This week has provided a clear demonstration of why strong corruption watchdogs like the New South Wales Independent Commission Against Corruption (Icac) are needed in Australian politics.
In the NSW supreme court, the final chapter of one of Icac’s most high-profile and long-running investigations reached its denouement.
Two former NSW Labor ministers were sentenced to extensive terms in jail for their parts in a convoluted plot to secure a $60m benefit for the Obeid family through the grant of a coal exploration licence over the Obeids’ family property in the Bylong Valley.
Ian Macdonald, 72 ,the former minerals minister, will serve at least five years of a nine-year sentence for his part in the conspiracy, which involved him willfully misconducting himself in public office.
He was found to have committed five discrete acts in breach of his duty as a minister of the crown, including leaking confidential information about the coal licence tender to the Obeids and shaping a tender process for the exploration licence to ensure the outcome the Obeids wanted.
For his part in inducing Macdonald to breach his public duties, the ex-Labor powerbroker and MP Eddie Obeid, 77, will serve at least three-and-a-half years in jail of a seven-year sentence. Moses Obeid, his son, received a five-year term with a non-parole period of three years.
They are hefty sentences – particularly given the age of the two ex-politicians. But justice Elizabeth Fullerton rated their offending as serious deserving serious jail time as a punishment and deterrent to others.
In the Icac hearing rooms, a few blocks away from the supreme court in central Sydney, an equally high-profile inquiry was unfolding involving serving Liberal politicians.
Operation Keppel originally focused on the alleged conduct of the former MP for Wagga Wagga Daryl Maguire but has now been expanded to consider the alleged conduct of Gladys Berejiklian – the former premier and outgoing MP.
The allegations against Maguire involve much smaller amounts of money. He is alleged to have run a fraudulent visa scheme out of his office and to have received relatively modest kickbacks for attempting to secure favourable land deals for developer clients.
But it involves allegations of misconduct by a public official – the people we trust with making our laws and spending our money.
The questions surrounding Berejiklian stem from her “close personal relationship” with Maguire, which was only revealed during Icac hearings in 2020. At issue is whether the relationship, undisclosed for several years to her colleagues, influenced her actions as a minister in relation to two grants made to Maguire’s electorate of Wagga Wagga.
Most of the allegations against Berejiklian involve breaches of the ministerial code of conduct, which include a duty on ministers to disclose any actual or potential conflicts. These can be a financial interest or a non-pecuniary personal interest – like a friendship or relationship.
Berejiklian is also being investigated over whether she breached her duty under the Icac Act to report a suspicion of corruption.
No finding has been made and Berejikllian says she has done nothing wrong and history will vindicate her. She will appear next week to answer questions in person.
Both matters – in the supreme court and at Icac this week – demonstrate why we need a federal integrity commission with strong investigative powers, a wide brief to explore possible corrupt conduct and the ability to hold public hearings.
The Morrison government’s current proposal for a federal watchdog would not involve public hearings. It would not be able to look at past events and it would only look at conduct that could constitute a criminal offence.
It would not be able to examine dishonest behaviour by those outside the public sector and it would not be able to make findings of corrupt conduct (but merely refer the behaviour to criminal agencies for prosecution).
In the Bylong coal saga, the acts found to have constituted the conspiracy occurred between 2007 and 2009. They only came to light due to media scrutiny. On Christmas eve 2009 the Australian Financial Review noted some peculiar dealings regarding a limited tender which included the coal exploration licence near the Obeid’s Bylong property.
“There are years when working out who gets the Christmas goodies, and how Santa’s little helpers keep track of who’s been naughty and nice, seems an overwhelming task,” the AFR wrote.
It then tried to untangle who was behind the company that won the exploration licence known as Mt Penny. Not easy.
In 2010, I was researching another story about the Obeids and became aware of several land sales in the Bylong Valley which the locals told me appeared to be linked to the Obeids.
Soon after that article appeared in April 2010, I received a call from an Icac investigator asking me to come in for a chat. I had a theory, not dissimilar to the conspiracy that was later revealed by Icac, but I didn’t know for sure. I certainly couldn’t prove it to a criminal standard.
After many months of investigations, Icac held an inquiry and made corrupt conduct findings in 2013 against Obeid, Macdonald, Moses Obeid and a number of businessmen who participated in the deal.
It took many more years for charges to be laid and convictions secured.
If it was being dealt with under the federal integrity commission proposed by Morrison, there would have been no corruption findings, only prosecutions, assuming that its investigators could have reached that point without the benefit of putting the main actors into the witness box and having top-flight lawyers grill them.
There would have been no public ventilation of the conspiracy for many years. The Obeids, who managed to extract $30m from the mining venture before Icac moved in, would have got away with the full $60m or more they stood to gain.
Moses Obeid, a private citizen, would have been beyond the jurisdiction of the federal integrity commission and not pursued, despite Fullerton finding he was “an enthusiastic participant” in the NSW conspiracy.
There would have been no early warning to other politicians through the public hearings about the folly of such an audacious scheme.
The Bylong coal conspiracy was years in the making. But the federal body would have no power to look at behaviour pre-dating its establishment.
The Maguire-Berejiklian investigation – and it’s still only an investigation at this stage – shows other weaknesses of Morrison’s toothless proposal.
The threshold for any investigation by his federal Icac is the prospect of proving criminal conduct.
Perhaps it would have been able to move against Maguire, who is alleged to have taken kickbacks from developers, but would his behaviour have come to light at all under such a model? Maguire was “bycatch” in another Icac inquiry looking at rezonings by the Canterbury council.
As for the investigation concerning Berejiklian, it may not involve criminal behaviour at all.
So far the evidence concerns possible breaches of the ministerial code of conduct and any failure to report suspicions about her boyfriend to Icac (as she was required to do).
But any alleged failure to disclose information could have serious consequences.
It could mean a politician advocated for a decision or a policy for reasons that were not apparent to colleagues. Aside from leading to poor decisions, such a failure undermines the trust of the public that decisions are made on their merits and in the best interest of the community. Or it might rise to the level of corruption.
A number of public servants and even the former premier Mike Baird gave evidence this week that they would have acted differently if they had known of Berejiklian’s relationship when they decided on a $5.5m grant for Maguire’s seat of Wagga Wagga.
They said they would have put in place additional steps to ensure public money was wisely spent and the process of determining grants was fair.
Icac investigations resulted in some deeply uncomfortable moments for the Labor and Liberal parties this week. Sometimes a corruption body like Icac will fail to make out its case, which is why they must exercise their power cautiously.
But the shocking Bylong Valley proves there is no doubt we need such scrutiny at all levels of government.