curtain calls .....
Former NSW mines minister Ian Macdonald secretly controlled a Singapore coal trading company which was set up in May 2008 six days after he asked the mines department for information about coal tenements over a farm owned by Labor powerbroker Eddie Obeid.
Macdonald faces questions about payments made to the company, Bridgewater Energy Pte Ltd, when he appears on Monday before a corruption hearing over allegations he stood to make millions of dollars after Cascade Coal won coal exploration licences worth $489 million.
Searches of Singapore corporate records show the company’s shares are owned by a Sydney director, Hessam Bahramali, who could not be contacted for comment on Sunday.
Investigators found details of Bridgewater’s bank account at the United Overseas Bank in Singapore in a bundle of documents relating to Cascade Coal in the office of Sydney accountant Bill Sweeney.
Consultant Greg Jones, a lifelong friend of Macdonald and a shareholder in Cascade, used Sweeney’s accounting firm to channel $195,000 to Macdonald in late 2009 as a loan. Macdonald repaid only $50,000.
Jones has denied that handwritten notes made by him and lawyer John Gerathy about a “5 per cent –$4 million” payment and references to a 5 per cent “facility fee” of up to $24.3 million refer to payments to be made to Macdonald.
For Macdonald, it’s groundhog day. He will be asked – again –to explain his actions as mining minister, one of four separate corruption investigations covering the same 18-month period.
Gattellari to be sentenced
They include receiving the services of a prostitute, Tiffanie, provided by property developer Ron Medich and “Lucky” Gattellari in July 2009.
In an unrelated development. Gattellari will be sentenced this week in connection with the murder of businessman Michael McGurk in September 2009.
The road to downfall of Macdonald, the man known as Sir Lunchalot, began in Dubai on January 15, 2008 when he booked in for five nights at Le Royal Meridien Beach Resort in Dubai. The bill for Macdonald, his wife, deputy chief of staff Jamie Gibson and a departmental officer came to $32,886.
For all the controversial deals linked to Macdonald, it’s this one that would kick him out of politics. When details of that trip emerged in June 2010, then NSW premier Kristina Keneally demanded that Macdonald resign as minister.
He resigned from the NSW upper house three days later. And Keneally announced she had referred the matter to the Independent Commission Against Corruption (ICAC), Macdonald’s first brush with investigators.
That outcome was the furthest thought from his mind as he returned to Australia in late January 2008. His friend and political ally Eddie Obeid had a question for him about a farm he had just bought.
Obeid and Macdonald were the Legislative Council’s odd couple. How did a creature of the Labor Left come to be allied with senior figures in the party’s dominant Right faction, including Obeid?
‘Wheel and deal’
“Obeid and Macdonald were the two personalities who stood out as the guys who loved to wheel and deal with the odds and sods who make up the crossbench in the NSW upper house and cobble together a majority,” a source says. “They both love the deal, the horse-trading, the game, you know.
“They were both in the upper house, OK, so that’s a small house, there’s only 42 members, obviously everyone gets to know each other pretty well. The . . . were drawn to each other, I think ,because of a similar make-up.”
That didn’t make Macdonald a friend, Obeid told ICAC. Obeid said that after he bought Cherrydale Park at Mount Penny in the Bylong Valley for $3.65 million, he asked Macdonald about an exploration licence (soon to expire) held by mining giant Anglo American that included part of his property.
Obeid insists that while he told Macdonald about the property he never told him where it was. On May 9, 2008, Obeid met a businessman from Mudgee, near his Bylong farm. He told ICAC they might have discussed Cherrydale but “not too much”. Macdonald was present.
The following day, May 10, Macdonald’s staff were emailing queries to the mines department about coal tenements around Mount Penny – a location Macdonald’s officials had never heard of. More queries about Mount Penny followed on May 14. The next day Macdonald flew to Asia on a business tour to promote coal mining.
The Australian Financial Review can reveal that on May 16, Bridgewater Energy Pte was incorporated in Singapore with 100 shares, with Hessam Bahramali as a director.
Two extra singapore directors
It operates as a coal and commodities trader. The 100 shares initially were held by Nicholas Waters, a Singaporean national living in Jakarta. The shares were transferred to Bahramali on October 5, 2011.
Besides Bahramali and Waters, the company has two extra Singapore directors, Ragini Dhanvantray, from the incorporation date, and Katarina Iramawaty, appointed last year.
“We’ve got evidence that this is a company, Bridgewater Energy, which Macdonald conducts with [John] Gerathy and another partner and that this is an account that is conducted in Singapore,” counsel assisting ICAC, Geoffrey Watson SC, said last week.
While Gerathy and Macdonald are partners in an advisory firm, Resource Image, neither is a director of Bridgewater.
Watson tendered a printout of the details of Bridgewater’s bank account details at the United Overseas Bank in Singapore.
“We found this document, which are banking details for Bridgewater Energy, in a bundle of documents which related to John Gerathy and Cascade Coal which we found on Bill Sweeney’s office, could you explain what Sweeney would be doing with it?” Watson asked Greg Jones. Jones was a political staffer with Macdonald in the 1980s before becoming a consultant with Cascade Coal’s principals, Travers Duncan and John Kinghorn.
Jones said he was unaware of any payments into the Bridgewater account.
Cascade Coal denied links
Sweeney is due to give evidence on Monday.
Cascade Coal said in a statement last week that it had no knowledge of any financial links between Jones and Macdonald.
On June 6, 2008, days after his return to Sydney, Macdonald directed his department to redraw the coal tenement about Mount Penny. The new tenement fitted “like a blanket” over the Obeid family farm, Watson has told ICAC.
Macdonald’s world had become very complicated. The Labor government was enmeshed in efforts to privatise the power industry; Obeid was pressing then premier Morris Iemma to dump Frank Sartor as planning minister and replace him with Macdonald; and Macdonald had two sets of coal deals up in the air.
On June 16, Macdonald had lunch with racehorse trainer Anthony Cummings and Eddie Obeid’s son Moses at the Credo restaurant at Cammeray.
A day later Macdonald had dinner with former CFMEU boss John Maitland, who was pressing for a coal lease for a mine to be used to train mining workers. Two years ago the resulting lease was worth $290 million to Maitland and his fellow investors. It will be the subject of the third leg of the current ICAC inquiry that begins on March 18.
It was a long way from his beginnings.
“It’s no coincidence that Obeid and Macdonald were in the upper house [where candidates are not directly elected by voters],” a NSW Labor source says. “They were creatures of the factional system, the union bloc votes that make up the backbone of the factional machines.”
Macdonald was adviser to frank walker
Macdonald’s political patrons were drawn from the Left, including former Hawke government minister Arthur Gietzelt, whom he thanked in his maiden speech to Parliament (a speech which deplored then Liberal premier Nick Greiner’s attempt to set up ICAC as a “permanent inquisition” into Labor administrations).
Macdonald spent a decade working as an adviser in Sydney to left-wing NSW Labor minister and former attorney-general Frank Walker. Yet it is clear that some in the faction were suspicious of him even at the start of his parliamentary career in 1988, when he was installed in the state’s upper house with the support of the Metal Workers Union.
Chief among them, according to Labor sources, was senator John Faulkner, who emerged victorious from a tussle in 1980 with Macdonald for the job of assistant secretary of the NSW ALP.
Faulkner declined to speak to the Financial Review for this article. Others say privately that Macdonald was adept in the art of telling people what they wanted to hear.
“A big problem with the organised factions in the Labor Party and the Liberal Party is [that] often complete frauds and chancers can get through the system by just mouthing the orthodoxies that a particular faction wants to hear,” a source says. “I think Macdonald [is] exhibit A.
“When he owed his preselection to the Left of the party he told them what they wanted to hear – you know, he was an opponent of privatisation, he was a hero of the working class, he mouthed every cliche that went down well with some pretty gullible people.”
When Macdonald was in a position to influence state policy as a minister, he pursued an agenda that was “wildly at odds with that that he’d mouthed to the supporters of the Left of the Labor Party for the previous 25 years”, the source says. This would lead, in part, to his expulsion from the faction in December 2009.
Enthusiastic supporter of development
The prime example of Macdonald’s policy shifts was his stance on electricity privatisation, which is opposed by the Left. In 2008, just over a decade after he threatened then NSW treasurer Michael Egan over his privatisation push at the ALP state conference at the Sydney Town Hall, Macdonald would be one of the principal advocates of a power sell-off under premier Iemma.
He became an enthusiastic supporter of development and primary industries, including forestry and coal, as opposed to premier Bob Carr’s pro-environment policies.
This was something Macdonald had in common with Obeid and other cabinet colleagues from the Right – powerbroker Joe Tripodi, former treasurers Michael Costa and Eric Roozendaal and Tony Kelly.
It’s unclear the extent to which Macdonald’s colleagues were aware of any allegedly corrupt behaviour while he was a minister. One source says he was known as “a bit of a rogue but not a crook”.
“He was a wheeler dealer type but that doesn’t make you Robinson Crusoe in the Labor Party or in party politics,” the source says.
But it was not until July last year that he was suspended from the party, pending ICAC’s findings. Late last year when the Labor Left issued a public apology for Macdonald, it was at Faulkner’s urging.
At 11.50am on Thursday, September 12, 1991, MPs from the two houses of the NSW Parliament - the Legislative Assembly and Legislative Council - met in a joint session to approve the millionaire businessman and Lebanese newspaper owner Eddie Obeid as the state's newest Labor MP.
He was the ALP head office's candidate to succeed Jack Hallam, the former agriculture minister and leader of the opposition in the upper house, who was retiring after 18 years in politics.
The Labor benches were crowded with MPs joining the ceremony to catch a glimpse of Obeid, still a relatively unknown quantity to most of them.
''Order!'' the upper house president, Max Willis, shouted. ''I am now prepared to receive proposals with regard to an eligible person to fill the vacant seat in the Legislative Council caused by the resignation of the Honourable Jack Rowland Hallam.''
The opposition leader, Bob Carr, jumped to his feet saying: ''I propose Edward Moses Obeid, OAM, as an eligible person to fill the vacant seat.''
''I second the nomination,'' said Michael Egan, Carr's upper house lieutenant and the future state treasurer. Willis declared Obeid elected and closed the session. It had taken only a few minutes to install Obeid but he would spend the next two decades using his malign influence on state governance and the Labor Party.
Obeid's political career was sponsored by Graham Richardson, the former NSW ALP general secretary who became a senator and a senior cabinet minister in the Hawke and Keating governments. Recently, he has been reincarnated as host of Richo on Rupert Murdoch's Sky News.
Richardson had met the owner and publisher of the Arabic-language El Telegraph during the late 1970s and was impressed by his willingness to donate to the ALP and by his bountiful hospitality.
As the friendship matured between the senator and the aspiring politician, nicknamed ''the Sheik'', Richardson vowed to find Obeid a seat in the NSW upper house, once described as ''Sydney's most exclusive club''.
Richardson set about removing Jack Hallam, who had enraged the factional powerbroker by speaking at an ALP conference in support of a left-wing motion to ban uranium mining in NSW.
''As a long-serving agriculture minister, I think my position carried some weight,'' Hallam said last week from his home on the NSW far north coast. ''Richardson was furious. He never spoke to me again. He wanted me out of Parliament and he wanted his mate Eddie Obeid to take my place.''
Richardson was a spirited advocate for uranium mining and used his influence in Sydney and then Canberra to frustrate the ban, which had become a talisman for the left. In her unauthorised biography of Richardson, The Fixer: The Untold Story of Graham Richardson, the award-winning journalist Marian Wilkinson wrote: ''Uranium mining was one issue Richardson passionately believed in. Not only did it make economic sense but it had the added advantage of prompting scores of left-wing activists to resign from party branches.''
Before the May 1991 state election, there was an abortive move to remove Hallam from the ALP upper house ticket, but the popular MP was given the No.1 spot and Obeid was slotted at No.7.
The first six ALP candidates won seats but Obeid missed out. Another unlucky candidate was Graham Freudenberg, Labor's legendary speechwriter who had worked for Arthur Calwell, Gough Whitlam, Bob Hawke, Neville Wran and Barrie Unsworth.
''Freudy'', awarded life membership of the NSW ALP in 2005, said his candidacy had been supported by Michael Easson, the secretary of the NSW Labor Council, and his twin brother, Shane Easson, as well as Carr and the party general secretary, John Della Bosca.
''They intended that I should get the sixth or seventh place on the Labor ticket,'' Freudenberg said.
''They neglected, however, to clear it with Richardson, who had his own candidate for a winnable position, businessman Obeid.
''I ended up with the hopelessly unwinnable ninth position.''
But within weeks of Parliament resuming, Obeid struck a lucky break when Hallam announced his retirement.
''I told the party before the election that if we won, I would stay,'' he recounted. ''But if we lost, I would leave. I was exhausted and I'd had enough. I wasn't surprised to learn that the faction decided Obeid would be my successor. He was gifted my full eight-year term. Richardson had finally got his way.''
Freudenberg recalled that shortly after Hallam's resignation and Obeid's elevation, senator Stephen Loosley, another former ALP general secretary, made him an outlandish offer. ''I've just had lunch with Eddie Obeid,'' Loosley said. ''He was wondering if you would write his maiden speech for the Legislative Council.''
Freudenberg declined, but someone else crafted Obeid's inaugural speech, which was delivered on November 13, 1991, before a public gallery crowded with his family and associates.
He began at 8.15pm and concluded almost 50 minutes later. He gave public thanks to his supporters, starting with Richardson and including Carr, Wran, Della Bosca, Loosley, Michael Easson, the federal parliament speaker, Leo McLeay, upper house MPs Johnno Johnson and Deirdre Grusovin and former attorney-general Terry Sheahan.
With the speech delivered, Obeid set about recruiting MPs to the Terrigals, the right-wing sub-faction named after the central coast township where the group's founding meeting was held.
The faction attracted influential right-wingers who exercised ruthless power in two key areas: preselection of parliamentary candidates and promotion to cabinet.
Policy wasn't a major issue for the Terrigals. Their overriding considerations were jobs for the boys, branch-stacking, accumulating a war chest from developers and hoteliers, and extravagant advertising. Whatever It Takes, the title of Richardson's 1994 book, became their slogan.
The Obeid-Richardson relationship continued to flourish. In 1993, Richardson informed Obeid that Kerry Packer wanted to sell his suburban printing subsidiary, Offset Alpine Press. Obeid took the deal to stockbroker Rene Rivkin, who stumped up $15.3 million for the company and listed it on the stock exchange. One of Obeid's sons, Paul, was made a director, though there is no evidence the family had any shareholding in the company.
On Christmas Eve 1993, the print shop went up in smoke. Fortunately, it had been insured at its replacement value of $53 million for its shareholders, including Richardson, Rivkin, governor-general Bill Hayden, Channel Nine's star host Ray Martin, entrepreneur Rodney Adler and former Packer chief executive Trevor Kennedy.
Obeid's biggest breakthrough came after the 1999 election when the then-premier Carr appointed him minister for fisheries and minister for mineral resources, aka the state's ''Mr Fish and Mr Coal''. After his victory at the 2003 election, Carr sacked Obeid from the cabinet, provoking a flaming row in the premier's office. From that day they became sworn political enemies.
By this stage there was a clear division of labour at the top of the state: Carr ran the Premier's Department, Michael Egan ran Treasury but Obeid's Terrigals ruled the Labor caucus.
Their ruthless power became public when they broke Carr's premiership and forced him into early retirement, killed off the premiership ambitions of Carl Scully, ended the reigns of premiers Morris Iemma and Nathan Rees, and cynically elevated Kristina Keneally to the top job.
Under Iemma, the highly prized mineral resources portfolio previously held by Obeid, was handed to Ian Macdonald leader of the left faction. When Rees sacked Macdonald in late 2009, he paid dearly: he was ousted from the premiership by the Obeid faction and the incoming premier, Kristina Keneally, immediately promoted ''Macca'' to three portfolios, including Mineral Resources.
Alarmingly, the rise in the influence of Obeid's faction was in direct proportion to the collapse in ALP membership and the folding of branches. At the 2011 election, NSW Labor suffered its biggest defeat in 100 years and its numbers in the lower house were decimated to a rump of 20 MPs.
The Obeid legacy is now being played out in sensational hearings at the Independent Commission Against Corruption, where secret deals involving mineral resources in the Upper Hunter Valley worth hundreds of millions of dollars are being forensically examined. Voters are being given a ringside glimpse of how the nation's oldest parliament had become a private fiefdom for insider profiteering.
In coming years, historians will argue over the causes of Labor's decline. What will not be in dispute is that factional powerbrokers such as Graham Richardson, the right's Eddie Obeid and the left's Ian Macdonald were major contributors to its implosion.