girolamo, also a major shareholder in the company, is a prominent figure in the NSW Liberal Party.

Senator Sinodinos is regarded as a frontrunner for a cabinet position if Tony Abbott becomes prime minister this year.

On Wednesday, apparently to distance himself from AWH, Senator Sinodinos announced he would forgo a 5 per cent shareholding to which he was entitled following his time as chairman, worth up to $3.75 million.

He told The Australian Financial Review that the board of AWH agreed to transfer the shareholding in January 2011 before he quit as AWH chairman the following November.

Asked about political donations from AWH he said: ''I have no recollection of individual donations and am unable to speculate about the motivation of third parties making donations''.

However records show that AWH donated $60,453 to the NSW division of the Liberals between March 11, 2009, and May 13, 2011, including when the future senator was treasurer.

He attended his first board meeting as a director and deputy chairman of AWH in November 2008. He became chairman on November 3, 2010. A month later the company made its largest donation, $30,000, to the party.

The position of party treasurer is honorary, with no responsibility for managing political donations. But the treasurer also chairs the party's finance committee and has a significant role in political fund-raising.

The senator's office said he would make no further comment on the matter.

Since 1992, Australian Water Holdings has won project-management contracts for water infrastructure in the north-west growth centre worth more than $500 million. It transformed itself from a non-profit syndicate to a private company in 1999.

Under the previous state government, Australian Water Holdings argued vehemently with Sydney Water that its original contract guaranteed it the sole right to project-manage all future water infrastructure in the area.

With the help of the family of Mr Obeid, Australian Water lobbied hard for a $1 billion privatisation deal of Sydney Water's work in the north-west. But it also agitated for a letter from the Labor government that would acknowledge the company's legal right to manage the remaining $500 million worth of infrastructure work in the growth centre. This letter, which was needed to help raise venture capital, was never issued under Labor.

But in early 2012 the Coalition government quietly gave the company an exclusive 25-year deal.

Senator Sinodinos & The Virtuous Circle Of Political Donations

It was Saturday morning and classical music was floating through solicitor John Gerathy's multimillion-dollar waterfront apartment in Woolloomooloo. ''You have got me at an inopportune moment,'' said Gerathy when he picked up the phone. ''I have got some guests here at home. They've come to visit,'' he said.

Only last month, the Herald revealed that Gerathy, 67, had checked himself into a mental health facility, telling corruption investigators he was too ill to give evidence.

However, the Independent Commission Against Corruption, which has all but finished inquiries in Operation Jasper, will be sitting this week to hear two vital witnesses who have previously been unavailable: Gerathy and the Obeids' accountant, Sid Sassine, who has been overseas.

Gerathy declined to discuss the nature of his illness. When asked if he had recovered, he replied: ''I am not sure about that.'' Would he be giving evidence on Tuesday? ''Oh, well, I, ah, I hope so,'' he said.

As disgraced minister Ian Macdonald's business partner, Gerathy has been described as a ''crucial witness'' in the state's most sensational corruption inquiry, which is keen to know why Gerathy bankrolled Macdonald to the tune of $550,000 and why documents in Gerathy's handwriting appear to suggest that Macdonald stood to receive up to $4 million from the allegedly crooked government coal tender which had already landed the family of former Labor powerbroker Eddie Obeid $30 million.

Gerathy had already had an unpleasant visit to the witness box, when he was called to give evidence last November. On that occasion he was confronted with the accusation that, in breach of the commission's confidentiality requirements, Macdonald had rung him straight after giving evidence in camera last September.

As a result of that call, Gerathy immediately took action to retrieve a legal file from his old law firm. That file, which the commission has now heard has crucial documents missing, was the file of Alan Fang.

Fang, a Chinese businessmen who was close to Macdonald, was the Obeid family's initial choice to ''win'' the 2008 coal licence tender overseen by Macdonald, the then resources minister.

In 2008, Gerathy was Fang's lawyer when he and Fang met Obeid's son Moses to nut out the details of the sale of the Obeids' land to Fang's company. The Obeids are alleged to have used inside information from Macdonald to buy key properties that would fall within a new coal exploration area that Macdonald planned to announce later in 2008.

Fang, who followed Eddie Obeid into the ICAC witness box last month, dropped a bombshell when he revealed that in June 2008, before the government announced it was going to call for tenders for exploration licences for new mining areas, he discussed going into a mining joint venture with the Obeid family and that he spoke to Eddie Obeid in his office in Parliament House about this. He also said that Macdonald was aware of the deal as he had put him in touch with Obeid.

But only a week after Fang met Obeid, the press gallery veteran Alex Mitchell might have inadvertently scuppered the deal with the Obeids when he wrote a story titled: ''NSW mining minister and the mysterious Mr Fang''.

The story detailed how only weeks earlier the mysterious Fang had chartered an executive plane to fly Macdonald and other government officials to various meetings during their visit to China.

Gerathy, who was appointed by Macdonald to two government bodies, including the Wine Council, knew he would have to give further evidence when counsel assisting, Geoffrey Watson, SC, said: ''I'm afraid Mr Gerathy cannot be excused [from his summons]. He'll be required later in the inquiry.''

Also due in the witness box on Tuesday is accountant Sassine, 47.

As the saying goes: with friends like these, who needs enemies? Sassine, born in the same Lebanese village as Eddie Obeid, 69, has been the family accountant since Obeid parted ways with his former accountant in 2002, having accused him of being responsible for the 154 errors in Obeid's parliamentary pecuniary interest declarations.

"We have known Sid Sassine for the past 10 years or so both professionally and socially. Sid … has accomplished miracles with our accounts - where others before him have failed … We would recommend SJ Sassine to any potential client,'' enthused Obeid's sons Moses and Paul on Sassine's website.

But the Obeid boys' tribute to Sassine's ability to perform miracles has disappeared from Sassine's website since allegations before the ICAC that the family was corruptly rewarded with a $30 million payment due to a rigged government coal tender.

The commission has also heard that Sassine helped channel the millions of dollars from the coal deal through a complex series of family trusts which has enabled the Obeids to live lavish lifestyles while paying little or no tax.

The allegedly tainted money has been used by the Obeids for luxury cars, holidays and to buy a string of multimillion-dollar houses for many of Obeid's nine children.

A good example of Sassine's miracles with finances is Sam Achie. Achie, who is married to Obeid's daughter Fiona, earns a meagre $55,000 as the financial controller for the family company Obeid Corporation.

Despite having a dependent wife and five children, the Achie family bought a $1.4 million house in Hunters Hill and is about to embark on a million-dollar renovation.

Moses Obeid and his wife, Nicki, have a combined taxable income of $180,000, yet they live in a $4.5 million house in Vaucluse with annual mortgage repayments of $210,000, exceeding their combined incomes. They drive Range Rovers and still have money left over to employ household help.

But the Obeids are not the only clients of Sassine's whose ringing endorsements have been removed from his website.

Richard Bamford and Simon Feldman previously had ''no hesitation in recommending SJ Sassine & Co''.

Unfortunately, Feldman is in jail, having stolen $17 million from the Specialty Fashion Group, which includes the Katies chain. The NSW Supreme Court heard Feldman siphoned most of the money to ''prop up'' three private businesses he ran with Bamford. Sassine was the accountant to these businesses but there is no indication he was aware anything was amiss. And Bamford is similarly unavailable, since he is on the run. His companies were found liable by the courts to repay the $17 million stolen by Feldman but the prospects of recovery are slim since Bamford was last seen in December 2011, when he boarded a flight to Japan. There is a warrant out for his arrest.

Apart from Sassine's substantial involvement in property development, including buying land from government departments such as the former Roads and Traffic Authority and the housing department, he has also assisted the Obeid family to hide its interests in a variety of businesses.

Using companies that appear to be controlled by Sassine but in reality are owned by the Obeids, the Obeids have been able to disguise their interests in a health company that won government contracts, a childcare business, a maintenance company as well as a development company run by Obeid associates Ross and Rocco Triulcio.

Using Sassine's company Equitexx, the Obeids also had a stake in Blackwall Point Developments which in 2004 paid $10.48 million for industrial land in Abbotsford, in Sydney's inner west. This was rezoned residential and onsold two years later for $17.4 million.

The purchasers were the Obeids' good friends, developers Brian and Gary Boyd. The ICAC has heard the Obeids tried - unsuccessfully - to interest the Boyds in the coal venture now before ICAC. The Obeids' partners in the Abbotsford sale were Eddy Chahine and Wally Wehbe.

In 2003 Chahine paid Obeid's youngest son, Eddie jnr, a $50,000 ''spotter's fee'' for bringing to his attention an old bowling alley on Liverpool Road, Enfield. A subsequent ICAC inquiry heard that it was highly likely that Chahine's business partner in the development, Anne Bechara, had received inside information that the Labor-dominated Strathfield Council, whose mayor was Eddie Obeid's former business partner John Abi-Saab, was about to rezone the land.

This would have delivered Chahine and Bechara a motza, but Labor lost power and it didn't happen. Bechara, also a friend of the Obeids, was later sentenced to four months' imprisonment, which she served as home detention, for lying to the ICAC.

A jury acquitted Abi-Saab of blackmail but he received a suspended jail term after pleading guilty to conspiring to give false evidence to ICAC.

When Herald journalist Anne Davies first revealed Eddie jnr's $50,000 payment, Obeid delivered a stinging rebuke in Parliament for trying ''to insinuate there was anything improper in any of my children … going about their business earning money in the way they know best''.

He concluded his attack by saying: ''Implicating me or my family in anything to do with rezoning, land deals, or councillors is totally wrong. It is disgraceful journalism.''

ICAC Act II - The Miracle Accountant

Millionaire mining magnate Travers Duncan has taken the extraordinary step of launching legal action aimed at shutting down the Independent Commission Against Corruption inquiry in which adverse evidence has been given about himself.

Mr Duncan, 80, one of the richest men in Australia, has taken action in the NSW Supreme Court seeking to shut down the inquiry and prevent the commissioner making any findings.

The claim, which came before Justice Peter Garling on Thursday, lists as defendants Commissioner David Ipp, whom Mr Duncan is accusing of bias, and the commission.

For eight weeks ICAC has heard sensational evidence that the family of former Labor powerbroker Eddie Obeid used inside information from then resources minister Ian Macdonald to enrich his family by tens of millions of dollars.

The dramatic turn of events is expected to draw in Premier Barry O'Farrell, who is likely to be subpoenaed by Mr Duncan's legal team, headed by Noel Hutley, SC, to produce documents relating to coal exploration licences allegedly corruptly granted by Mr Macdonald in 2009.

Last month Mr Duncan tried to prevent Commissioner Ipp responding to a request from the Premier, who had sought advice from the commission on how to deal with the coal exploration licences.

The commissioner rebuked lawyers acting for Mr Duncan. Describing the tone of the letters from Yeldham Price O'Brien Lusk as ''impertinent'' and ''inappropriate,'' Commissioner Ipp said it was in the public interest to provide the requested advice to the Premier.

''I intend, unless otherwise restrained by a court, to proceed to respond to the Premier's letter,'' he said. He would not make ''findings of fact'' in his letter. He told Mr Duncan's lawyers that if their client disagreed with this action, Mr Duncan could exercise his legal rights by ''that well-known means''.

After receiving the commissioner's response, the Premier indicated the adverse evidence given to the inquiry would weigh against granting development consent.

''Let me make very clear that I will do all I can to protect the interests of NSW taxpayers,'' he said.

Mr Duncan was one of seven wealthy business figures whose company Cascade Coal is alleged to have won a rigged government coal tender for Mount Penny in the Bylong Valley which covered several properties owned by the Obeids and their associates.

Should Mr Duncan be successful, the inquiry, which has cost millions of dollars, might have to start afresh. Because of the seriousness of the matter, an expedited hearing date has been set for March 22.

Mining Magnate Tries To Shut Down ICAC Inquiry

Belinda Burcham, the 40-year-old whose week-long disappearance from St Vincent's Hospital earlier this year sparked a massive social media campaign, is alleged to have procured crucial proxy votes which helped Moses Obeid avoid paying a $16.6 million debt to the City of Sydney council.

On August 9 last year, the Herald revealed Moses Obeid, the son of ALP kingpin Eddie, had his debt to the council wiped out after smaller creditors - who included family, friends and associates - voted to accept a Deed of Company Arrangement which meant they would receive only between 1¢ and 3¢ in the dollar for the debts owed to them by his company Streetscape Projects.

The council is seeking to have the arrangement overturned, claiming it is neither fair nor reasonable. At a hearing in the Supreme Court this week it was alleged that Ms Burcham contacted Streetscape's former cleaner, Mary Kit, the day before Streetscape's creditors met to vote on whether the company would be put into liquidation, the preferred choice of the council, which was the major creditor.

Peter Gosnell, from website Sydney Insolvency News, who attended the hearing before Justice Paul Brereton, reported that the council contended Ms Burcham advised the former cleaner that the $690 debt owed to her by Streetscape would be paid in full if the cleaner agreed to direct her proxy to vote for the deed of arrangement.

The court also heard that before the meeting Ms Burcham also met creditor Maria Costa, who was told by Ms Burcham that Costa Enterprises' $1000 debt would also be paid in full, rather than the $30 she might receive as a creditor, if she agreed to direct her proxy in favour of the arrangement, Mr Gosnell reported.

Moses Obeid has disputed the council's claims in documents filed with the court.

Ms Burcham, a long-time friend of Mr Moses and his wife, Nikki, has been employed as the office manager at the Obeid headquarters in Birkenhead Point. Ms Burcham will face Waverley court on Monday charged with several break and enter offences.

One of the council's arguments to have the arrangement overturned is that some of the creditors had an association with Mr Obeid.

Among the unsecured creditors are Mr Obeid's sister, Gemma Vrana, and several associates including the Obeid family accountant, Sid Sassine, and developer Rocco Triulcio. Both gave evidence in the long-running corruption inquiry which is investigating claims that the Obeid family made $30 million from a rigged government tender. Another creditor listed was law firm Colin Biggers & Paisley. Two partners from the firm were also grilled last year by the Independent Commission Against Corruption about their association with the Obeid family.

At the August creditors' meeting, administrators Ozem Kassem and Robert Kite, of the accountancy firm Cor Cordis, used their casting vote to side with the small creditors rather than put the company into liquidation. Streetscape had a licence from the council to manufacture multifunction poles, which hold banners, street lights and traffic lights.

Describing Mr Obeid's conduct as ''dishonest and fraudulent'', in February last year Justice Clifford Einstein ordered him to pay the council $12,123,470 for secretly selling the council's poles overseas in breach of licensing agreements. With interest the amount is now $16.6 million.

The matter returns to court in April.

Woman Who Went Missing Allegedly Helped Moses Obeid Secure Debt Vote

Senior Labor figures have spoken out bluntly about the Independent Commission Against Corruption (ICAC) investigation into former powerbroker Eddie Obeid, saying the scandal is doing immense damage to the party.

They have also blamed former party officials for allowing Mr Obeid to wield enormous influence in past New South Wales governments.

"It is breathtaking the wreckage he has done," Foreign Minister Bob Carr has told tonight's Four Corners program.

Senator Carr said his successor as premier, Morris Iemma, made a serious mistake by giving Mr Obeid special status and access to his office.

"I'm sure that Morris Iemma, a very decent, decent and honest figure, would reflect that it was a cardinal mistake to allow Obeid that special status and privilege," he said.

"And people who then ran the state ALP machine were making a terrible mistake to confer some special status on him, for what reason? What could he deliver? What qualities could he bring?"

Senior federal Labor Senator from NSW John Faulkner has told Four Corners it is likely the Obeid scandal will have an impact on the coming federal election in the state, where the party is battling to hold onto marginal seats.

"Labor's standing in the state of New South Wales has been very, very significantly damaged by the revelations at ICAC and it would be very surprising if that didn't have an impact federally," Senator Faulkner said.

In a blunt assessment, he added Mr Obeid was allowed to operate behind the scenes where his power in the NSW party went unchecked.

"I've never met him, never spoken to him and I've never heard him make a public speech but regardless of all that, he ran the New South Wales Labor Party and ran Labor governments in New South Wales," he said.

Mr Obeid and his sons, along with former NSW mines minister Ian Macdonald, are facing allegations before the ICAC of a multi-million dollar criminal conspiracy over a state-issued coal exploration licence.

The licence was issued over the Mt Penny area in the Bylong Valley, four hours north-west of Sydney, that included three farms owned by the Obeid family and their friends.

The coal exploration licence was ultimately awarded to the Cascade Coal company and the Obeids negotiated to secure a share of the venture.

Four Corners has also learnt ICAC seized documents relating to two other coal exploration licences granted while Mr Macdonald was mines minister.

The two licences were awarded in February 2008 to a company associated with mining magnate Travers Duncan, a shareholder and former director of Cascade Coal.

Mr Duncan was questioned during ICAC's recent public hearings about his relationship with Mr Macdonald.

The two exploration licences covered an area in Moolarben, north of Mudgee, in central-west NSW.

They were awarded to Moolarben Coal Mines Pty Ltd, a company controlled by coal miner Felix Resources.

Mr Duncan was chairman of Felix Resources at the time the licences were granted.

The two licences adjoined a larger coal mine being operated by Felix.

The NSW Minerals Department confirmed the document seizure in a letter to Four Corners.

"The original files relating to EL 7073 and EL 7074 were seized by the Independent Commission Against Corruption in May 2012 and they have not been returned," the letter stated.

Mr Duncan said in an email to Four Corners he was not aware ICAC had taken the documents relating to the two exploration licences and that he was not concerned about the seizure.

Last week Mr Duncan took action against ICAC in the Supreme Court in a bid to shut down the corruption inquiry, accusing Commissioner David Ipp of bias.

The unprecedented legal action threatens to draw in Premier Barry O'Farrell, who last month sought advice from Commissioner Ipp over whether he could suspend or cancel controversial mining licences granted by Mr Macdonald.

Senior Labor Figures Point Fingers Over Obeid

Eddie Obeid's claims to a corruption inquiry that he played no part in his family's business interests have been contradicted by his private diaries, which list scores of meetings with Sydney's most influential people, some of whom did deals with companies tied to the former Labor minister's family.

''I've repeated that dozens of times and I'll repeat it again. I have not been involved in the business for 25 years!'' Mr Obeid angrily told the Independent Commission Against Corruption which has been investigating allegations that he and his family made a $30 million profit from an allegedly corrupt government coal tender presided over by the now disgraced resources minister Ian Macdonald.

But contrary to his evidence, Mr Obeid's diaries, recently tendered at the inquiry, paint an extraordinary picture of business dealings, including with a number of key business associates of the Obeid family.

Property developer Rocco Triulcio is shown to meet Mr Obeid regularly at a ''car wash'', at Latteria, a coffee shop in Darlinghurst, or, on one occasion, at a wharf in Cabarita.

ICAC has heard that Mr Triulcio used his accountant to disguise his purchase in 2008 of a Bylong property next to the Obeids before the government announced it would grant a coal exploration licence over the area.

The Obeids and Mr Triulcio also have property development projects in the Ryde area of Sydney.

The Obeids have denied having a secret share in the Elizabeth Bay marina but Mr Obeid's diaries reveal frequent meetings with the half owner of the marina, Michael Dalah. The other half is owned by the Obeids' family friend, real estate agent Joseph Georges, who has denied he is a ''front'' for the Obeids.

Mr Dalah also has a catering company, Laissez-Faire, which has secured a number of cafe leases in government buildings, including the State Library of NSW, the Australian Technology Park and at the Australian National Maritime Museum.

Mr Obeid's diary shows that in August 2007 he met Mr Dalah and solicitor Rob Hugh about the State Library cafe. In early February 2008, Mr Obeid's diary records an 11am meeting with ''Steve Dunn/Dalah'' also about the State Library cafe.

Mr Dunn, who features regularly in Mr Obeid's diary, is the former chief executive of NSW Maritime. Mr Dunn later attended meetings with Mr Dalah and planning minister Tony Kelly in an attempt to develop a huge marina in picturesque Elizabeth Bay.

Premier Barry O'Farrell recently appointed Mr Dunn to conduct a review of the Game Council.

Mr Obeid's 2008 diary has an entry: ''Paul Dundon, Director Health Solutions - police, education, Corrective Services, dept community services''.

DHS, in which the Obeid family owned a secret stake, was paid $150,000 by the Education Department, $30,000 for a 15-day consultancy to the NSW Police, and almost $34,000 by Corrective Services for managing sick leave from 2005 until 2008.

''Joe/Kym Lennox'' is another diary entry. In August 2009 ports and waterways minister Joe Tripodi announced that Joe Elias' $2 company All Occasion Cruises had won the tender to build an 18-berth marina and a function centre and cafe at Blackwattle Bay, near the fish market.

It was Mr Obeid's son Eddie jnr who introduced his friend Joe Elias, who ran a floating male strip club, to Mr Lennox, a former government bureaucrat who became the project manager for the bid.

Although an external panel recommended a two-stage tender process, Maritime's Mr Dunn dismissed all other bidders after the first stage and declared All Occasion Cruises the winner.

Other diary entries show Mr Obeid meeting with Tony Imad, from whom the Obeids had earlier purchased three cafes at Circular Quay.

Revealed: Eddie Obeid's Secret Diaries

One of a group of wealthy businessmen has widely circulated emails accusing the Independent Commission Against Corruption of making ''unsubstantiated and outrageous allegations'' against the group.

The email by Greg Jones, a close friend of former mining minister Ian Macdonald, comes on top of legal action by Mr Jones' business partner, mining tycoon Travers Duncan, to try to stop ICAC handing its findings to Parliament.

Corrupt findings by Commissioner David Ipp could prevent Cascade Coal receiving approval to develop a potential billion-dollar mine at Mount Penny, near Mudgee.

The commission has heard Cascade was the private company set up by Brian Flannery, Mr Duncan, former Baker & McKenzie partners John McGuigan and John Atkinson, banker Richard Poole and former RAMS Home Loans founder John ''Kingy'' Kinghorn.

The seventh member of the consortium was Mr Jones, who kept his shareholding hidden because his friendship with then resources minister Ian Macdonald, who was presiding over the tender, might have been politically explosive.

''Dear friends and business associates,'' wrote Mr Jones in an email dated March 16, saying that since ICAC had finished, ''Cascade Coal is now free to respond to the defamatory, incorrect, unsubstantiated and outrageous allegations made (under privilege) by the ICAC prosecutor, most of which has been reported as fact on the ABC and in the Fairfax press.''

Mr Jones attached to his email a five-page Cascade Coal letter sent to every NSW MP on Friday. The letter claimed that none of the Cascade investors was involved in ''corrupt activity of any kind'' and it was

in ''the best interests of the state'' to allow Cascade to develop the mine.

Geoffrey Watson, SC, counsel assisting the commission, said on Sunday: ''I am not concerned what Greg Jones says about me. The evidence, including his evidence, speaks for itself.''

The Cascade letter, which has been sent to all MPs and Mr Jones' associates, was signed by Mr Kinghorn and Mr McGuigan. It omits any damaging evidence about them which has been presented to the commission.

Their letter states ''The uncontested evidence is that the Obeids deliberately misled and deceived Cascade Coal with respect to their underlying interests.''

But in his evidence Mr McGuigan admitted knowing he was dealing with the family of Labor powerbroker Eddie Obeid when he negotiated with his son Moses and his adviser for the Obeids to have a 25 per cent stake in Cascade, before it won the Mount Penny tender.

The inquiry heard the Obeids and their associates bought land in the Bylong Valley before Mr Macdonald announced the area would be open to coal exploration. Access to the properties was then used to extract a deal with Cascade. The Obeids were later paid $30 million, with the promise of $30 million more, to exit Cascade before its $500 million sale to public mining company White Energy. Five Cascade investors, including Mr McGuigan, Mr Duncan and Mr Kinghorn, were also on the board of White Energy.

The Cascade investors, including Mr Jones, each stood to make $60 million if the sale went ahead. The deal collapsed when White Energy's independent directors started asking whether the Obeids were involved. The inquiry has heard Mr McGuigan, Mr Duncan and others might have breached their director's duty by failing to reveal their knowledge of the Obeids' involvement to White Energy or the stock exchange.

Cascade's recent letter did not mention that because the Obeids did not receive their second $30 million, they still own about 9 per cent of Cascade.

Wealthy Group's Email War On ICAC

from Crikey …..

ICAC: a $1800 waterfront dinner, a '$100m cheque to investors'

MARGOT SAVILLE

The Independent Commission Against Corruption will widen its scope to look at allegations former New South Wales mining minister Ian Macdonald acted recklessly in office. The announcement came as the fourth and last inquiry into allegedly corrupt coal mining tenders kicked off.

Counsel assisting Peter Braham SC told the hearing this morning Labor ministers Luke Foley, Doug Cameron and Anthony Albanese will be called to give evidence next week, emphasising they would only be giving evidence about ALP factions with no suggestion of any impropriety.

Braham told the inquiry the main transaction under review - the 2007 granting of a coal mining licence to a company called Doyles Creek Mining - was a "financial disaster" for the state. But it turned out to be a "gold mine for a group of well-connected entrepreneurs", who managed to turn an investment of several hundred thousand dollars into an asset worth about $100 million.

In effect, this was like "handing over a $100 million cheque" to the investors, counsel said.

The main player in all of this is union official John Maitland, who ran the main coal mining union, the Construction, Forestry, Mining and Energy Union, and was also a close factional ally of Macdonald, who along with Eddie Obeid was one of the two key factional powerbrokers within the party. Macca kept his position in the upper house of the NSW Parliament largely due to the support of Left-wing unions like the CFMEU.

The Commission heard a tantalising reference to a meeting between Macdonald and Maitland at the city Chinese restaurant, Noble House, in which the minister was pleading for his political life; hopefully this will be further investigated in later evidence. Other crucial meetings were held at the private dining room of pricey Sydney steakhouse Prime, a frequent haunt of the minister dubbed "Sir Lunchalot", and the seedy but atmospheric late-night drinking haunt the Nippon Club. The deal was actually signed at Sydney waterfront restaurant Catalina over a meal costing $1800 - a magnum of pinot noir was cracked open to celebrate the signing of the deal.

The process by which the deal was adopted was astounding, said the counsel, saying Macdonald rejected the usual process of holding a competitive tender which "could have raised many millions of dollars for the state of NSW". The minister simply awarded the licence to Doyles Creek Mining, owned by a group of investors which included Maitland and Newcastle businessmen Andrew Poole and Craig Ransley. They must have been "laughing all the way to the bank", Braham said.

Macdonald, the star of an earlier ICAC inquiry into his receipt of personal services from a sex worker called Tiffanie, did so against departmental advice, the Commission was told. Almost immediately, questions were raised in the media and in state Parliament, and by 2011 the matter had been referred to ICAC.

What has been very interesting is the recent public squabbling among Labor leaders over who was most responsible for the actions of Macdonald and Obeid.

The one person with clean hands is former NSW premier Nathan Rees, who fired Macdonald in 2009, later making a speech to the party caucus saying that he was "determined to clean up politics in NSW and ... restore integrity to government:

"The old regime will never again dictate the fortunes of our party, nor will they regain the levers of control. Should I not be premier by the end of this day (there had been a leadership challenge) let there be no doubt in the community's mind that any challenger will be a puppet of Eddie Obeid and Joe Tripodi."

Of course, the caucus then elected Kristina Keneally as premier, and Macdonald was reinstated to the ministry under pressure from Obeid and his henchmen.

The inquiry continues.

from Independent Australia ….

With Ian Macdonald being exposed as Eddie Obeid’s left testicle, Eddie’s right testicle comes out to spill the beans.

G’day Comrades. I don’t mind telling you that I’m a bit miffed by the proletariat who get up themselves and on my goat at times.

I’m Eddie Obeid‘s Right Testicle.

You might have heard of my lesser half, Ian Macdonald, better known as ‘Eddie Obeid’s Left Testicle’ and former NSW Minister of Mining for Mates.

Not that Macca, or anyone else, would ever think of him as a horn bag. He’s got a head on him like a sheep’s bladder turned outside in. Not a pretty sight. No offence to sheep.

He’s not as well hung as myself, mind you, and unlike me, he’s virtually hairless (I take after the Leb side of the family) but nonetheless he still copped a manly mention at the Independent Commission Against Corruption in Sydney yesterday.

It’s a bit rich, given that fast Eddie famously dresses to the Right. From the current investigations section of ICAC:

The ICAC is investigating, among other issues, the circumstances surrounding a decision made in 2008 by the then Minister for Primary Industries and Minister for Mineral Resources, the Hon Ian Macdonald MLC, to open a mining area in the Bylong Valley for coal exploration, including whether the decision was influenced by the Hon Edward Obeid MLC (Operation Jasper).

The Commission is also investigating, among other issues, the circumstances surrounding the issue of an invitation to Doyles Creek Pty Ltd to apply for, and allocation of, an exploration licence (Operation Acacia).

Further, the ICAC is investigating the circumstances in which Moses Obeid provided the Hon Eric Roozendaal MLC with a motor vehicle in 2007 (Operation Indus).

Mate, I can’t say too much for obvious reasons. I don’t want to be accused of any premature ejaculations that might undermine the inquiry. Not that there is such a thing as undermining in NSW Labor ranks. Oink oink. Nudge nudge.

Even as I’m scribbling this, in comes breaking news from the ABC alerting us that ICAC officers searched former Northern Tablelands MP Richard Torbay‘s Armidale home today. It’s on Matey.

Mate, I’m very attached to Eddie. He’s our only visible means of support. He’s a great mate, mate.

Both me and Left Testicle have worked hard to churn out the Right stuff and working in a bi-partisan coalition.

We’ve got a few runs on the board and without our help there’s no way that Eddie would have fathered nine children and several of his sons have recently been on view giving colourful evidence at ICAC, so you know we produce quality as well as quantity, as you would expect from a Catholic and former altar boy.

Eddie’s always been upwardly motile, despite the spurn count from some of his former mates now giving unfavourable evidence against him.

Mate, I hope Eddie never has to give back his 1984 Medal of the Order of Australia that he was awarded for services to ethnic welfare.

And mate, he got the gong a year before he was appointed to the Board of Governors of the Law Foundation of New South Wales. Nice one Eddie.

And nice one Macca, mate. I can’t think of a better Left Testicle that I’d like to share Eddie’s boxers with.

Onya Macca. And onya mate for not giving away the identity of Eddie’s Right Testicle. You’re a real mate, mate.

We built this city.

Eddie Obeid’s Right Testicle Emerges

meanwhile ….

Controversial former Labor MP Joe Tripodi was involved in a secret campaign to help a group of independents associated with Richard Torbay at the past state election, a former associate claims.

The allegation, which Mr Tripodi denies, comes amid claims that Labor was secretly funding the campaign of Mr Torbay, whose Armidale premises were raided by Independent Commission Against Corruption investigators on Wednesday, less than a week after he dramatically resigned as an independent from State Parliament.

His resignation occurred hours after senior Nationals figures received explosive information concerning Mr Torbay that led to his immediate disendorsement as the Nationals' candidate to contest the New England seat in the federal election. The matter was also referred to ICAC.

The associate, who has asked not to be named, said the Labor Party ''wanted to support a group of country independents that Torbay was putting together. But they wanted to put some distance between ALP head office and this campaign. He [Tripodi] thought I would be a good person to run it.''

The associate said that although he was amenable to the offer, he didn't hear anything further ''possibly because ALP polling showed that not only was Labor a lost cause but that voters intended to bypass the independents and vote directly for the Coalition,'' he said.

However, he said that before the March 2011 state election Mr Tripodi held a meeting at his kitchen table where he provided Nick Berman, the Liberal-turned-independent candidate for Hornsby, with the highly prized Labor Party's NSW electoral database.

''I gave them a breakdown of the Hornsby state electorate into each of the wards or suburbs for Nick Berman to do direct mail,'' the associate said.

Mr Tripodi denied this, telling Fairfax Media: ''I don't know what you are talking about.'' Mr Berman, the former Liberal mayor of Hornsby and a former employee for then Liberal MP Jackie Kelly, did not return calls.

Retired school principal Des O'Malley revealed that in 2004 now Labor state secretary Sam Dastyari worked on the campaign of country independent Dawn Fardell.

''Somebody that knew of him put us on to him. He was very handy because he knew all the ins and outs of getting things such as printing and mail outs done,'' said Mr O'Malley, who was Ms Fardell's campaign manager.

Mr O'Malley said that although Mr Dastyari brought a number of skills to their otherwise amateurish campaign, carpentry was not one of them.

Mr Dastyari was trying to make sandwich boards with the timber and brand new drill he had bought from the hardware store, Mr O'Malley said. ''He was out the back of our office and there was smoke going everywhere and he was grinding away … 'I can't get the bloody thing to work,''' complained Mr Dastyari. ''Mrs Fardell's son pointed out the drill was in reverse,'' laughed Mr O'Malley.

Mr Dastyari, who was a member of Young Labor and a university student at the time, said he had gone to Dubbo to volunteer on the Labor campaign only to find there was no candidate. He said he ended up being asked to help with Ms Fardell's campaign since Labor wasn't in the race.

Last year News Ltd reported Mr Dastyari saying that it was Mr Torbay who had asked him to run Ms Fardell's campaign in 2004. But Mr Dastyari said yesterday that was not the case and he first met Mr Torbay when they worked on Ms Fardell's campaign together.

Fairfax Media can reveal that Mrs Fardell failed to disclose a $20,000 donation by the Australian Hotels Association to her unsuccessful 2011 election campaign.

The AHA also donated heavily to other country independents in both 2007 and 2011.

''Donations from the AHA to Richard Torbay and his closest independent allies in Parliament went from $17,000 in the 2007 election to $40,000 in the lead-up to the 2011 contest,'' Greens MP John Kaye said.

''Prior to the 2011 election, the AHA was a major financial backer of the Labor Party.

''Suddenly their political donations behaviour changed to focus on the Torbay-aligned independents.''

Tripodi 'In Secret Campaign To Help Torbay's Party Plan'

In the Labor Party, creative insults hurled at political opponents, be they the Liberals or the rival faction, are a badge of honour, a skill honed at state conferences and perfected in Parliament. Who could forget former prime minister Paul Keating's ''a souffle doesn't rise twice'', directed at Andrew Peacock in 1989 as he attempted to regain the Liberal leadership a second time. Or his description of John Hewson as ''a feral abacus''.

Former Labor leader Mark Latham favoured the more pungent, branding the Howard government ''a conga-line of suckholes'' on foreign policy. Less often, though, are the tensions within a faction on public show, especially within the Left, where decades of numerical inferiority to the Right have promoted an outward solidarity.

At this week's Independent Commission Against Corruption hearings, the insults have flown thick and fast as those in the Left have sought to distance themselves from the disgraced former primary industries minister Ian Macdonald and responsibility for his 22-year-stint as a senior Left MP and minister.

ICAC is investigating Macdonald's decision to grant a coal exploration licence at Doyles Creek in the Hunter without tender to a group of investors which included former Left mining union boss and friend John Maitland. The proposal included a ''training mine'' but was vigorously opposed by the minister's department because they believed it was tantamount to writing a ''blank cheque'' worth millions.

At the heart of the matter is whether left-wing allegiances played a part in any corrupt conduct. A parade of senior Left figures have been called, not because there is any stain against them, but to give evidence of the power relationships within the faction.

The most vocal critic of Macdonald within the party was and remains Luke Foley, formerly the most senior Left party official - he was NSW Labor assistant secretary - and now leader in the upper house.

Known as Sir Lunchalot, Macca had a reputation for the high life and of bestowing patronage on those who were mates.

By 2006 Foley had formed a view Macdonald should be stripped of his preselection.

Under the cloak of privilege provided by ICAC, Foley was able to vent his long-held view about Macdonald. ''I'd received over a number of years a chorus of complaint from senior figures in the NSW Labor government regarding Mr Macdonald's conduct, regarding his actions, and through my own observations as well I had formed the view that Mr Macdonald had abandoned Labor principle, had lost his moral compass and was not deserving of continued Labor preselection for Parliament,'' he told ICAC.

''It was very clear to me that Ian Macdonald was not loyal to the Left. He was loyal to other elements within the NSW parliamentary Labor Party. He was an agent and operative of Eddie Obeid and the Terrigal Group.''

And he didn't stop there: ''Well, one of Ian Macdonald's nicknames was bestowed by Bob Carr, that he was Della's [John Della Bosca] pet crocodile. Another nickname was that he was Obeid's left testicle.''

Only David Rowe, the cartoonist for The Australian Financial Review, dared to go where Foley's words suggested. But the word picture was conjured and the barb sunk deep.

Macdonald's counsel, John Fernon, SC, hit back, accusing Foley of disloyalty and self-interest.

Hadn't he once played cricket at Macdonald's country property? Hadn't he been the leaker behind an article in The Daily Telegraph outlining a deal struck at the Noble House Chinese restaurant among factional heavyweights for Macdonald to serve two more years and then retire? And wasn't he the ultimate beneficiary in that he took Macdonald's seat in Parliament?

A day later, Senator Doug Cameron fired back, saying Macdonald had ''dogged the deal''. After the Hawke-Keating Kirribilli agreement, such accusations have particular resonance.

ICAC also heard how Maitland's proposal for a training mine had poisoned relations within the mining division of the CFMEU.

The present president, Tony Maher, gave evidence that he initially regarded Maitland's proposal for a training mine as ''chasing rainbows''.

When Maitland asked him to sign a pro forma letter endorsing the idea of a grant of a new exploration licence in the particularly coal-rich Doyles Creek, Maher said no.

''I said to him that if, of all the people, of all the project proponents that could come to me and say would you support this concept, the last person I could do that for would be him, because he's a former official of the union. And I said, you know, I wouldn't lobby for you to get a mine, a training mine, and I won't sign a letter that makes it look like I would because, you know, it would be a bad look for the union, and I wasn't prepared to do it,'' he told ICAC. ''I don't think John ever spoke to me again … unless it was at an airport lounge somewhere.''

But Maitland, a larger-than-life figure in the mining union, did not rest there. He tried to win support from Maher's deputies and to effectively roll Maher.

The assistant secretary, Peter Murray, sought to bring the training mine back to the union's executive with the added idea that the union should invest in it. ''We told him: if it looks like a duck and walks like a duck, it's corruption,'' Maher said.

''You don't get something for nothing. It's a ridiculous idea and we weren't going to have anything to do with it, and from that point it wasn't raised again.''

Maher's relationship with his deputy, Murray, became so ''dysfunctional'' that he left another official, Andrew Vickers, in charge of the union when he went overseas.

He later learnt that Murray had gone behind his back and written a letter of support for the Doyles Creek project in his absence. Murray left in 2008 and went to work for the Doyles Creek project. As for the man Murray went to work for, Craig Ransley, Maher opined that he was ''the most offensive person I have ever met''.

Macdonald and Maitland are due to give evidence to ICAC in about a fortnight. The score-settling is sure to continue.

Insults Fly As The Score-Settling Begins

meanwhile, the comedy continued unabated nearby ….

The head of the Independent Commission against Corruption, David Ipp, is facing a further challenge to his impartiality after counsel for former Labor minister Ian Macdonald asked him to disqualify himself on the grounds of apprehended bias.

Tim Hale, SC, told Mr Ipp that Mr Macdonald wanted the commissioner to disqualify himself from the investigation of operations Jasper and Acacia for the same reasons as have been advanced in the Supreme Court by Travers Duncan, the chairman of Cascade Coal.

Mr Ipp immediately declined.

Justice Cliff Hoeben in the Supreme Court is due to hand down his decision next week on Mr Duncan's challenge to Operation Jasper. As a practical matter, if Mr Ipp is found to have pre-judged in that case, it will be difficult for him to continue in the current Operation Acacia inquiry because of common personalities.

Operation Jasper looked into whether there was corrupt conduct in the granting of an exploration licence for the Mount Penny area, which covered land owned by the former Labor powerbroker Eddie Obeid.

Operation Acacia is looking into the granting of an exploration licence for a '' training mine'' at Doyles Creek in the Hunter to a group of investors which included mining union boss John Maitland.

Mr Macdonald was the minister responsible in both cases.

An adverse ruling next week would prompt several other applications to the Supreme Court.

At the heart of the bias case is whether Mr Ipp had already formed a view when he contacted the Director-General of Premier and Cabinet, Chris Eccles, and Planning Minister Brad Hazzard in January.

Premier Barry O'Farrell subsequently sent a letter requesting advice from Mr Ipp about what might need to be done legislatively to stop the issuing of planning consent for projects found to be tainted. Mr Ipp made public the letter on February 6 but did not mention the earlier contacts. His counsel has argued he acted within his powers under the ICAC Act.

Mr Macdonald is expected to argue that Mr Ipp had already formed a view about his conduct.

Mr Hale also foreshadowed that he will argue that the way Jasper has been run is not an ''investigation'' within the meaning of the Act. ''We will ultimately be submitting that … the fact-finding was not approached in a way to obtain evidence … upon both sides of the question, the working hypothesis,'' he said.

Macdonald Accuses ICAC Chief Of Bias

Entrees:

Gow Gees - Silken dumplings filled with exotic delight

Prawn Toasts - Crispy seafood treat

Spring Rolls - Juicy chicken or spicy pork

Macca's Golden Balls - Eddie Obeid's left testicle, stewed in Terrigal soup

From the moment we heard of Ian Macdonald's colourful nickname this week, the funsters of Macquarie Street have been guessing who Eddie's right nut might be.

The answer is obvious. Step forward Graham Richardson, the former ALP kingmaker now posturing as a political commentator. (When he's not busy doing side orders for the likes of Ron Medich, that is.) It was Good Ol' Richo who recruited Obeid to the Labor Party and fixed his red carpet ride into the NSW Legislative Council in 1991, with the disastrous results that have unravelled before the Independent Commission Against Corruption.

Mark Latham gave Richardson a splendid spray on 2UE the other day and did not miss. Describing him as an ''idiot'' and ''the dregs'' of the ALP, Latham went on: ''It's shameful that this man has any reputation, the man who set up the wheeling and dealing, 'whatever it takes' culture in the modern Labor Party. He's the bloke who wrecked the place and he walks around like he's got clean hands like Mother Teresa, knows all the numbers. All he knows how to do is put people like Obeid in Parliament … and it's a real achievement in public life for Richardson but 20 years after he made that decision, it is contributing to the destruction of the federal Labor government. He should crawl under the rock from which he came.''

That destruction continues apace. Rather than tossing overboard such respected party elders as Simon Crean, Martin Ferguson and Kim Carr, a leader more wise and confident than Julia Gillard would have kept them on. By acknowledging their right to dissent, extracting a pledge of loyalty and retaining them in the ministry, she might have healed at least some of the government's self-inflicted wounds.

Richardson's self-basting antics contrast to some advice proffered this week by Bill Kelty, the former ACTU boss and a true Labor man to his boot heels. Writing for Fairfax Media on Thursday, Kelty did not miss either:

''The ALP must reject the ideas and processes that have no home in the party,'' he wrote. ''A Labor Party that cultivates division, or taxes superannuation retrospectively, or cannot justify deficits, or makes regional tours presidential visitations, or reinvents class warfare, or steals the rhetoric of Pauline Hanson on migrants, or embraces the Pacific refugee solution of John Howard, or attacks single mothers and narrows its base to a mythical group of blue-collar workers, cannot win an election.

''On the other hand, an ALP that demonstrates its commitment to future generations through education, healthcare, fair wages, superannuation, the environment and protection of the most vulnerable is capable of winning.''

Sadly, it is probably too late. Think iceberg, Titanic, deckchairs.

Bill Kelty - along with Paul Keating - was one of the architects of the superannuation system we enjoy today. Julia Gillard and Wayne Swan appear to be set on trashing that Labor legacy by plundering superannuation savings in this coming budget to pay for the big-ticket Gonski education reforms and the national disability insurance scheme.

A flood of speculation from Canberra suggests the government will slap a higher tax on the earnings of money invested in super, up from 15 per cent to perhaps 30 per cent.

Here I acknowledge naked self interest, although millions of Australians are on the same playing field. Like most baby boomers, I was careful to save for my retirement. Not all of us could do it; many will be living on the seniors' pension now, with more and more joining them as the years roll on. But those of us able to put aside that nest egg made our decisions and investments by the rules of the game at the time. Shifting the goalposts now would be a spectacular act of bastardry. Rather, the government should be closing the loopholes available to such supranational companies as Google or Starbucks, who apparently pay next to no tax in this country.

Mind you, Tony Abbott is also planning to clobber millions of retired Australians on the lower end of the scale by bringing back the 15 per cent tax on superannuation for people earning $37,000 or less. That would cost your average punter about $500 a year.

None of this touches the politicians themselves, of course. Their superannuation ''entitlements'', lavishly underwritten by the taxpayer, are very comfortably removed from the real world inhabited by the rest of us.

Mike Carlton

Former News Ltd chief John Hartigan was sounded out about whether his media organisation would support a plan to install Richard Torbay as NSW premier.

Mr Hartigan has confirmed that in late 2009, controversial businessman Greg Jones organised a meeting with him and Mr Torbay, the speaker of the Legislative Assembly.

The meeting took place over a drink at the East Sydney Hotel to ask what News Ltd's influential chief executive thought of the plan to make Mr Torbay the independent premier.

Mr Torbay said he would want the Liberals' Mike Baird and Gladys Berejiklian parachuted into his cabinet - although they knew nothing about his plan.

Mr Hartigan was incredulous. ''This was Eddie Obeid's plan,'' he said. ''The way I read it, Eddie Obeid was willing to blow up the [Labor] party in order to retain power through Mr Torbay.''

After the Torbay meeting Mr Jones asked the News chief to meet Mr Obeid, a request Mr Hartigan refused.

Three weeks ago Mr Torbay dramatically resigned from State Parliament and as chancellor of the University of New England after allegations concerning him were referred to the Independent Commission against Corruption.

Channel Seven has reported that those allegations concern Mr Torbay receiving up to $50,000 cash from Mr Obeid and his son Moses. The money was understood to have been handed over at a Birkenhead Point cafe, before the state election in 2011.

Seven's state political reporter Lee Jeloscek had been unable to substantiate the story but last week he unexpectedly ran into Mr Torbay in Martin Place. ''He confirmed that this was the nature of ICAC's investigation,'' Jeloscek said.

Mr Obeid has denied providing any money to Mr Torbay and told News Ltd papers if anyone was suggesting this he would be ''suing the hell out of them''. Moses Obeid also denied the allegation.

Officers from the corruption commission raided Mr Torbay's Armidale home and electoral office within a week of Mr Torbay's sudden resignation.

It was Mr Torbay who informed senior National Party officials of the allegations, which they then reported to ICAC. Mr Torbay also quit as the Nationals' candidate to challenge independent Tony Windsor at the federal election.

Mr Torbay's unsuccessful meeting with Mr Hartigan is understood to have taken place after then premier Nathan Rees dumped Mr Obeid's close ally, the now disgraced mining minister Ian Macdonald.

During the recent ICAC investigation, evidence was given suggesting that Mr Macdonald was to be paid $4 million from Mr Jones' share of a potential $60 million profit from an allegedly rigged coal tender which Mr Macdonald oversaw. And notes tendered during the inquiry indicated that Mr Jones, a former Labor staff member and lifelong friend of Mr Macdonald, had previously channelled thousands of dollars in secret payments to his old mate.

The inquiry has also heard that the family of Eddie Obeid received $30 million from the allegedly corrupt coal deal.

On December 3, 2009, Mr Rees was deposed as premier and replaced by Kristina Keneally, prompting Mr Rees to accuse his successor of being a ''puppet of Eddie Obeid and Joe Tripodi''.

Revealed: 'Obeid's Grand Plan' For Torbay As Premier

Former union boss John Maitland admitted lying within minutes of taking the stand on Tuesday morning during an inquiry into an allegedly corrupt coal deal through which he made millions of dollars in windfall profits.

Mr Maitland said he had abided by a legal order not to discuss the contents of a private examination by the Independent Commission Against Corruption in July last year - but he was then played a secretly recorded phone call in which he did precisely that.

"You have lied about that already this morning?" Peter Braham, counsel assisting the inquiry, asked.

"It appears so," Mr Maitland replied.

On 16 July last year, Mr Maitland telephoned his friend Archie Tudehope and discussed the questions the ICAC had asked him in the private interrogation several days earlier.

The ICAC is investigating the circumstances in which Mr Maitland's company - Doyles Creek Mining - was issued a lucrative coal exploration licence contrary to formal advice from the mining department and without a public tender.

The ICAC has heard that Ian Macdonald, the former NSW resources minister, personally ordered the allocation before announcing it in a press release on Christmas Eve 2008 - a release political advisers accepted was an exercise in "putting out the trash".

When Doyles Creek was sold into NuCoal and floated on the securities exchange in 2010, Mr Maitland's $165,000 investment was transformed into a share portfolio worth as much as $14 million.

Mr Maitland has also been questioned at length on Tuesday about the status of his relationship he had with Mr Macdonald.

He said Mr Macdonald was not his "mate" even though ICAC has heard evidence to the contrary from several political colleagues of both men, including current NSW Labor front-bencher Luke Foley and federal senator Doug Cameron.

"I had a comfortable relationship with him," Mr Maitland said.

He also accepted that he had known Mr Macdonald since at least the 1990s but said he had formed the closer working relationship since midway through last decade.

The inquiry continues.

Union Boss Maitland Admits Lying 

Former NSW politician Richard Torbay received one of the largest personal donations ever recorded months after organising a successful meeting between then planning minister Tony Kelly and Cameron McCullagh, a Sydney accountant who wanted a heritage order lifted on a mansion he owned.

''Richard, I would greatly appreciate any assistance you can give in arranging a meeting with Minister Kelly,'' wrote Mr McCullagh to Mr Torbay in an email in June 2010. Two years earlier, Mr McCullagh, 49, a former associate director of Macquarie Bank, and his wife Georgiana, 48, spent $3.8 million purchasing ''Peroomba'', a grand estate on 4150 square metres, from the Windeyer family.

The house in Harrington Avenue, Warrawee, was built in 1938 by award-winning architect William Rae Laurie for his brother-in-law Sir Victor Windeyer, who became a High Court judge. However, the McCullaghs' plans to knock it down and rebuild hit a significant hurdle when Mr Kelly placed a 12-month interim heritage order on June 15, 2010.

Government documents obtained by Greens MP John Kaye reveal that Mr Torbay, who was then speaker of the Legislative Assembly, facilitated a meeting with the minister. The Department of Planning issued a briefing note titled: ''Meeting with Richard Torbay and Cameron McCullagh Re: Peroomba.''

The meeting, which occurred on June 23, 2010, was set up following Mr McCullagh's complaints to Mr Torbay that Peroomba was structurally unsound and had no heritage listing when he bought it in November 2008.

Mr McCullagh, a partner at Steadfast insurance brokers, also sent an email to Cameron White, in the department's heritage branch, informing him that Mr McCullagh's own expert ''considers the property does not warrant heritage listing''.

He also demanded to meet with heritage officers before their report was completed and, if this was not done, ''I will wish to speak to the Minister's Office''.

He said in his email he had ''assurances that this will be possible at very short notice''.

Despite a draft independent heritage assessment deeming the property had significant local heritage value, on August 13, 2010, Mr Kelly lifted the interim order saying in a media release: ''The heritage assessment concluded Peroomba does not meet the threshold for listing on either the State Heritage Register or Ku-ring-gai's Local Environmental Plan.''

Peroomba was in ''poor condition'' and had ''extensive cracking to masonry walls and other defects … extensive remedial work would be required to stabilise the building,'' Mr Kelly said.

The McCullaghs then demolished the house.

Four months later, on December 21, 2010, Australian Electoral Commission records show Mrs McCullagh's private company GEMG donated $100,000 to Mr Torbay, the independent MP for the Northern Tablelands.

Mr McCullagh told the Armidale Express last year the donation was because Mr Torbay is ''highly effective and the sort of person I want in politics''.

Greens MP Dr Kaye said on Wednesday: ''It is hard to identify why the speaker was advocating on behalf of the McCullaghs''.

''His seat is hundreds of kilometres from both the property and the residential address of its owners. The subsequent campaign donation raises legitimate questions,'' Dr Kaye said.

Mr Torbay, a close ally of former powerbroker Eddie Obeid as well as Mr Kelly, dramatically resigned in March from State Parliament and as chancellor of the University of New England after allegations concerning separate donations were referred to the Independent Commission Against Corruption.

Mr Kelly is facing possible criminal charges after the ICAC recommended the Director of Public Prosecutions consider prosecuting him for forgery and using a false document over the purchase of the former union retreat Currawong in the dying days of the Labor government in March 2011.

Mr Torbay and the McCullaghs did not return Fairfax Media's calls. Mr Kelly was unable to be contacted.

Meanwhile, the neighbours in Harrington Avenue are aghast at the McCullagh's construction of a six-bedroom mansion complete with turrets, tennis court, swimming pool and a rock climbing wall.

''There's nothing like it in the street,'' said one, adding, ''It says: 'We've got money, but no taste'.''

The Developer, The $100k Gift & The 'Highly Effective' MP

Former resources minister Ian Macdonald introduced legislation which overruled the highest court in NSW and resulted in a $1 billion windfall to two mining executives who have been under the scrutiny of the Independent Commission against Corruption.

Travers Duncan and Brian Flannery had owned the Moolarben coalmine near Mudgee for more than 30 years. But it was not until the Labor government intervened that it made a big profit.

The NSW Court of Appeal had ruled they could not mine at Moolarben because the lease encroached on a lease held by mining giant Xstrata.

But after the court decided, in August 2008, they could not mine at Moolarben Mr Macdonald stepped in to champion Mr Duncan and Mr Flannery's cause.

After a long legal battle, it took one day for the Labor government to introduce legislation that overturned the Court of Appeal's decision. The legislation went before the entire cabinet for approval.

Mr Duncan and Mr Flannery sold the mine within a year as part of their company Felix Resources to Chinese miner Yanzhou Coal, delivering $530 million each to Mr Duncan and Mr Flannery.

This was not the first time they had received a helping hand from the Labor government.

The pair were also shareholders in a private company, Cascade Coal, which in 2009 received an exploration licence at Mount Penny, near Mudgee, after a suspicious tender run by Mr Macdonald.

In 2008 the government amended the Mining Act to reverse the outcome of a Court of Appeal decision. Left to stand, the court decision would have invalidated Mr Flannery and Mr Duncan's mining leases at the Moolarben coalmine.

The ICAC has revealed a friendship between Mr Macdonald and Mr Duncan, who were regular dining partners.

Transcripts reveal the pair had dinner together in June 2009 at one of Sydney's top restaurants when they discussed Yangzhou Coal's interest in buying Felix Resources.

Greens MP Jeremy Buckingham said it was outrageous the Labor government had legislated so quickly to overturn a court decision. ''This action implicates the entire Labor cabinet, not just a single rogue minister,'' he said.

Peter Coates, a senior executive at Glencore Xstrata said the ''speed of the law change was very unusual''.

A day after the bill was passed, on September 24, 2008, Felix Resources issued a statement praising Mr Macdonald for his decision to amend the Mining Act.

Mr Flannery, who was managing director of Felix Resources at the time, said the bill - the Mining Amendment (Improvements on Land) Bill 2008 - would ensure the validity of the Moolarben leases.

He said the government's action had ''restored clarity and certainty to mining leases that had been placed at risk of unnecessary and costly litigation by the recent Court of Appeal decision''.

When introducing the bill, Mr Macdonald said it was needed to restore certainty to existing mining titles in place before the Court of Appeal's decision.

With the benefit of hindsight, some Liberal and Labor MPs are questioning the appropriateness of the decision. The opposition did not oppose the legislation because it seemed to reinforce the title of miners holding leases which were not in question.

Mr Buckingham said the Greens want a royal commission into the administration and operations of the Mining and Petroleum Acts. ''We believe it is the only way to restore public trust in this area and achieve root and branch reform,'' he said.

George Williams, from the University of NSW law faculty, said in general, it was ''unusual but not unreasonable'' for parliaments to legislate to reverse a court decision. ''It is certainly not common but it does happen in circumstances where Parliament is particularly concerned about the court decision,'' he said.

''It raises real concerns about whether it is appropriate to override that decision and you normally expect a strong case to be put forward in Parliament to permit that.''

Peter Gerangelos, a professor of constitutional law at the University of Sydney and author of The Separation of Powers and Legislative Interference in Judicial Process, also said the reversal of a court decision was ''relatively rare''.

On Friday Mr Flannery said the Liberal opposition and the Labor government had jointly passed the legislation. ''So as to its appropriateness, please ask the Premier, Mr O'Farrell, or the solicitor-general who could better articulate the reasoning for agreeing to such legislation,'' he said.

He said construction of the mine began immediately after the legislation was passed and it was one of the few mines developed at the height of the global financial crisis. It now employed 400 people.

Mr Duncan and Mr Macdonald declined to comment.

Resources and Energy Minister Chris Hartcher said: "If there is sufficient evidence of misconduct the government will ensure a thorough investigation occurs."

Labor's Helping Hand Led To $1b Yield

The former resources minister Ian Macdonald has insisted to a corruption inquiry that he had "total authority" to issue exploration licences without a tender, including to a company backed by former union boss and Labor Party figure John Maitland.

Mr Macdonald, giving evidence before the Independent Commission Against Corruption for the third time in two years on Wednesday, has also maintained that he and Mr Maitland were not friends of any kind, contradicting Labor colleagues from the same faction who had regarded them as "mates".

"We had a cordial relationship," Mr Macdonald said.

"I met him about 15 times in seven years . . . I never went out drinking with him . . . I have never met his children."

But Mr Maitland did meet Mr Macdonald's daughter Sasha, who, the inquiry has heard, attended a celebratory dinner at Catalina when an exploration licence was formally issued to Mr Maitland's company. She went on to secure a job in China through one of Mr Maitland's contacts.

The ICAC inquiry is focusing on the circumstances in which the licence was issued just before Christmas in 2008. It had the effect of creating a windfall of $50 million for the investors behind Doyles Creek Mining when the asset was floated on the stock exchange – including Mr Maitland and Newcastle businessmen Andrew Poole and Craig Ransley.

Mr Macdonald's appearance at the commission marks the end of seven months of public hearings into three separate corruption cases that have also embroiled Labor Party powerbroker Eddie Obeid and his family, and former treasurer Eric Roozendaal.

To date, Mr Macdonald has been accused at the ICAC of three separate acts of corruption.

The first involving a meeting he arranged for accused murderer Ron Medich and a state official, and a prostitute named Tiffanie allegedly arranged for Mr Macdonald in return. The second was his alleged involvement in a "criminal conspiracy" to rig a coal licence tender that generated millions of dollars for the Obeids. And finally, in the current inquiry, for showing "partial" treatment to Mr Maitland.

Counsel assisting the inquiry, Peter Braham, SC, said it was generally accepted in the Rees Labor government of 2008 that if a minister was going to embark on something that would involve the forgoing of state revenues, the matter should be brought to the cabinet.

Mr Macdonald rejected the assertion and said he had never heard Nathan Rees say any such thing.

"I had total authority to deal with exploration licences without going to cabinet," Mr Macdonald said.

The inquiry has heard that the department of mineral resources played very little role in issuing the licence and that the minister's office was Mr Maitland's principal point of contact.

Phone records tendered to the inquiry show Mr Maitland and Mr Ransley dealt with the former minister's personal staff.

Mr Braham also asked Mr Macdonald to accept that the issuing of the licence to Doyles Creek Mining, without a tender, involved an "aberrant process on your part".

"It might have been different in part," Mr Macdonald said, "but I believe it was quite proper."

Mr Maitland claimed on Wednesday that the guidelines for the release of a tenement such as Doyles Creek "provide for flexibility".

Mr Macdonald continues giving evidence on Thursday.

'I Had Total Authority' For Mining Licences: Macdonald

It has been described as the most significant public corruption inquiry in the history of New South Wales. The ICAC inquiry into former state Labor ministers has now wrapped with the findings due in July. Court reporter Jamelle Wells covered the inquiry for the ABC and recounts some of the highlights of what became quite a public spectacle.

Were it not for the seriousness of the allegations raised during the six-month corruption inquiry into former New South Wales Labor ministers, those who watched it could be forgiven for thinking they were part of a studio audience.

The highly-publicised inquiry that the Labor Party wishes never happened gave a behind-the-scenes look at the former government of the people of New South Wales, the wealth and lifestyle of the Obeid family, unions and the business and mining worlds.

Two public galleries in the Independent Commission Against Corruption (ICAC) building were often full, with security officers breaking up scuffles in the long queues of people waiting to get in.

At one point when Counsel-Assisting Geoffrey Watson announced another phone tap would be played, Commissioner David Ipp even said to the public gallery, "Please try and control yourselves at the back, at least refrain from clapping."

There were witnesses who ran from the building to avoid the media, then turned up the next day in the public gallery.

Lawyers for one witness stood in front of a fire escape to try to stop the media questioning their client and another lawyer was accused of deliberately pushing a reporter over outside.

There was outrage when a man in a hat pushed to the front with a tray of coffee, while another couple brought a picnic hamper and fold-up chairs to sit on while waiting.

There were farmers, hardcore court watchers, families on a day out and a man who came to ICAC with friends to celebrate his 60th birthday.

One man in the public gallery with electrodes attached to the back of his head was involved in research at a nearby training institution and often came down to have a look during a break.

Another went to sleep one day - with his singlet rolled half way up exposing his stomach - and started to snore.

It all kicked off last year with Operation Indus, an inquiry into allegations former minister Eric Roozendal received a discounted car as a bribe.

Mr Roozendal - a former treasurer - told the ICAC he is not very good with his personal finances. He has since resigned from parliament, stating that the ICAC had nothing to do with his decision.

Then came Operation Jasper, an inquiry into the lucrative Mount Penny coal licence that former mining minister Ian Macdonald granted over land owned by the Obeid family in the Bylong Valley.

The ICAC heard allegations that Ian Macdonald leaked information and made decisions that led his Labor colleague Eddie Obeid and associates to stand to profit $100 million.

There was an audible gasp in the public gallery when Mr Watson stated that amount of money and said, "if it is corruption, then it is corruption on a scale probably unexceeded since the days of the Rum Corps."

Mr Watson said a "relationship of patronage and dependence" existed between Mr Obeid and Mr Macdonald.

During one of his days in the witness box, Ian Macdonald said he did not tell the ALP or Parliament about the tenement over the Obeids' property because no-one asked him.

He denied rigging the tender process and denied getting kickbacks stating, "I am not a crook."

When Mr Macdonald told the ICAC he now does cleaning and works with a shop, someone in the public gallery muttered, "He can do my place."

The Obeid family - Eddie and his wife Judith and five sons Moses, Eddie Junior, Paul, Damian and Gerard were grilled about their business interests and trust accounts.

Eddie Obeid told the inquiry, "I don't think my family does anything shonky."

The long parade of witnesses included former premiers Nathan Rees and Morris Iemma, former Sydney mayor Frank Sartor, merchant bankers, lawyers, farmers and associates of the Obeid family.

The ICAC was told that the Obeids encouraged their associates to buy up land in the area and tried to hide their involvement in mining projects.

It heard one associate brought a farm in the Bylong Valley then phoned a local shop to find out how to get there.

When questioned about what sort of cows they would put on their farm another witness said cows that "walk around and eat grass".

Eddie Obeid was recalled to the inquiry to respond to allegations by Hong Kong businessman Alan Fang that Ian Macdonald set up a meeting for them in parliament to discuss mining investment and buying the Obeid farm Cherrydale Park.

After three witnesses came forward to dispute Eddie Obeid's claim that during 20 years in politics Ian Macdonald had never set foot in his office, Mr Obeid's barrister Stuart Littlemore was forced to concede that his client might have made a mistake with his evidence.

The third part of the Inquiry - Operation Acacia - looked at allegations Ian Macdonald "gifted" the Doyles Creek coal licence in the Hunter Valley to former union boss John Maitland without a competitive tender and against departmental advice.

The licence, which was announced on Christmas Eve in 2008, was described as a "goldmine" for Mr Maitland and a small group of entrepreneurs who became millionaires from it, but a "financial disaster for the people of New South Wales."

Ian Macdonald said he had the sole authority to issue the licence and denied being John Maitland's friend.

Mr Maitland defended promoting Doyles Creek as a training mine, even though the ICAC heard only around 1 per cent of revenue from it would go towards training.

The inquiry heard he made $15 million three years after investing $165,000 in the project - but he denied it was that much.

He also denied lying about discussing details of a confidential ICAC examination with a colleague, but after a phone tap was played was forced to admit he did.

Climate Change Minister Greg Combet was one of several witnesses who said he had been misled by John Maitland into writing a letter of support for the mine.

When asked by a member of the public in a lift one day how he was holding up under tough cross examination Mr Maitland joked that he was used to it because his wife does it all the time.

The inquiry heard the deal was signed off on at a $1,800 meal at Catalina's restaurant, one of the many dining venues mentioned during Mr Macdonald's evidence.

One witness said the meal was "not lavish" and Ian Macdonald said if he paid for all the meals he had when he was in parliament he would "go very broke very quickly."

During many heated exchanges Commissioner David Ipp reminded Ian Macdonald and Eddie Obeid several times that they were no longer in parliament.

In July, The Commissioner will hand down his findings into the three inquiries and a 2011 inquiry into allegations Mr Macdonald accepted the sexual services of a prostitute called Tiffanie as a bribe.

Mr Macdonald and Mr Obeid have denied any wrongdoing and both have stated that they will fight any corruption findings.

Jamelle Wells is the ABC's senior court reporter for Sydney working across television, radio and online. You can follow her on Twitter @JamelleWellsABC. View her full profile here.

Curtain Comes Down On ICAC's Public Spectacle

Former NSW government ministers Eddie Obeid and Ian Macdonald have been expelled from Labor for bringing the party into disrepute.

State Opposition Leader John Robertson has confirmed the pair have been expelled over allegations aired at the Independent Commission Against Corruption (ICAC) about the granting of mining licences.

He told ABC radio that the ICAC hearings were keeping NSW politics in a holding pattern.

"I want people to know that I am not going to allow the O'Farrell government to run away from the big issues that confront NSW because these proceedings are on at ICAC.

"But I also want people to know that the Labor party isn't the party that they might perceive as it's being played out before the ICAC," Mr Robertson said.

The ICAC has been examining allegations that Mr Obeid made millions from a coal exploration licence issued for Mount Penny in the Bylong Valley in 2008 by then NSW resources minister Mr Macdonald.

Mr Obeid's lawyers have previously warned the ALP of legal action if their client is expelled from the party.

The inquiry's findings are due later this year.

Obeid & Macdonald Expelled By Labor

Former Labor minister Ian Macdonald wants taxpayers to pay his travel and other expenses if he appears before a parliamentary inquiry into his granting of a mining licence which is the subject of a corruption investigation.

The man formerly known as ''Sir Lunchalot'' due to his extravagant ministerial lifestyle is also demanding the right to have a lawyer present and that the inquiry investigate how his initial claim he was ''unavailable'' came to be leaked to the media.

His lawyers wrote to the NSW privileges committee, which is conducting the inquiry, to outline his terms on Wednesday.

It is understood the committee is concerned it does not know Mr Macdonald's whereabouts or how he would travel to Sydney, meaning taxpayers could be asked to foot a big travel bill.

The committee has the power to subpoena Mr Macdonald, who was last known to be living in Orange, and could consider doing so to ensure his appearance at a hearing set down for Tuesday.

Fairfax Media revealed last month that lawyers for Mr Macdonald wrote to the committee claiming he was ''unavailable'', without giving a reason.

The committee is conducting the inquiry after it emerged hundreds of pages of documents were missing from those made available to upper house MPs seeking to examine Mr Macdonald's approval in 2009.

The mining exploration licence was issued by Mr Macdonald, then mineral resources minister, over land at Mount Penny in the Bylong Valley owned by the family of Labor powerbroker Eddie Obeid.

In 2009, the NSW upper house issued a ''call for papers'' into the matter, requiring the production of all documents relating to Mr Macdonald's decision. But it emerged during this year's Independent Commission Against Corruption inquiry into the matter that many of the documents it uncovered were not delivered to MPs in 2009, sparking claims of a possible cover-up.

The commission has been examining whether Mr Obeid's family used inside information provided by Mr Macdonald about a tender for the licence to make tens of millions of dollars. Its report is due within weeks.

Macdonald Wants Travel Costs Reimbursed

Former NSW Labor powerbroker Eddie Obeid and former NSW mining minister Ian Macdonald have been found by the NSW ICAC to have acted corruptly and referred for possible criminal charges.

The long-running Independent Commission Against Corruption inquiry has also made corruption findings against Mr Obeid's son Moses.

However it cleared former NSW roads minister Eric Roozendaal, finding there was insufficient evidence to show he knew of arrangements that led to him benefiting from a discounted car.

The findings, contained in three reports, follow six months of sensational hearings and more than 150 witnesses. The inquiries revealed corruption reaching some of the highest levels in both the Right and Left of the NSW Labor Party.

ICAC found Mr Obeid, the one-time head of the powerful Labor right faction, and his son Moses, acted corruptly in the process of obtaining and selling a mining exploration licence on their property.

Commissioner David Ipp recommended that Mr Macdonald, Eddie Obeid and Moses Obeid all be referred to the Director of Public Prosecutions to face possible criminal charges over their involvement in the Mount Penny coal mine.

ICAC found Mr Macdonald rigged a 2008 tender process to grant a coal licence over land at Mount Penny owned by the Obeid family, enabling the Obeids to make $30 million.

ICAC said Mr Macdonald could face “the common law offence of conspiracy to defraud or misconduct in public office” over his conduct in agreeing with the Obeids to act contrary to his public duty as a minister.

The Obeids were also recommended to each be considered for conspiracy to defraud.

Mr Ipp was scathing of the conduct of Mr Obeid and Mr Macdonald.

He called Mr Macdonald an “unsatisfactory witness” who gave “deliberately untrue evidence”.

Mr Obeid was “an aggressive witness and seemed to be more concerned with imposing his will on the proceedings than simply telling the truth,” Mr Ipp said.

The commissioner also said that Moses Obeid was “willing to lie or mislead whenever it suited his purpose”.

Moses Obeid later issued a statement denying any wrongdoing. “I deny any unlawful behaviour on my part,” he said. “The allegations against me are strongly denied as is any suggestion that I have acted corruptly.”

Eddie Obeid said the ICAC report was superficial and biased and he denied he had acted corruptly.

“I reject the assertions by the commissioner that I acted in any way that could amount to corrupt conduct,” he said in a statement. He also indicated he would take legal action to seek a review of the findings.

A number of high-profile businessmen also face corruption findings over their involvement in Mount Penny.

They include mining mogul Travers Duncan and senior mining executive John McGuigan, well known business figure John Kinghorn, merchant banker Richard Poole and John Atkinson, a former partner at the law firm Baker & McKenzie.

The consortium of investors in Cascade Coal - in which the Obeids had disguised their 25 per cent stake - won the right to explore for coal at Mount Penny.

Each of them have also been recommended for possible prosecution for the offence of obtaining financial advantage by deception.

Mr McGuigan rejected the findings, saying he had acted properly at all times, and vowed to take “appropriate action” to restore his reputation.

Mr Poole also said he had acted “professionally and properly” at all times. “It is my belief that the evidence does not support the findings.”

In public hearings that began last November, ICAC heard the Obeid family enriched itself by between $75 million and $175m as a result of receiving inside information on the granting of exploration licences and the companies invited by Mr Macdonald's department to express an interest.

Using various shelf companies, the Obeids struck a deal with the successful tenderer, Cascade Coal, to sell Cherrydale Park for four times its market value, and to take a 25 per cent stake in the exploration licence, which is estimated to be worth about $500m.

Several high-profile business figures who invested in Cascade were also questioned in the inquiry.

ICAC has recommended the matter be referred to the NSW Crime Commission to strip the millions of dollars from the Obeid family that they made from the Cascade coal and Yarrawa tenement deals, even if the Obeid family is not found guilty of a criminal offence.

The ICAC further referred the tax arrangements of the Obeid family to the Australian Taxation Office, which showed millions being paid to family members through the Obeid family trust.

In a separate report, Mr Macdonald was also found to have acted corruptly and could face criminal charges for accepting the sexual services of a prostitute organised by former Sydney property developer, now accused murderer, Rod Medich.

The prostitute was organised in July 2009 by Mr Medich's former right hand man, Fortunato (Lucky) Gattellari, who is currently serving a jail sentence in relation the murder of Sydney standover man Michael McGurk. Mr Medich is accused of Mr McGurk's murder.

The ICAC found that Mr Macdonald accepted the services of the prostitute, named Tiffanie, in return for organising a dinner at Sydney's Tuscany restaurant between Country Energy executive Craig Murray and Mr Medich in an attempt to further Mr Medich's electrical contract company. Mr Murray is not accused of any wrongdoing.

Mr Ipp has also that advised the DPP consider prosecuting Mr Medich for corruptly giving a benefit to the minister.

As part of its investigations, ICAC also found Mr Obeid's son, Moses, engaged in corrupt conduct over a $10,800 car for former Labor minister Eric Roozendaal.

The corruption watchdog investigated whether Mr Roozendaal received a new Honda CRV at $10,800 less than its original value in return for political favours for his colleague, Eddie Obeid.

The ICAC reports said Moses Obeid “provided a benefit to Mr Roozendaal as an inducement for him to show favour to Obeid business interests in the exercise of his official functions”.

Mr Roozendaal was not found to have acted corruptly.

He said ICAC had cleared him and restored his reputation.

`I have always maintained that I acted appropriately and ethically during my parliamentary career and in the best interests for the people of NSW,” he said in a statement. “I am glad we can move on now.”

The ICAC inquiry opened in November last year with counsel assisting the inquiry, Geoffrey Watson, SC, saying “it is corruption on a scale probably unexceeded since the days of the Rum Corps”.

The federal opposition is poised to capitalise on the reports, with Joe Hockey declaring the revelations from ICAC were a reflection of “the whole of Labor”.

“Labor is rotten to the core...

“We look forward to hearing what ICAC has to say about the real facts behind the state of Labor,” he said.

The issue is killing state Labor in NSW, with the latest Newspoll showing the Coalition leading the ALP 61-39 on a two-party preferred basis.

Mr Rudd staged an “intervention” in the NSW branch as one of his first announcements upon returning as Prime Minister, handing control of the branch to the ALP national executive.

He has also vowed to hand at least 50 per cent of votes on the party's powerful administrative committee to rank-and-file members.

Labor's NSW general secretary Sam Dastyari said today there was relief within Labor that the long and damaging saga was coming to an end.

“Of course it is unhelpful for the party to have these matters being played out on the eve of an election,” he told The Australian.

“The Prime Minister Kevin Rudd has been clear that he'll take whatever steps are necessary to make sure these things will never, ever happen again, and party members welcome that.”

Mr Rudd said today he was “disgusted” with the revelations to have emerged in the ICAC.

“Anyone who is responsible for corruption, for illegal behaviour, should face the full force of the law.

“That's what I want to see happen.”

CHARGES RECOMMENDED BY ICAC

Charges recommended by ICAC in Operation Jasper:

Ian Macdonald:

- For the criminal offences of conspiracy to defraud or misconduct in public office in relation to his conduct in agreeing with Eddie and Moses Obeid to arrange for the creation of the Mount Penny coal tenement.

- His conduct in providing Moses Obeid or other members of the Obeid family with confidential information for the purpose of financially benefiting the family.

Eddie & Moses Obeid:

- For the criminal offence of conspiracy to defraud in relation to the agreement that Mr Macdonald would create the Mount Penny tenement and criminal offences of conspiracy to defraud in relation to Mr Macdonald's provision of confidential information.

Travers Duncan, John McGuigan, John Atkinson and Richard Poole:

- For their corrupt conduct by concealing the involvement of the Obeids in the Mount Penny tenement.

Charges recommended by ICAC in Operation Atrial:

Ian Macdonald:

- For corruptly receiving a benefit and the common law offence of misconduct in public office.

Ron Medich:

- For corruptly giving a benefit contrary to section BB(2) of the Crimes Act.

Charges recommended by ICAC in Operation Indus

Moses Obeid, Rocco Triulcio, Rosario (Ross) Triulcio, and Paul Obeid:

- For giving false or misleading evidence at the ICAC.

Ian Macdonald, Eddie Obeid facing charges after being found by ICAC to have acted corruptly 

State politics lumbers along under the radar. But a few cracks are appearing in Barry O'Farrell's cabinet. This is not surprising almost three years into government, but worth noting.

Tangled in a couple of minor scandals, Greg Pearce was punted as finance minister a few weeks ago. No loss there. Pru Goward has made a hash of community services, fudging the statistics then tossing up dodgy excuses she would have shredded in her earlier incarnation as an ABC journalist. Graham Annesley, former sports minister and a decent bloke, sensibly wants no more of politics and is off to manage the Gold Coast Titans NRL team.

Then there is Treasurer Mike Baird and his helpful habit of naming old mates and Liberal Party donors to rewarding posts.

These include Roger Massy-Greene, appointed chairman of the electricity distributor Networks NSW, and Chum Darvall, a former Baird colleague at Deutsche Bank and now chairman of TransGrid.

Most intriguingly, colourful businessman Nick di Girolamo, a Liberal fund-raiser and, curiously, an associate of the inevitable Eddie Obeid, is now a director of Sydney Water.

Seizing the moment, Herald reader Paul Miles fired off a hopeful letter to the Treasurer a few days ago. He hasn't had a reply yet, so I'm giving it a run here to jog things along:

Dear Mr Baird,

Just a short note to let you know that I am after a highly paid NSW government board chairmanship.

Although I do not have a history of donating cash to your party, I will correct that shortfall immediately should you supply me with its banking details.

My appointment, I assume, as with the others, will not be vetted by the independent panel you established as an "added integrity measure" in late 2011. Apart from cash deposit confirmation, I take it you will not require other details such as antecedents and credentials.

The Sydney Cricket Ground Trust is my preference, but I do understand that Premier O'Farrell must firstly run that past Alan Jones.

I am looking forward to working with you and the Premier and am keen to get started as soon as possible.

Yours sincerely,

Paul R. Miles.

Mike Carlton

Less than four months after ICAC made multiple corruption findings against former state Labor minister Eddie Obeid, he is to face four more inquiries.

Controversial former Labor powerbroker Eddie Obeid will face three fresh corruption inquiries, starting at the end of this month.

But Fairfax Media can reveal that the Independent Commission Against Corruption plans a fourth inquiry into the Obeids' secret plan for a billion-dollar water deal. This inquiry, into Australian Water Holdings, is potentially more explosive than the Mount Penny coal exploration inquiry which found Mr Obeid's family had made $30 million, with the potential to make another $100 million.

The fourth inquiry, which will start early next year, will examine the Obeids' clandestine involvement in AWH, which manages hundreds of millions of dollars worth of work for Sydney Water.

It will look at former planning minister Tony Kelly's attempt to help the Obeids secure millions of dollars from a plan to have part of Sydney Water privatised and sold to AWH.

Former treasurer Michael Costa, who became the chairman when he left Parliament, will also feature in the inquiry. Mr Obeid's ally Joe Tripodi also lobbied premier Kristina Keneally to secure a favourable deal for AWH.

The potential for the AWH inquiry to embroil Liberal senator Arthur Sinodinos, its former chairman, is believed to have cost him a cabinet spot. Senator Sinodinos told Parliament in March that he was ''shocked and disappointed'' to discover AWH was ''financially linked to the Obeid family''.

The inquiries starting this month have the common allegation that Mr Obeid misused his position as an MP to pressure colleagues and bureaucrats to make decisions advantageous to himself and his family.

The first, Operation Cyrus, will investigate allegations that between 2000 and 2011, Mr Obeid misused his position to gain advantages for his family who secretly held the leases of a string of cafes at Circular Quay.

It is also alleged that several public officials improperly exercised their official functions regarding the cafe leases to benefit the Obeid family. Last year the Herald revealed the Obeids secretly controlled three waterfront cafes at Circular Quay.

Former minister Carl Scully said that after the government completed an exhaustive tender process in 2000, Mr Obeid had sought an extension to one of the leases, but did not tell him his family stood to benefit.

''I flatly refused this request,'' he told the Herald. ''This was not well received and … Eddie became quite angry. It was only after I left politics that an allegation was made to me that Eddie had … a direct commercial interest. If the allegation is true, then it would explain the overreaction to my decision.'' Another former minister, Eric Roozendaal, told the Herald Mr Obeid had discussed with him the leases but did not disclose his interest.

The second part of Operation Cyrus centres on allegations that between 2005 and 2008 Mr Obeid tried to influence public servants to make decisions favourable to Direct Health Solutions, without disclosing that his family had an interest in that company.

The Herald has previously revealed that Mr Obeid arranged private meetings with Mr Costa, then a frontbencher, to advance the business interests of DHS, without disclosing his family's financial interest.

DHS operates a sick-leave system designed to reduce absenteeism. It was paid $150,000 by the Education Department, $30,000 by NSW Police for a 15-day consultancy, and almost $34,000 by Corrective Services for managing sick leave from 2005 to 2008.

The third inquiry, Operation Cabot, will examine allegations that Mr Obeid misused his position to persuade public servants to grant water licences at the family's property Cherrydale Park, without disclosing that his family had an interest in the licences.

Deep Water: Obeid Faces New Scrutiny

First there was the proliferation of ''We Love [heart] ICAC'' stickers which sprung up in and around the Balmoral Beach Club after corruption findings against two of the club's members, John Kinghorn and John McGuigan.

But now the prestigious club, which occupies prime waterfrontage at Balmoral Beach, is abuzz with news that all four tyres of Mr Kinghorn's Mercedes-Benz were slashed outside the club earlier this week.

The damage to Mr Kinghorn's wheels occurred about 7.30am on Monday while the businessman was taking his customary dip in the ocean.

Members said the luxury car maker's roadside assistance crew later came to Mr Kinghorn's aid.

A spokesman for NSW Police said the incident was not reported.

''We don't make comments about our members and what's happened to them or hasn't happened to them,'' said club president Rob Johnson, who has been a member since 1998.

A source close to 72-year-old Mr Kinghorn said of the tyre slashing: ''The theory doing the rounds was that it had more to do with a colourful local than the ICAC or a disgruntled Balmoral Beach Club member.''

There hasn't been such a ruckus at the beach club since member Robbie Waterhouse was warned off racecourses around the world over the Fine Cotton affair more than two decades ago.

While horrified at the damage to Mr Kinghorn's car, the member responsible for the sticker campaign is most unhappy with Mr Kinghorn and Mr McGuigan's ongoing membership of the century-old club.

''These two individuals seem to be utterly unrepentant about their nefarious dealings and still strut the club as if nothing has happened,'' he said.

In July Mr Kinghorn, the founder of RAMS Home Loans, and Mr McGuigan, a lawyer, were found to have acted corruptly by hiding the involvement of Eddie Obeid and his family in a controversial mining deal.

The Independent Commission Against Corruption found the two were part of a group of wealthy investors in Cascade Coal which later paid the Obeids $30 million to exit the coal company.

The two men were also directors of publicly listed company White Energy which was proposed to buy Cascade for $500 million.

The actions of Mr McGuigan and Mr Kinghorn have been referred to the Commonwealth Director of Public Prosecutions to consider whether criminal charges can be laid for breaches of directors' duties.

According to its website, the values of the Balmoral Beach Club - which has about 2000 members and a waiting list - include tolerance and providing a feeling of camaraderie among its members.

Unalloyed Anger: Obeid Ally Finds His Mercedes Tyres Slashed

ICAC alleges the former MP had a personal interest in avoiding tenders on prime government real estate in Circular Quay

Eddie Obeid was known in the halls of NSW parliament as a fixer but when "stuff hit the fan" in a family business, his brother-in-law says it never crossed his mind to ask the then MP for help.

Obeid is accused of lobbying state ministers Carl Scully, Michael Costa, Eric Roozendaal and Joe Tripodi to have leases on prime government-owned real estate – home to two Obeid family-owned restaurants – renewed without going to tender.

It is alleged the one-time Labor powerbroker never disclosed his personal connection to the Sorrentino restaurant and Quay Eatery at Sydney's Circular Quay.

The allegations were aired on Monday, the first day of another NSW Independent Commission Against Corruption (Icac) inquiry into Obeid, who has already been declared corrupt by the watchdog in relation to separate matters.

Under questioning from counsel assisting the commission, Ian Temby QC, the ex-MP's brother-in-law, John Abood, agreed that while he owned Circular Quay Restaurants Pty Ltd (CQPL) on paper the major owner was really an Obeid family trust. CQPL, in turn, owned the two restaurants.

The inquiry has heard Abood was given the job of managing the eateries because he was struggling to find work.

He said he spoke to "the boys" – Eddie Obeid's sons – and they got together $2.4m to buy Sorrentino, Quay Eatery and a nearby cafe.

"I was fronting the businesses, not a front for the Obeids – there's a difference, sir," Abood said.

He also denied that Obeid was called in to help when NSW Maritime, the landowner, moved to seek expressions of interest from potential new lessees without giving existing retailers preference.

"Going to market in this way has the obvious advantage of ensuring that public assets provide a good return to the public purse," Temby said in his opening address.

Ultimately, NSW Maritime altered its draft commercial lease policy to allow for direct negotiations with existing tenants and new leases were indeed granted to CQPL in 2009.

"When, if you want to say – excuse me commissioner – that stuff hit the fan, we had to react to that," Abood testified. "I never even contemplated talking to Eddie about it and I never did, sir."

The three-week inquiry is part of three fresh investigations by the corruption watchdog codenamed Cyrus, Cabot and Meeka.

ICAC will also examine claims that Eddie Obeid influenced public officials to allow generous water licences for a coal-rich Hunter Valley property owned by his family.

It's also been alleged that Obeid hand-delivered to then Treasurer Michael Costa a letter requesting a meeting with a director of Direct Health Solutions, without revealing that his family and long-time associate Rocco Triulcio had a combined $450,000 investment in the company.

Temby has foreshadowed that along with Obeid, prominent bureaucrats Steve Dunn – who recently headed up the O'Farrell government's controversial Game Council review – and Mark Duffy could face corruption allegations. Dunn is expected to testify at the inquiry.

Obeid has denied any wrongdoing but promised to co-operate.

"No one is ever happy with having to answer continuous allegations but as long as they have hearings, I'll keep turning up," he told the Seven Network. "I'm not corrupt, and time will tell."

He is expected to give evidence next week.

The inquiry continues before assistant commissioner Anthony Whealy QC.

Former NSW Labor minister Joe Tripodi has denied he told his chief of staff that former minister Eddie Obeid had interests in commercial leases in Circular Quay.

Lynne Ashpole told the Independent Commission Against Corruption (Icac) on Thursday that her former boss Tripodi told her about Obeid's interests in businesses at the Quay.

Tripodi on Friday denied that he told Ashpole about Obeid's interests.

"I did not say that," Tripodi told council assisting the commission, Ian Temby QC.

"I told Ms Ashpole that Mr Obeid had been complaining about the treatment those leaseholders were receiving and that he was of the view their leases should be extended."

ICAC has heard that Obeid and members of his family had business interests in the leases.

Tripodi agreed when asked that Obeid was a mentor who had helped him get into parliament and achieve his ministerial rank.

He also agreed that he respected and was grateful to Obeid.

The ICAC is investigating allegations that Obeid lobbied several former Labor ministers over leases at Circular Quay, in which his family had hidden interests.

Earlier on Friday, Commissioner Anthony Whealy announced the scope of the inquiry would be widened to include Tripodi.

The inquiry continues.

Former energy minister Chris Hartcher and central coast MPs Chris Spence and Darren Webber are set to be suspended from the Liberal Party after being named in two major corruption inquiries.

A senior government source confirmed the Liberal Party had begun proceedings against the trio.

The decision was taken on Tuesday night after the O'Farrell government was dragged into the scandal surrounding the family of former Labor powerbroker Eddie Obeid, with an announcement public hearings would begin in weeks.

The MPs have only just renominated for preselection in their central coast seats for the March 2015 state election.

But on Tuesday members of Mr Spence's electoral conference for The Entrance were told a meeting scheduled for next Monday to confirm his candidacy was cancelled until further notice.

The Independent Commission Against Corruption will hold a public inquiry, starting on March 17, into allegations of corrupt conduct by public officials and ''persons with an interest'' in the Obeid-linked company Australian Water Holdings.

A second inquiry will be held from April 28 into allegations Mr Hartcher, who is the member for Terrigal, The Entrance MP Mr Spence and Wyong MP Mr Webber ''corruptly solicited, received and concealed payments'' in return for favours.

Australian Water, which became one of the largest donors to the NSW Liberals before the 2011 state election, was allegedly one of the sources of the payments.

ICAC says the first inquiry, Operation Credo, will look at whether, between 2004 and 2012, interests in Australian Water benefited by inflating charges to state-owned Sydney Water corporation.

It will examine allegations ''public officials and others'' were involved in falsifying a cabinet minute relating to a public-private partnership proposal by Australian Water to mislead a budget committee of cabinet.

Mr Obeid and his fellow former Labor ministers Joe Tripodi and Tony Kelly are alleged to have ''misused their positions as members of Parliament'' to try and influence public officials over the deal.

It is alleged that in November 2012 Liberal Party identity Nick Di Girolamo - a former chief executive and major shareholder in the company - and Eddie Obeid jnr tried to mislead ICAC's investigation into whether Mr Obeid snr tried to use his position as an MP to influence public officials over the proposal.

Within hours of the Tuesday announcement, Mr Di Girolamo resigned as a director of the state-owned State Water Corporation.

The second inquiry, Operation Spicer, will look at whether between April 2009 and April 2012 Mr Hartcher, Mr Webber and Mr Spence, along with two former staff of Mr Hartcher - Tim Koelma and Ray Carter - corruptly solicited payments for political favours.

It will also examine whether between December 2010 and November 2011 the MPs and Mr Carter solicited banned political donations.

The inquiry will consider allegations Australian Water Holdings, through Mr Di Girolamo, made ''regular payments'' to Eightbyfive, a company owned by Mr Koelma in return for Mr Hartcher favouring Australian Water interests. The payments were allegedly claimed to be for public relations advice.

Mr Hartcher suddenly resigned from the cabinet in December after ICAC raided his office.

In 2012 Mr Carter and Mr Koelma resigned and Mr Carter was suspended as Terrigal electorate officer after the party referred allegations they had breached donations laws to the Election Funding Authority. A $5000 payment to Eightbyfive, from Wyong builder Matthew Lusted, sparked the referral by the party. Mr Lusted was approached for the payment by Mr Carter shortly before the March 2011 election. It is understood Mr Lusted's name and others were given to Mr Carter by Wyong mayor Doug Eaton, who has refused to comment.

Liberal MPs Face Suspension For Links To ICAC Inquiry

The NSW government is refusing to disclose what contact former resources minister Chris Hartcher had with businessman Nick Di Girolamo over a controversial Central Coast coalmine after a potentially corrupt relationship was alleged by authorities.

On Tuesday Mr Di Girolamo and Mr Hartcher were named in a major inquiry being undertaken by the Independent Commission Against Corruption. Public hearings are to begin next month.

Among the allegations being examined is that as chief executive of a water infrastructure firm, Australian Water Holdings, Mr Di Girolamo agreed the company would make ''regular payments'' to a company owned by Mr Hartcher's then policy adviser, Tim Koelma, called Eightbyfive. ICAC says it is alleged the payments were made ''purportedly for the provision of media, public relations and other services and advice'' in return for which Mr Hartcher ''favoured the interests of AWH''.

Just before the state election in March 2011 a consortium led by the South Korean government-owned company, Kores, was denied approval for the $800 million Wallarah 2 mine by the former Labor government.

The then NSW opposition, led by Barry O'Farrell, had been vehemently opposed to the mine. As opposition leader Mr O'Farrell and his Central Coast spokesman, Mr Hartcher, held a 2009 rally opposing the project, dressed in red T-shirts bearing the slogan ''water not coal''. Mr O'Farrell told the rally ''the next Liberal-National government will ensure mining cannot occur here … no ifs, no buts. A guarantee.''

But in January 2012, following the election which swept the Coalition to power, Kores resubmitted its plans shortly after Mr Hartcher, the new resources minister, told Parliament all mining proposals should be subject to ''merit-based assessments''.

In March 2012 Mr Di Girolamo registered as a lobbyist with the NSW Parliament via his company Westin Strategic Consulting. Kores was its sole client.

In October 2012 Kores lodged a development application.

On Tuesday, as ICAC was revealing the allegations against Mr Hartcher and Mr Di Girolamo, the NSW Department of Planning announced it was recommending Wallarah 2 be approved, subject to strict conditions.

The project will be considered by the Planning Assessment Commission, which had previously recommended that 40 conditions be attached to any approval.

On Tuesday a spokesman for Mr O'Farrell said: ''The Premier is overseas and unavailable for comment.''

Greens MP John Kaye said Mr O'Farrell needed to be transparent about the activities of Mr Di Girolamo.

"Only Premier Barry O'Farrell and his cabinet know which of their decisions were influenced by Chris Hartcher,'' he said. ''If they want to restore their credibility, they should publicly identify those outcomes and reverse or put on hold those which may be subject to the ICAC allegations.''

Dr Kaye called for an ''independent review'' of all decisions in which Mr Hartcher had had a significant say.

NSW Government Clams-Up Over Hartcher-Di Girolamo Link

A front company for the family of disgraced former Labor minister Eddie Obeid has been ordered to pay almost $1 million to the state government over two cafe leases at the centre of a corruption probe.

But a lawyer for the company said on Thursday that the chances of recovering the money were slim.

The Supreme Court ruled earlier this month that the Obeid family company, Circular Quay Restaurants Pty Ltd, should pay Roads and Maritime Services $977,814 in rent and costs.

The ruling comes more than a year after RMS evicted Cafe Sorrentino and Quay Eatery from prime wharf commercial spots at Circular Quay over $806,782 in overdue rent. Circular Quay Restaurants had acquired the two RMS leases - as well as that for the nearby Arc Cafe - for a combined price of $2.4 million in 2003.

The leases were at the centre of an Independent Commission Against Corruption inquiry held last year and due to report this year. It had heard that Circular Quay Restaurants was used by the Obeids to disguise the family's ownership of the leases on prime commercial land in or near the ferry terminals.

Mr Obeid successfully lobbied colleagues and departmental chiefs for lucrative concessions on the cafe leases, the inquiry heard.

RMS began legal action against its former tenant in December in a bid to recover the outstanding rent, as well as other costs incurred by the agency. A spokeswoman said: ''This included legal fees, costs to relet the premises, and maintenance and cleaning costs. Roads and Maritime Services has demanded payment.''

But the company's solicitor, David Deutsch, questioned the value of the resources and money the RMS had spent seeking to recover the money.

''I don't think the chances of recovering funds are high,'' Mr Deutsch said, adding his client had made the ''commercial decision'' not to fight the action.

''It's a claim which we have chosen not to defend and we see no utility in wasting money on this issue,'' he said.

Mr Deutsch said Circular Quay Restaurants ceased trading six weeks ago. A lease for the Arc Cafe had been transferred to a new entity with ''no ties'' to the Obeids, he said.

Separately, Coca-Cola Amatil is seeking to wind up Circular Quay Restaurants to recover a $100,000 debt it is owed for Coke products.

The matter will return to the Supreme Court on March 3.

But Mr Deutsch said he did not believe its chances of recovering the money were any better than that of RMS. ''The company at this stage is likely not going to take any formal steps in the winding up matter,'' he said.

A spokeswoman for Coca-Cola Amatil said it had ''no comment to make on the issue''.

Eddie Obeid Company Ordered To Pay Almost $1 million To Roads & Maritime Services

Premier Barry O’Farrell has been forced to admit he "dropped in" on a meeting attended by Liberal identity Nick Di Girolamo and former resources minister Chris Hartcher, whose relationship is being examined as part of a major corruption inquiry.

The government has also admitted the meeting, on February 28, 2012, may have occurred before Mr Di Girolamo was placed on the official lobbyist register representing the Korean government-owned company Kores, raising questions about whether Mr Hartcher breached the ministerial code of conduct.

Kores had been seeking approval for the controversial $800 million Wallarah 2 coal mine on the Central Coast - a project Mr O’Farrell had promised to block while in opposition, but which was recently given planning department support.

Mr O’Farrell’s admission in question time came only minutes after Mr O’Farrell told Parliament that ‘‘to the best of my knowledge’’ he had not met with Mr Di Girolamo over the controversial mine project.

The Premier subsequently told Parliament he had been ‘‘approached on two occasions’’ for a meeting with Kores Australia, on November 15, 2012 and March 8 last year.

However he said the meetings ‘‘did not proceed. That’s to the best of my knowledge’’.

Under the questioning by Opposition Leader John Robertson and Maroubra MP Michael Daley, Mr O’Farrell then told Parliament that records do not show any of his staff meeting Mr Di Girolamo over Wallarah 2.

But he added: ‘‘Records do show that on the 28th of February [2012], during his visit to Sydney, I dropped in for five minutes to a meeting between the president of Kores, Mr [Kim Shin-jong] and the minister for resources and energy [Mr Hartcher], and I am advised that amongst the nine people present was Mr Di Girolamo.’’

Mr O’Farrell went on to say that ‘‘I stress the fact that I dropped in to say hello to the president and to apologise for the fact that I hadn’t previously been able to see him’’.

However, on Wednesday night his office did not explain how he could have been seeking to apologise for not holding meetings that were only requested nine months later or, alternatively, if he failed to disclose to Parliament other approaches.

Asked why Mr Di Girolamo attended the meeting, given he had yet to register as a lobbyist, a spokesman said following media inquiries in March 2013 ‘‘it was noticed by the premier’s office that Mr Di Girolamo’s placement on the lobbyist register may have occurred shortly after [the February 28 meeting]’’.

‘‘The Premier’s chief of staff immediately reported this to the director general of the department of premier and cabinet,’’ the spokesman said.

The ministerial code states ministers must abide by the lobbying code of conduct, which forbids them meeting with lobbyists who are not on the official register.

It is the first time Mr O’Farrell has acknowledged any contact with Mr Di Girolamo over Wallarah 2 since Fairfax Media first raised the issue in March last year.

It has previously been revealed that in December 2012, Mr Di Girolamo sought to organise a meeting between a senior Kores executive and Planning Minister Brad Hazzard over Wallarah 2. However, that meeting did not proceed either as Mr Hazzard was unavailable at the time. Last week Mr Di Girolamo and Mr Hartcher were named in an inquiry being undertaken by the Independent Commission Against Corruption.

Among the allegations being examined is that as chief executive of a water infrastructure firm, Australian Water Holdings, Mr Di Girolamo agreed the company would make ‘‘regular payments’’ to a company called Eightbyfive. Eightbyfive was owned by Tim Koelma, who was a volunteer in Mr Hartcher’s electorate office before the March 2011 election and became his senior policy advisor.

ICAC says it is alleged the payments were made ‘‘purportedly for the provision of media, public relations and other services and advice’’, in return for which Mr Hartcher ‘‘favoured the interests of AWH’’.

The Wallarah 2 project was denied approval by the former Labor government just before the March 2011 state election.

As opposition leader, Mr O’Farrell and his Central Coast spokesman, Mr Hartcher, had held a rally in 2009 opposing the project, dressed in red T-shirts bearing the slogan ‘‘water not coal’’. Mr O’Farrell told the rally: "The next Liberal-National government will ensure mining cannot occur here ... no ifs, no buts. A guarantee."

In January 2012, Kores resubmitted its plans shortly after Mr Hartcher, as the new resources minister, told Parliament all mining proposals should be subject to "merit-based assessments". In March 2012, Mr Di Girolamo registered as a lobbyist with the NSW Parliament via his company Westin Strategic Consulting. Kores was its sole client.

In October 2012, Kores lodged a development application.

Last week, the NSW Department of Planning announced it was recommending Wallarah 2 be approved, subject to strict conditions.

The project will be considered by the Planning Assessment Commission, which had previously recommended that 40 conditions be attached to any approval.

Barry O'Farrell 'Dropped In' On Meeting Attended By Nick Di Girolamo & Chris Hartcher

A lucrative harbourside lease at the centre of a corruption inquiry into Eddie Obeid has been transferred to another branch of the disgraced former Labor powerbroker's family - and potentially beyond the reach of creditors, including the state government.

In what may prove embarrassing for the Sydney Harbour Foreshore Authority, the new tenants of the authority's East Circular Quay cafe lease are Mr Obeid's nephew Peter Schibaia and Mr Schibaia's 23-year-old daughter May. Mr Obeid's relatives replace the former operator of Arc Cafe, the Obeid family front company Circular Quay Restaurants, which was placed into liquidation this week.

Circular Quay Restaurants acquired the Arc Cafe lease - as well as those of two nearby Roads and Maritime Services properties - for a combined price of $2.4 million in 2003.

The leases were the subject of a corruption inquiry last year, which heard that Mr Obeid lobbied colleagues and bureaucrats for concessions. The inquiry will report this year.

RMS evicted Circular Quay Restaurants from its two properties in 2012, but Arc Cafe - said to be the most lucrative of the three businesses - was still operated by the company, just metres from the waters of the quay and its bustling ferry wharves, until late last year. At that point it transferred the lease to Schibaia Group. The two Schibaias are listed as its directors.

The $150,000 deal was approved by SHFA on December 4 - just a week after RMS lodged a statement of claim against Circular Quay Restaurants for $806,782 in unpaid rent. Less than a month ago the Supreme Court ordered Mr Obeid's company to pay almost $1 million, including costs, to RMS.

Asked if it would have approved the transfer if aware its new tenants were Mr Obeid's relatives, SHFA said the grounds on which it could withhold consent ''do not include the family connections of company directors''. ''For abundant caution, the Authority has referred this matter to ICAC,'' it said.

Another creditor of Circular Quay Restaurants, Coca-Cola Amatil, wound up the company this week over a $108,000 debt.

Jim Sarantinos, a spokesman for insolvency and restructuring specialists Ferrier Hodgson, said a liquidator would need to establish whether there was a risk around the transfer ''before you consider whether it was worthwhile taking action''.

''Unfortunately, due to the expense and the uncertainty of the recovery of such transactions, they are often not pursued, and irrespective of the circumstances, creditors can still lose out,'' he said.

Ms Schibaia, who was busy making coffees at Arc Cafe on Monday, could shed little light on the circumstances surrounding the transfer. ''I've got nothing to say, really, because I don't know what you're talking about,'' she said.

Asked if the Obeids were still involved in the new company or the cafe, Ms Schibaia responded: ''No comment, no''.

Circular Quay Restaurants' lawyer, David Deutsch, had previously told Fairfax Media that Arc Cafe's new operator had ''no ties'' to the Obeids.

Mr Deutsch did not appear in court while his client was wound up on Monday or respond to requests for comment.

While Eddie Obeid's brother-in-law John Abood was listed as Circular Quay Restaurants' sole director, ICAC had heard the Obeid family secretly owned 90 per cent of the company.

Emanueli Oliveri, who is acting for Coca-Cola, said it was pursuing Mr Abood, who had given his personal guarantee over the company, through the District Court.

But the liquidator would also look into any other dealings by the company, Mr Oliveri said. ''If they can be attacked then we'll attack them.''

An RMS spokesman said it would continue to pursue the debts owed ''in accordance with court orders''.

Eddie's Arc: Relatives Take Over Circular Quay Lease From Front Company

From the time the first details of the Independent Commission Against Corruption's latest investigations were announced a few weeks ago, shudders have reverberated through the ranks of the O'Farrell government.

The details hinted at the prospect of one of its most senior ministers, Chris Hartcher, being implicated in corrupt activity involving Eddie Obeid, the most notoriously corrupt figure in the discredited former Labor government.

On Monday, counsel assisting the inquiry Geoffrey Watson landed another devastating blow to the Liberals.

Tongue firmly in cheek, Watson described the alleged corruption surrounding Australian Water Holdings as ''an uncharacteristic display of bipartisanship''.

''It might be said - re-adapting Shakespeare - that corruption 'acquaints a man with strange bedfellows','' he added, with a flourish.

Watson outlined a meeting in a Parliament House lift between Obeid and then Labor water minister Phil Costa, who is not accused of any wrongdoing.

Costa has told the ICAC Obeid suggested he needed to ''sack that bitch'' - a reference to then Sydney Water chief Kerry Schott, who was cold on a proposed deal with AWH that would benefit the Obeid family.

Then came the bombshell. Obeid is alleged to have told Costa that Hartcher would make corruption allegations against Schott using information provided by him.

An anonymous complaint was later made to the ICAC - which the commission says is unfounded. ''The source of the complaint is very interesting,'' Watson said. ''This is where misconduct makes its leap across party lines''.

There Watson left us hanging, with a promise of a full explanation at a later date.

But a year out from an election, the danger for the O'Farrell government is that this type of statement confirms for the public there is little difference between it and the Labor government violently ejected from office three years ago.

Worse, the Labor accused - Obeid, Kelly and Tripodi - are long gone from Parliament whereas Hartcher is hanging on to his seat and may do so until the ICAC hands down a final report - which could arrive shortly before next year's poll.

The ICAC has made it very clear Premier Barry O'Farrell is in the clear, despite his close relationship to another of the accused, Liberal identity and AWH chief executive Nick Di Girolamo.

But just how much damage may be done to his government is only now starting to become apparent.

In Cahoots With ALP On Roguery Not Good Look For Coalition

meanwhile …..

Labor and Liberal figures including federal Assistant Treasurer Arthur Sinodinos stood to make tens of millions of dollars from a company linked to the family of crooked former powerbroker Eddie Obeid,  a corruption inquiry has heard.

Senator Sinodinos, then NSW treasurer of the Liberal Party, was installed on the board of the Obeid-linked Australian Water Holdings (AWH) in 2008 ‘‘to open lines of communication with the Liberal Party’’, the Independent Commission Against Corruption heard on Monday.

‘‘There will be evidence that he tried to do so,’’ counsel assisting,  Geoffrey Watson, SC, said in his opening address.

The former AWH chairman was earning $200,000 a year for ‘‘a couple of week’s work’’ and would have ‘‘enjoyed a $10 or $20 million payday’’ if Australian Water had won a lucrative contract with the state government.

Senator Sinodinos has since abandoned his rights to shares in the water infrastructure company and denies any wrongdoing.   ‘‘[He] will attend ICAC as a witness and is looking forward to assisting the inquiry,’’ his spokeswoman said.

Mr Watson alleged the inquiry would show corruption across political party lines. The company assiduously lobbied the Coalition government after the March 2011 state election.

‘‘It might be said – readapting Shakespeare – that corruption ‘acquaints a man with strange bedfellows,’’’ he said.

The ICAC is examining allegations that the Obeids were ‘‘secret stakeholders’’ in AWH and that Mr Obeid corruptly lobbied Labor colleagues on behalf of the company. The inquiry heard the family stood to make up to $60 million if the government entered into a partnership with AWH.

Mr Obeid’s political allies, Joe Tripodi and Tony Kelly, allegedly helped to doctor a cabinet minute in 2010 to benefit AWH, which was ‘‘tantamount to fraud’’.

Mr Watson said Mr Obeid had tried to ‘‘eliminate’’ two senior public servants who stood in his way.

‘‘Of all Mr Obeid’s machinations, the most foul is his involvement in an attempt to ruin the reputations of Dr Kerry Schott and Ron Quill of Sydney Water,’’ he said.

Mr Obeid allegedly told then Labor minister Phil Costa that ‘‘you need to sack that bitch’’, in a reference to Dr Schott, and that Liberal MP Chris Hartcher would make a corruption complaint against her.  Mr Watson said that Mr Obeid was ‘‘right on the money’’ and an anonymous complaint was made to the ICAC. ‘‘The source of that complaint is very interesting. This is where the misconduct leaps across party lines,’’ he said.

A second ICAC inquiry, starting on April 28, will examine allegations AWH and other ‘‘unscrupulous businessmen’’ paid into  a slush fund linked to Mr Hartcher in exchange for favourable treatment.

The ICAC heard that Senator Sinodinos’ ‘‘other involvements’’ will come under scrutiny.

But Mr Watson said that former Labor treasurer Michael Costa, who is also a former chairman of AWH, was not accused of any wrongdoing and ‘‘his role seems to have been a positive one’’.

There was also ‘‘no evidence to implicate’’ Liberal Premier Barry O’Farrell and his former finance minister Greg Pearce in corruption.

The inquiry heard that Nick Di Girolamo, a prominent Liberal Party fund-raiser and Obeid associate, transformed Australian Water from a non-profit venture into a commercial operation charging exorbitant ‘‘administration costs’’ to Sydney Water. This included $75,636 in donations made by AWH to the Liberal Party.

‘‘It seems that Sydney Water has – unwillingly, unknowingly – been a principal Liberal Party donor,’’ Mr Watson said. The party said on Monday it would refund  Sydney Water.

Mr Di Girolamo became  chief executive of AWH – then called the Rouse Hill Infrastructure Consortium – in early 2007. He took a salary of $1.1 million and bonuses of up to $275,000 when the company had around 10 employees and only one contract. ‘‘Salaries of that size were absurdly high. The Prime Minister of Australia was being paid $330,000 a year,’’ Mr Watson said.

The Obeids allegedly became ‘‘secret stakeholders’’ in AWH in 2010 when they agreed to pay $3 million for a 30 per cent stake in the company. But the family insist the money was a loan. One of the terms of the ‘‘loan’’ agreement was that Mr Obeid’s youngest son, Eddie jnr, would be employed by AWH on a salary of $350,000 a year.

Mr Watson said that Mr Di Girolamo used some of the $3 million to pay off debts relating to a racehorse called Partners In Crime.

The first witness in the three-week inquiry will be called on Tuesday.

ICAC: Arthur Sinodinos stood to make 'tens of millions' from Australian Water Holdings deal

Former NSW Labor minister Tony Kelly has admitted he signed off on a cabinet minute favouring a company linked to the Obeid family but denied he "wilfully turned a blind eye" to mistakes in the document.

In a tense morning at the Independent Commission Against Corruption, Mr Kelly said the cabinet minute was drafted by his Labor colleague Joe Tripodi, then a backbencher, and advisers from their offices.

"I signed it and I put it forward," Mr Kelly said. "The others ... produced it."

The commission is investigating allegations that Mr Kelly and Mr Tripodi doctored a cabinet minute to "completely reverse" a recommendation to reject a proposal by infrastructure company Australian Water Holdings for a public-private partnership.

The inquiry has heard the Obeid family was "secret stakeholders" in AWH and stood to make up to $60 million from the PPP.

Mr Kelly told the inquiry he did not read the original cabinet minute but he admitted in a private interview with ICAC that it was his "ministerial decision" for a new minute to be produced and submitted to cabinet.

The re-drafted minute removed financial information about AWH and included statements about Mr Kelly's view on expected financial returns.

Counsel assisting the inquiry, Geoffrey Watson, SC, suggested to the former minister that he "wilfully turned a blind eye to the errors contained in this document because you wanted to promote this deal with Australian Water Holdings at all costs".

"That is not true and you know it", retorted Mr Kelly.

"Do you accept that the cabinet minute which you signed contained highly misleading information?" asked Mr Watson.

Mr Kelly conceded the cabinet minute "could have contained more information".

Mr Kelly agreed he was unaware at the time if the proposal was worth $10,000 or $10 million.

He also did not know how many employees AWH had, or if it had more than $2.

Brian McGlynn, an expert retained by the Department of Premier and Cabinet, has previously given evidence that he prepared the cabinet minute rejecting AWH's bid for the PPP.

The Obeid-linked infrastructure company told the state government it was worth up to $200 million but Mr McGlynn estimated it had assets worth only $36 and was not good value for taxpayers.

Mr McGlynn was asked to rate the PPP out of five stars in the style of "the movie show with David and Margaret". He gave it "half a star maybe", adding "maybe Margaret [Pomeranz] would agree or disagree, she often has strange views".

Mr Kelly said he was shocked when early last year Mr Tripodi knocked on the door of his Wellington home with a hamburger and a coffee in each hand.

Mr Kelly said that Mr Tripodi's visit was unannounced but he invited him in because "that's what country people do".

The inquiry heard that 98 per cent of the conversation was what their former parliamentary colleagues were doing post politics.

Although Mr Kelly doesn't "like talking about Frank Sartor", the topic of conversation turned to him. Mr Tripodi said of Mr Sartor, "He's spending his time writing a book bagging out the Labor party, that's what he's doing," Mr Kelly recalled.

Mr Kelly said that was how the topic of Australia Water minute was changed because Mr Sartor had raised it in his book.

Mr Tripodi also raised his new interest, which was "lucerne farming". He then finished his hamburger and left. Mr Kelly told the inquiry Mr Tripodi's visit lasted between 20 and 30 minutes.

Tony Kelly Admits Signing Australian Water Holdings Cabinet Minute

The former managing partner of a Sydney law firm was accused of being an ''old-fashioned shyster fraudster'' and a ''bare-faced liar'' who created sham documents to ''trick'' a corruption inquiry.

Nick Di Girolamo, 44, was the managing partner at Colin Biggers & Paisley until February 2007, when he joined a water infrastructure company now being investigated by the Independent Commission Against Corruption.

The first question put to Mr Di Girolamo was whether he ''immediately formed the view that you would milk it, milk it and get every cent you could get out of Sydney Water … isn't that right?''

The inquiry heard that Mr Di Girolamo used his legal skills to exploit a loophole in the contract between Australian Water Holdings and Sydney Water, which was paying it to provide infrastructure to the north-west.Advertisement

It heard that AWH, which was a non-profit company before Mr Di Girolamo's arrival, refused to provide Sydney Water with any breakdown of its bills.

One of the first things Mr Di Girolamo did was to give himself and the other directors massive salaries, which were billed back to Sydney Water. Apart from his own salary of $1.1 million, plus a ''sign on'' fee of $250,000, another director, John Rippon, had his salary increased by $1 million to a total of $1.7 million.

Mr Di Girolamo was grilled about billing the government-owned utility for expenses that had nothing to do with the provision of water services. These included double-billing Sydney Water for the legal fees of law firm Allens, which was providing advice to AWH about how it could sue Sydney Water.

The inquiry heard that AWH billed Sydney Water for expenses such as $76,000 in donations to the NSW Liberal Party, $9000 for a 2GB advertisement read by Alan Jones, $2200 to the Italian Chamber of Commerce for a gala ball, $15,000 for a Balmain Tigers dinner, $17,000 per month for lobbyists, $885 chauffeur-driven limousines for Mr Di Girolamo and Eddie Obeid jnr, a $300 wedding present for an employee, as well as lunches, dinners and expenses related to the attempted expansion of AWH into Queensland.

Mr Di Girolamo said the bills were ''mistakes'', except for the wedding present, which he classified as an office expense.

''It's funding aspects of a lifestyle - limousines here, limousines there, big lunches here, big lunches there, donations to organisations, big-noting yourself, all at the expense of Sydney Water wasn't it?'' asked counsel assisting, Geoffrey Watson, SC. ''No, it was not,'' Mr Di Girolamo replied.

''And tell me, if that was done intentionally you'd agree it was a fraud wouldn't you?'' put Mr Watson. ''Absolutely,'' Mr Di Girolamo said.

In other evidence, Mr Di Girolamo was asked why a lawyer of his experience would claim that a document detailing the sale of shares for $3 million to a company controlled by the family of corrupt Labor powerbroker Eddie Obeid was a personal ''loan'' from Eddie Obeid jnr.

Mr Watson pointed out that the word ''loan'' did not appear in the document, nor did any interest rate or repayment of the principal.

Mr Di Girolamo denied that a later document signed by him and Eddie Obeid jnr was created to hide the Obeids' links with AWH.

NSW ICAC Inquiry Accuses Nick di Girolamo Of Creating Sham Documents

from Crikey …..

The NSW disease: Barry O'Farrell infected, now who's next?

Outgoing New South Wales Premier Barry O'Farrell may have been a shock casualty of the Independent Commission Against Corruption's Credo inquiry, but sympathy for a popular leader should not give way to a premature declaration that his government was free of corruption.

Public hearings start soon in ICAC's related Spicer inquiry, focused specifically on Liberal Party fundraising. Given yesterday's events, it would be foolish to predict what might come out of it.

Already yesterday, conservative columnist Paul Sheehan was speculating there must be more to O'Farrell's resignation than a repeated memory failure over a $3000 bottle of wine.

The Credo evidence is in, but Commissioner Megan Latham has yet to hand down her findings. It is fair to say that nothing appears to have emerged that alters the initial assessment of counsel assisting ICAC Geoffrey Watson SC, who said in his March opening address: "We've looked carefully at the activities of Mr O'Farrell and Mr [former finance minister Greg] Pearce, and we have found no evidence to implicate either in any corruption." Both were the focus of relentless lobbying by Australian Water Holdings.

Despite lobbying by AWH and its CEO Nick Di Girolamo, AWH did not succeed in its long campaign to establish a $1 billion public-private partnership to deliver the water and sewer infrastructure to Sydney's North West Growth Centre. The PPP would have delivered a windfall gain to AWH shareholders, including $60 million to the family of corrupt Labor politician Eddie Obeid and up to $20 million to former assistant treasurer Senator Arthur Sinodinos (whose position looks ever-more shaky).

The main focus of Operation Credo, let's recall, was on lobbying of the previous Labor government by AWH, particularly a breathtaking 2010 attempt to doctor a cabinet minute and turn an unfavorable reaction into a favorable recommendation on the PPP.

But as Watson noted, for at least the first five months after O'Farrell's election in March 2011, AWH's lobbying effort (italics mine) "was working -- the proposal was consistent with Liberal Party policy and the noises from the politicians were generally positive". Despite every relevant expert telling the government the proposed PPP was a crock, the AWH proposal would not go away, and in May that year di Girolamo even succeeded in getting a face-to-face meeting with O'Farrell, which Pearce described as "cosy".

As Watson set out right at the beginning, AWH also succeeded in getting an openly hostile Sydney Water to agree to have former judge Terence Cole QC consider the PPP. As it turned out, Watson said, Cole's evaluation was "devastating" to AWH and di Girolamo's argument that AWH's existing open-ended contract with Sydney Water gave it the right to establish a PPP, finding AWH had "no more than an agreement to agree". That was at the end of August, 2011, and it then took another five months before AWH and Sydney Water were able to reach a settlement -- striking a new, 25-year contract worth $100 million -- and finally kill off the PPP altogether, after which time di Girolamo quit the company. Watson said his initial view was that the new contract between Sydney Water and AWH -- still on foot -- was "fair and proper" but it was for ICAC to determine whether it was product of corrupt conduct or not.

Further, as the ABC's 7.30 revealed last night, Greens MP John Kaye has obtained documents showing in mid-2012 di Girolamo was appointed to the board of the State Water Corporation by Treasurer Mike Baird, against advice.

Baird, almost certain to become premier this afternoon, appointed di Girolamo after he had come last in a recruitment process to join the board of Sydney Ports Corporation, with the chairman advising he was a lawyer with narrow experience who did not possess the skills required to fill the gaps on the ports board but was "likely to be suitable for other smaller boards".

Kaye says the board of State Water is larger than the board of Sydney Water and there was no subsequent interview for di Girolamo, who got a plum post worth $34,000 a year in what looks like a straightforward case of jobs for donors. According to the Greens tally, AWH and di Girolamo donated $118, 583 to the Liberal Party between 2008-2011.

As Kaye told Crikey this morning: "Mr Baird as premier has to answer the question why was Mr di Girolamo appointed to the State Water board on his signature with documents that showed he was not qualified, he had not been through a board appointment process, and when he had been through a process it had said he was unsuited except for smaller boards. Instead he signed off on the appointment of a major party donor to a plum job."

"The irony is that Mr di Girolamo was filling a position vacated by [former Health Services Union president] Michael Williamson, who is now serving a prison term and whose appointment was the subject of savage criticism by the then-Coalition opposition. It looks like in March of 2011 the people of NSW turfed out the HSU and brought in AWH".

It's yet more of the NSW disease, and it's not cured yet.

From Black Ops and bribery to the difficulties of drawing blood from a schnauzer, the current corruption inquiry Operation Spicer has had everything.

It has also had a sinister undertone that money and immorality are deadly combination which, when exercised together, can have a profound effect on our democratic process.

This is what has been truly shocking about this Independent Commission Against Corruption inquiry. In 2009 property tycoons were banned from donating to political parties for the simple reason that, in the public's eye, those donations created an obligation for the recipient.

But for some wealthy property tycoons the ban has meant nothing. When the Liberal Party looked as though it was likely to win government, those funds flowed their way. And it wasn't just politicians such as former energy minister Chris Hartcher who were happy to put their cap out.Advertisement

Evidence given before the commission reveals the NSW Liberals’ chief fund-raiser, Paul Nicolaou, was happy to use the little-known Free Enterprise Foundation, which was based in Canberra, to “wash” banned donations and return them to the NSW branch of the party.

The repercussions of the shocking evidence are being felt far beyond the windowless hearing room on the seventh floor of the Stocklands building in Castlereagh Street.

For years the NSW Labor Party appeared to have a monopoly on political corruption. But the allegations of political skulduggery and treachery which have been aired at the ICAC during this inquiry have rocked the Liberal Party.

Among the jaw-dropping allegations are some which involve serious criminality. Hartcher, a former solicitor, stands accused of taking three cheques which had been made out to the NSW Liberal Party and depositing them in the trust account of his old law firm Hartcher Reid. He then instructed his nephew Simon Reid, a solicitor at the firm, to move the money into an account operated by the Thai boyfriend of his long-time staffer Ray Carter.

Carter has given evidence that he then returned the money to Mr Hartcher. While we are yet to hear from Mr Hartcher, on the face of it he has been involved in money-laundering, a jailable offence.

Another potential criminal offence was committed by Tim Koelma, another former Hartcher staffer. Hartcher is accused of being the mastermind behind Koelma’s "sham" PR company, Eightbyfive, which was used to hide banned donations.

It is a criminal offence to knowingly make a false allegation to ICAC, of which Koelma stands accused.

"Yay, Black Ops", writes Koelma in an email to this brother Eric, instructing him on delivering an anonymous complaint to ICAC in 2010. The complaint made baseless allegations designed to ruin the careers of the then head of Sydney Water Kerry Schott and a senior executive, Ron Quill. The commission has heard that the words were provided to him by Nick Di Girolamo.

The latter wanted Schott and Quill sidelined because they were standing in the way of his company, Australian Water Holdings, winning a billion-dollar partnership with the government. Di Girolamo had channelled $183,000 through Eightbyfive and it seems he was keen to get a bang for his buck.

It was former Labor MP Jodi McKay who provided the human face to the tragic consequences when democracy is for sale. The Newcastle politician paid a very high price for refusing to accept donations from coal magnate Nathan Tinkler, who wanted to build a container terminal in Newcastle.

McKay wept when she heard her colleague Joe Tripodi, the former ports minister, had used money from the Tinkler Group to run a damaging campaign against her. Unwittingly accepting Tinkler’s tainted funds has brought no joy to McKay’s successor, the Liberals’ Tim Owen, who has announced he will not recontest the next election.

His wife, Charlotte Thaarup-Owen, posted on Facebook that her husband had gone into politics with the best of intentions but will leave disappointed and angry.

"When we do the wrong thing, we not only violate ourselves and our own integrity but we also tarnish those close to us with our poor choices," she wrote. "Perhaps the worst thing is that we contribute to general mistrust and disillusionment in society in general, this is not what the world needs!"

Even I am shocked by ICAC revelations

meanwhile ….

A power company whose chairman is in business with the nephew of corrupt former Labor powerbroker Eddie Obeid was awarded NSW government contracts worth close to $1 billion last month.

Records show ERM Power won an open tender to supply electricity to government departments including NSW Health, Attorney-General and Justice and Education and Communities.

On Thursday it emerged ERM chairman Tony Bellas is in business with Mr Obeid's nephew Dennis Jabour and has links to controversial Liberal Party identity Nick Di Girolamo.

Mr Jabour and Mr Di Girolamo have been embroiled in the Independent Commission Against Corruption's investigations into infrastructure company Australian Water Holdings.Advertisement

In an April 24 statement to the stock exchange ERM said the contracts, worth $900 million over three years, meant ERM is now the largest electricity supplier to the NSW government.

ERM has also been able to secure a $100 million, 12-month extension to a four-year contract with the federal government.

Under the contract ERM supplies electricity to 80 government departments including Parliament House, Government House, the Australian War Memorial and NSW defence sites including RAAF Williamtown and Holdsworthy Barracks.

Asked on Friday if he had any concerns about the awarding of the contracts, NSW Energy Minister Anthony Roberts said: ''No''.

On Friday ERM sought to distance itself from Mr Obeid and Mr Di Girolamo a day after Mr Roberts referred an exploration licence held by gas company Metgasco to the ICAC.

Mr Roberts referred information he received about unspecified ''shareholdings and interests'' in Metgasco to the ICAC after suspending its licence at Bentley, near Lismore.

ERM Power is the largest shareholder in Metgasco, with a 12.8 per cent stake.

Apart from being in business with Mr Jabour, Mr Bellas is a former director of Australian Water Queensland, for whom Mr Obeid's son Eddie Obeid jnr once worked.

Mr Di Girolamo, whose gift of a $3000 bottle of Penfolds Grange Hermitage to Barry O'Farrell in 2011 led to his resignation as Premier last month, is also a former director of the company, which is a subsidiary of Australian Water Holdings.

In a statement ERM chief executive Philip St Baker said the company ''has not, and has never had any, connection'' with Mr Obeid and his family, Australian Water Holdings, Australian Water Queensland or Mr Di Girolamo.

ERM was not represented on the Metgasco board, not involved in its management and ''exercises no influence over the company'', he said.

Metgasco said it ''is not aware of any matter involving the conduct of Metgasco, its staff or of its shareholders that would constitute grounds for an investigation by ICAC''.

Mr Roberts has said Metgasco's licence was suspended due to insufficient community consultation.

But Metgasco chief executive Peter Henderson told ABC radio on Friday that the company had received no warning and would seek compensation from the state government.

Metgasco shares on Friday dived 44 per cent to close at 4.9¢. This values the company at $22 million.

Obeid linked to winner of contracts worth $1 billion

The ABC is attempting to defend a defamation case brought against it by corrupt former NSW Labor minister Ian Macdonald by arguing his "bad reputation" could not have been further damaged by claims made in a TV news broadcast.

Mr Macdonald, who has been found corrupt in three separate Independent Commission Against Corruption inquiries, says a 7pm ABC news broadcast last year falsely claimed he "made millions" of dollars from a coal deal involving corrupt former Labor powerbroker Eddie Obeid.

He contends he made no money from the deals and is seeking damages in the NSW Supreme Court because his reputation has been "gravely injured".

In a defence filed in court, the ABC says it broadcast a correction a day after the original report that said the ICAC had made "no finding that Ian Macdonald made any money from the deals".

But the ABC also says the report conveyed a range of other meanings, including that the ICAC found last year that Mr Macdonald was involved in "grand corruption",  "abused his position as a government minister" and was a dishonest witness.

The national broadcaster argues it did not defame Mr Macdonald because those claims are true and, under a defence known as contextual truth, any other meanings that may have been conveyed by the broadcast "do not further harm the reputation of the plaintiff".