All in the family

FEDERAL Labor is reeling from the arrest of its former MP Craig Thomson on fraud charges, but the NSW corruption inquiry, centred on whether Labor powerbroker Eddie Obeid and his family enriched themselves through insider knowledge, continues to cast a pall over Labor's chances of re-election.

FEDERAL Labor is reeling from the arrest of its former MP Craig Thomson on fraud charges, but the NSW corruption inquiry, centred on whether Labor powerbroker Eddie Obeid and his family enriched themselves through insider knowledge, continues to cast a pall over Labor's chances of re-election. With Obeid finally due to appear on Monday, will the inquiry get its man?

KEITH Enderbury, a former Labor member of the News South Wales Parliament, 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 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, otherwise known as NSW Labor powerbroker Eddie Obeid. In the decades that have passed since Enderbury palmed a Bible and took his place in the witness box, not a few others have followed - the ICAC has conducted 153 investigations since its inception. But little has changed.

In 1989, a network of graft and patronage allowed corrupt politicians to solicit bribes and political donations from property developers. In 2012, a very similar network is alleged to have extracted kickbacks 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."

The only real difference perhaps is the notable rise in volume. At the heart of the Tweed inquiry that snared Enderbury 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 that the windfall was a result of the access he had had - through his father - to the disgraced former mining minister Ian Macdonald.

So enduring is this form of corruption that Watson has even likened the conduct of the Obeids and the state's former mining minister 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 - which makes the affair so sensational. Obeid had access to every premier, every minister, every Labor mayor in Sydney.

His appearance on Monday is 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 NSW 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 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 at 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 both complex and astonishing, but this was how Moses Obeid summed it up on Thursday:

Some time after the family purchases the farm 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 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, another of Eddie's sons] 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 [mining minster Macdonald] 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 in time, however, that a series of events occurred which 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. Indeed, barely a month after Moses and Macdonald had supposedly 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 of the 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 wants to create 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, 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 Obeid's disposal.

Rather than inquiring about leases that might threaten the family farm's lucerne crops, Watson has alleged Eddie Obeid effectively instructed Macdonald to open up the area for coalmining. Then, with a supply of inside information about the upcoming tender, the family extracted the maximum 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 the actual crime scene. Everyone wants to know: will ICAC get its man?

There is much incriminating evidence. Eddie Obeid snr 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 that 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 corrupted a Sydney Harbour Foreshore Authority official, is currently 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 will be because he has used his own 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.

Do you know more? Contact

InvestSMART FORUM: Come and meet the team

We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles