Can Labor overcome Obeid's malign presence?

"There are two types of people in the Labor Party," says one senior NSW MP. "Those who bent the knee and kissed Eddie's ring, and those who kept their distance because they thought him so odious."

"There are two types of people in the Labor Party," says one senior NSW MP. "Those who bent the knee and kissed Eddie's ring, and those who kept their distance because they thought him so odious."

To Labor's shame, only a handful stood up to the high priest of the Right, Eddie Obeid, found by the Independent Commission against Corruption this week to have engaged in corrupt conduct.

It cost Premier Nathan Rees his job in 2008. Former premier, now Minister for Foreign Affairs, Bob Carr's record was mixed. He let Obeid into the NSW ministry in the first place, but dropped him in 2003.

Now as Prime Minister Kevin Rudd prepares to press the go button on a federal election campaign, questions remain about whether the man who once wielded so much power for two decades has really released his octopus-like grip on the Labor Party.

What will be the ramifications for Labor, both at the federal election this year and the NSW election due in March 2015?

The corruption findings against Eddie Obeid and his colleague, former minerals minister Ian Macdonald, will remain in the headlines for years. "We will pursue this through every court of the land to prove that we're innocent," an indignant Obeid pledged this week.

"We've done nothing wrong and this has been just a political witch-hunt to have Labor ex-ministers in the public eye being scandalised and victimised and vilified," he said.

In a few weeks, another ICAC report on Macdonald and his dealings with former union boss John Maitland will be released.

Meanwhile ICAC is working on new lines of inquiry into the affairs of Obeid. In their sights are cafe leases granted to his family at Circular Quay and decisions that may have benefited a company, Australian Water Services, in which his family had a secret interest.

It is Labor's never-ending nightmare.

This week former premier Nathan Rees put the likely damage to Federal Labor at 2 to 3 percentage points off the party's primary vote.

Rudd's advisers are more hopeful. While they concede there will be inevitable damage to the Labor brand, they hope Rudd's squeaky-clean image and swift actions to put the national executive in control of the NSW party will minimise the fallout.

But that assumes Obeid won't roll out his most potent weapon: associating his name with those whom he now considers his enemy.

This week he casually dropped to the media that he had backed Rudd as leader in 2006 and made calls in support.

Rudd's office has denied he ever met Obeid, other than possibly at a party function, but so toxic is his reputation that any mud could stick.

In the short term, though, the challenge for Labor will be convincing the public that the tentacles of Obeid's influence through the party have been truly cauterised.

And with Obeid on the rampage, prepared to boast of his connections through the party, it may not be so simple.

Edward Obeid was born in the village of Matrit in Lebanon and emigrated with his family when he was six. He grew up in Redfern and showed early entrepreneuralism by selling newspapers and collecting soft drink bottles for the deposits.

As a young man he worked as a taxi driver, studied accountancy and married Judy Abood. How Eddie Obeid became seriously rich is not clear. In the early 1970s he teamed up with Karim Kisrwani, another Lebanese businessman who ran a travel agency and a property development business.

In 1973 Obeid and other business partners bought the Arabic newspaper El Telegraph. As its publisher, Obeid became a big wheel in the community. He joined the Labor Party aged 29, and was soon attending functions. By the late 1970s Obeid had met Labor's consummate wheeler and dealer, the then NSW state secretary, Graham Richardson. Obeid became a regular at Labor fund-raisers, and was introduced to Richardson's great friend, Rene Rivkin. It was Rivkin to whom Obeid turned to help finance the purchase of an old printing press from the Packer empire. The name of the company, Offset Alpine, has been in the news ever since.

On Christmas Eve 1993, the plant burnt down, delivering for its shareholders a windfall gain when the insurers paid out greatly in excess of the book value. Obeid later complained to colleagues he had not managed to secure as large a share as he would have liked. But Rivkin's company cashed in and for the next decade the Tax Office pursued him and Richardson over a Swiss bank account said to hold the proceeds.

By the 1980s, the demographics of western Sydney were rapidly changing and Obeid demonstrated his capabilities in recruiting members and raising funds for the party. Branches in Sydney's middle and outer west were swelling with Lebanese members. In 1991, Richardson helped secure Obeid a seat in the NSW Legislative Council, the sleepy upper house chamber, populated with party fixers and union officials.

In Parliament, Obeid cemented his influence a year later by creating the Terrigals faction, named after the shindig he held for like-minded Right-wingers at his Terrigal beach house. The Terrigals came to dominate the NSW Right of the parliamentary party. Factional votes were binding, and with 50 per cent plus one, the Terrigals controlled the Right; because the Right was numerically superior to the Left, it could effectively control caucus. As its benevolent leader, Eddie's counsel was sought on everything from cabinet positions to policy, to personal problems.

Meanwhile Eddie was building his stable of young politicians who owed their careers to him. Chief among these was his protege, the Right's Young Labor leader, Joe Tripodi, who entered Parliament in 1995 .

In preselection battles Obeid was frequently mentioned as the eminence grise behind the outcomes.

At the federal level, he was credited with having delivered preselection to local councillor John Murphy in the federal seat of Lowe in 1998, over the former head of the Department of Foreign Affairs and Trade, Michael Costello. Costello, who had been political adviser to Kim Beazley, was seen as a star candidate for Labor but was defeated in a branch ballot.

At state level Obeid was influential in installing several politicians, including Angela D'Amore, Joe Tripodi's cousin, and supported the fresh-faced Kristina Keneally.

Obeid was only briefly a minister from 1999 to 2003 when he was responsible for fisheries and minerals. But his time in the ministry was dogged by scandal, notably his inability to get his pecuniary interest register accurate. During this time, Obeid handed over all his shareholdings to his children and declared no income other than his parliamentary salary.

But despite the legal arrangements, Obeid remained involved in the family business. According to ICAC this week, "he could , and did, exercise a final say in respect of important decisions".

Meanwhile his sons were involved in property development and manufacture of street furniture, which several Labor-controlled councils were buying. Behind the scenes, Obeid made approaches to ministers who were often unaware at the time of the direct financial gain that could come to the Obeids. Former ports minister Carl Scully recalled being lobbied by Obeid on behalf of the cafe owners at Circular Quay, unaware that the Obeids were owners, too. But nothing has yet come close to the findings of ICAC that Obeid used his influence to secure a decision from Macdonald to grant a mining exploration licence over land owned by the Obeids and their friends, a decision that could yield his family upwards of $60 million.

The wisdom in pleasing Obeid became more obvious after Carr retired. Obeid would play a role in installing the next three premiers. Only Rees had the guts to call him out: "Should I not be premier by the end of this day, 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." Rees lost the leadership to Keneally.

Obeid retired from NSW Parliament on May 10, 2011, just weeks after the party suffered a crushing loss at the state election.

NSW Labor's general secretary, Sam Dastyari, who at one time was so close to Obeid that he had invited him to his wedding, worked for more than a year on an agreed departure strategy. Within Labor, this was a cause for celebration. Along with the retirement of Obeid's protege, Joe Tripodi, the departure allowed the NSW branch to claim it had rid itself of a key malign influence.

But many in the party claim that while the ICAC spotlight has diminished Obeid's influence as people rush to distance themselves, it has not killed it altogether.

Obeid painstakingly constructed a web of patronage during his 20 years as a power broker in Parliament.

"Immediately after he retired, was he a person of influence? Absolutely," says one senior Labor figure. "And that extended to the ninth floor [Labor's head office in Sussex Street]".

The exodus of Labor MPs at the 2011 state election means Obeid's influence is significantly reduced in the NSW Parliament, but it remains alive in pockets of local government including Labor mayors and councillors in Burwood, Parramatta and Canada Bay. There are also those in Liberal ranks who believe some Liberal councillors owe their fealty to Obeid, rather than their party.

Nathan Rees, says: "Only a fool would take a call from Eddie Obeid now. Regrettably, there's plenty of fools in local government."

In June, with the ICAC findings imminent, the party finally got around to expelling Obeid from its ranks. In response, he launched a blistering tirade against Opposition Leader John Robertson, saying he had lobbied to get Robertson a seat in Parliament and into cabinet.

This week he hit out again: "John Robertson and Sam Dastyari, I cannot believe these people who I supported, I mentored, I got them in their jobs, they don't give me the benefit that every Australian should have - you're innocent until proven guilty."

The fact that Robertson - like federal minister Tony Burke and former minister Stephen Conroy - stayed at Obeid's ski lodge may come to haunt them at the coming elections.

But at least one senior Labor figure says there is a much bigger challenge facing the party: that of cultural change. "In the NSW Labor Party there is a willingness to tolerate, even worship the cult of whatever it takes, the Richo culture. It's admired. But that culture taken to extremes, ends up in this grotesque corruption."

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