Boyhood dreams …

Counsel assisting the New South Wales ICAC, Geoffrey Watson SC, seems to have an exquisite sense of humour.

Transcripts of the hearing can be downloaded in portable document format from the ICAC web page.

In setting the scene this morning Mr Watson tells us that Mr Obeid the power broker ensured that Mr Ian MacDonald was a minister.

In September 2007 the Obeid family purchased a grazing property in the Bylong Valley known as Cherrydale Park.

Other people, well-known to Mr Obeid, bought adjacent properties close by. One of them, Mr Lewis, has said it was to fulfill a boyhood dream.

In  May 2008 a staffer for Minister for Primary Industries made a request to the Department of Primary Industries that it provide information relating to coal reserves around “The Mount Penny area”.

Subsequently, the Minister, Mr MacDonald, released a selected portion of those reserves, with some unusual conditions attached.

Mr Watson alluded to evidence that the Obeid family were well aware of the upcoming invitation for expressions of interest well in advance of it being called …

and benefited from the process by reaping about a $100 million return on a paltry outlay,

whilst the people of NSW, the owners of the coal deposits, missed out on the considerable amount of money that would have been payable in an open tender process.

On the subject of dreams Mr Watson brought up an email from Mr Lewis to a solicitor on 23 June 2009 that included this reference …

“I don’t care if there are cows there as long as he is … happy my drilling rigs are there too.”

… maybe it was his boyhood dream to drill into a farm, said Mr Watson.

If you are interested to know how Ms Kenneally became premier of NSW Mr Watson gives us an insight into that as well.

In May 2004 Mr Macdonald was appointed as Minister for Primary Industries which included the old Department of Mineral Resources.  In effect, Mr Macdonald has had ministerial responsibility for coal from 2004 until 2010.  After a string of allegations of misuse and public and parliamentary funds Mr Macdonald resigned from Parliament on 7 June, 2010.

It’s also necessary to note something about the structure and workings of the New South Wales Labor Party at the relevant time.  It is only natural that factions, blocks or allegiances form within political parties and they do so on all sides of politics.  Although this inquiry will mainly examine the activities of the New South Wales Labor Party, Labor was no different in that respect to the Liberal Party or the other parties.  At the relevant time the New South Wales State Parliamentary Labor Party was broadly divided into Right Wing and Left Wing factions.

For many years and for the whole time relevant to this inquiry the Right Wing faction, which is usually known as Centre Unity, was the controlling faction.  It attracted about two-thirds of the members of the Caucus.  This gave Centre Unity effective control over the Parliamentary party.  But within each of the Right and Left Wing factions there were further groupings which have sometimes been called fractions.  In Centre Unity the dominant fraction was a group known as the Terrigals. The members of the Terrigals comprised more than half of the whole of Centre Unity.  With these numbers it could control the votes within the Right Wing Caucus and because the Right Wing dominated the Left Wing of the Parliamentary party this gave the Terrigals a disproportion of power over the whole of the Caucus and over the whole of the Government.  There was a perception that an ambitious member might need the support of the Terrigals for advancement.  Eddie Obeid was regarded as the founder and the chief of the Terrigals.  In fact, the name of the Terrigals derived from an early meeting of like-minded Caucus members at the Obeid beach house in Terrigal, that’s a town on the Central Coast of New South Wales.  Another key member of the Terrigals was Joe Tripodi.  Mr Obeid and Mr Tripodi controlled the Terrigal fraction between them and in that way they operated as a team.

Now, Commissioner, I want to say something now about Joe Tripodi.  Although his name will be mentioned, there is no evidence of corruption on the part of Mr Tripodi.  Meanwhile the Labor’s Left was divided into two fractions, the Soft Left and the Hard Left.  Ian Macdonald was a leader of the Hard Left, so there was no natural factional, fractional or political fit between Eddie Obeid and Ian Macdonald.  According to New South Wales Labor folklore, the Left and the Right are locked in an ideological blood feud.  Despite this, there will be evidence that a working and personal relations between Mr Obeid and Mr Macdonald became close and so close that Mr Macdonald regularly sided with Mr Obeid on political issues and socialised with Mr Obeid and his family and accepted the hospitality of the Obeid family in a variety of different ways.  In fact the relationship became so close that Mr Macdonald’s Left Wing colleagues questioned his continuing loyalty to the Left.

The relevance of that relationship is that it provides background to a series of decisions made by Mr Macdonald – decisions which have had the effect of conferring considerable benefits on Eddie Obeid and his family.

In July 2005 the Premier, Mr Bob Carr, suddenly announced his intention to resign.  There were two obvious frontrunners to replace Mr Carr, they were the Minister for Police, Carl Scully, and the Minister for Health, Morris Iemma.

Mr Iemma had the support of The Terrigals and that effectively guaranteed his success.  Mr Scully withdrew from the race and Mr Iemma was elected Premier unopposed on 3 August, 2005.  Mr Iemma will be called as a witness, in fact our first witness.

I want to make it clear there is absolutely no suggestion of any wrongdoing of any kind on the part of Mr Iemma.  What is significant is that when Mr Iemma went to put together his first Cabinet, he was lobbied by Mr Obeid and Mr Tripodi to include Ian Macdonald.

Now, Mr Iemma’s Premiership came during a difficult time for Labor which has been in power since 1995.  An election loomed in March 2007 and the experts considered that it would be hard for Labor to be returned.  But against the general thinking, Mr Iemma won the 2007 election and another four-year term – although he won it with a smaller margin.  Due to attrition, some alteration was necessary to Mr Iemma’s Ministry.  Again there was lobbying by Mr Obeid and Mr Tripodi.  They wanted Frank Sartor dropped and they wanted Ian Macdonald appointed in his place into the Planning Ministry.  Mr Iemma resisted Mr Obeid and Mr Tripodi and Mr Macdonald and Mr Sartor remained in their previous Ministries.

Things turned sour for Mr Iemma’s leadership.  Labor’s public support was very low and Mr Iemma made it known to the parliamentary party that he proposed a revival built upon a substantial reorganisation of the Ministry and that this would include axing Joe Tripodi.

When he told them of his plan to axe Joe Tripodi, both Mr Tripodi and Eddie Obeid were livid.  In losing their support, Mr Iemma lost the support of The Terrigals.  Numbers were organised to bring Mr Iemma down – it was all over in effect – and Mr Iemma resigned as leader on 5 September. 2008.

Eddie Obeid directed The Terrigals to throw their support behind a relative newcomer, Nathan Rees.  Nathan Rees will also be called as a witness – and again I want to make it clear there is no suggestion of any wrongdoing whatsoever by Nathan Rees – but accepting the support of Eddie Obeid and The Terrigals came at a price.  I understand that Mr Rees will give evidence that immediately upon gaining leadership he was lobbied by Mr Obeid and Mr Tripodi to drop Frank Sartor from the Ministry.  He was also lobbied to put Ian Macdonald in charge of the Department of Planning.   Now, the lobbying was not successful.  Mr Rees would not move Ian Macdonald – Macdonald remained in Primary Industries – however Mr Rees did drop Mr Sartor from the Cabinet, but that might be better explained by a pre-existing personal friction between Mr Rees and Mr Sartor.  These were becoming even more difficult times for the Labor Government.  Newspaper articles repeatedly exposed problems and some of these problems related to the conduct of Mr Tripodi and Mr Macdonald.  It would seem obvious that these two had to go.

On 15 November 2009 Mr Reese summarily sacked Joe Tripodi and Ian Macdonald from the Labor Ministry.

Well Eddie Obeid and Joe Tripodi immediately put together the numbers to have Mr Reese brought down.  Mr Reese was fully aware of their manoeuvres.

On 3 December 2009 after a spill motion was passed by Caucus Mr Reese stated his intention to re-contest the leadership, he said, this is a quote, “I will not hand over New South Wales to Eddie Obeid or Joe Tripodi.”  And Mr Reese then went onto say that his replacement and this is a quote, “will be a puppet of Joe Tripodi and Eddie Obeid.”

Eddie Obeid and the Terrigals threw their support behind Kristina Keneally although the ALP’s powerful head office favoured Frank Sator.  Mr Obeid’s choice prevailed.  On 8 December 2009 Mrs Keneally was sworn in as Premier.  Joe Tripodi and Ian Macdonald were immediately reinstated to Cabinet.

And what a pretty puppet she was.

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