Dirty deals done dirt cheap: why the PM needs to clean house in NSW

It was late in 1988 when the man known as the Senator for Kneecaps arrived in Melbourne to collect. The "collect" was several envelopes crammed with tens of thousands of dollars which was being secretly handed over by an executive from one of the largest transport businesses in the country.

Picking up the cash was Hawke government minister Graham Richardson, who had arrived in Canberra several years earlier riding a wave of ascendancy on his "whatever it takes" reputation, which had rendered the NSW Right wing of the party the most powerful Labor enclave in the country.

As general secretary of the NSW branch, Richardson's skills as a political bagman, his prodigious ability to tap developers and entrepreneurs for political donations, cemented not only his own position as a kingmaker, but his modus operandi became the blueprint for how the NSW party worked.

"As [Richardson's] legend grew, both in the media and inside the ALP, his style became an operational template for the next generation of apparatchiks - most notably Eric Roozendaal, Mark Arbib and Karl Bitar, the NSW general secretaries from 1999 to 2008," wrote former federal Labor leader Mark Latham recently.

With money came power. The millions of dollars Richardson and his successors raised delivered them the ability to crush rivals, to fund branch-stacking, to control union elections, to sanitise chosen candidates by ridding them of certain electoral unpleasantness such as gambling debts.

According to Marian Wilkinson's biography of Richardson, The Fixer, the $30,000 in cash Richardson was collecting in Melbourne that day was to bankroll his preferred candidates for the Transport Workers Union election.

"Keeping the union in sympathetic hands was critical to Richardson and his allies in the powerful right-wing faction of the ALP," Wilkinson wrote.

Sympathetic hands included the now disgraced Michael Williamson, who ran the Health Services Union like a personal fiefdom and was rewarded with lucrative positions on Labor government boards.

The nexus between donations and perceived favours for the "mates" has resulted in damaging corruption hearings.

In 1991 Richardson smoothed the path for his mate Eddie Obeid to be given an upper house seat in the NSW Parliament.

Safe positions such as these, where you never had to face voters in an electorate, were often doled out to union hacks and party officials as rewards for unswerving loyalty.

Should anyone be silly enough to try to challenge such appointments, the credentials and disputes committee of the party, also controlled by the Right, merely rubber stamped the initial decision.

Both Richardson and Obeid have maintained that they merely opened doors. "You won't find one person who gave me money and then got a government decision . . . You can't find that. I know you can't because I have been very careful for a long time," Richardson told Wilkinson in her 1996 book. For his part, Obeid claimed his lobbying of ministers on behalf of others was "to get the state moving economically".

It is Richardson's questionable legacy, which was followed with relish by Obeid, that Prime Minister Kevin Rudd is now trying to dismantle.

The timing of the reforms, which include a ban on property developers standing as candidates, is an attempt by the party to pre-empt the fallout from the jaw-dropping corruption inquiry that has plagued the party.

Political insiders have said that it was vital for Mr Rudd to be seen to be instigating much-needed reforms before anti-corruption commissioner David Ipp wreaks further havoc on the party with his final reports, due later this month.

"The way forward for NSW Labor is to take power from the few and give it to the many," said former premier Nathan Rees of the need to restrict the influence of the unions in favour of ordinary members. "If we don't do that, then the electorate will write our future for us and it won't be pretty."

The picture for Labor for the six months since November last year has been anything but pretty. The Independent Commission Against Corruption was a daily horror for Labor, with allegations that Obeid secured a $60 million windfall for his family from a government coal contract presided over by resources minister Ian Macdonald.

Also troubling for the party was the evidence from a series of former premiers that Obeid and his equally colourful colleague Joe Tripodi, who still chairs the credentials committee, secretly ran the party, even controlling who would be premier.

"Because the [Obeid-led] Terrigals could dominate the right-wing caucus and the right-wing caucus could dominate the whole of the caucus, it in effect gave the Terrigals a disproportionate control over the decisions of the parliamentary party?" asked counsel assisting, Geoffrey Watson, SC.

"Yes," answered former premier Morris Iemma.

Three years of Obeid's diary entries - from 2007 to 2009 - reflect an astonishing parade of politicians, developers, departmental chiefs, union bosses, business figures and colourful Sydney characters who were shown into the inner sanctum of room 1122.

According to the diaries, mortgage king "Aussie" John Symond was keen to talk to Obeid, a humble backbencher, about his jetty. Prominent developer and Labor donor Harry Triguboff wanted to chew the fat with Obeid over the lack of buses servicing a Meriton development in Waterloo.

On another occasion Triguboff wanted to talk about a penthouse in one of his inner-Sydney developments.

Former minister Frank Sartor gave evidence that it was Obeid who had offered him a possible sweetener when trying to talk him into running for the NSW Parliament. Over coffee, the then Sydney lord mayor confided that he was concerned about his financial security.

"What do you want to retire on?" inquired Obeid. Sartor replied that $1 million in his super account "would be nice". "I think I can help you with that," replied Obeid.

Sartor told ICAC he was "very uncomfortable" at this offer and declined on the basis that he didn't want to come into Parliament feeling as though Obeid "owned" him.

While Obeid has been dispatched to the political wilderness and expelled from the party, the architect of the era of skulduggery is still influential.

On the night of the re-emergence of Kevin Rudd as prime minister, Richardson took to the airwaves promoting the attributes of the man he repeatedly spoke of as his "good friend" Bill Shorten, who had knifed Julia Gillard, just as he had knifed Rudd three years earlier.

Richardson defended his mate's "whatever it takes" actions. "Shorten stood up and was counted. His career will not suffer as a result," wrote Richardson in the wake of the political execution of Gillard.

Others smart over Richardson's svengali-like role in party affairs. "Don't listen to a bloke like Richardson who put a bloke like Eddie Obeid into the NSW Parliament, we should be better than that, we should have a culture in the Labor Party that's not about wheeling and dealing and doing whatever it takes," wrote Latham recently. "It's about public policy and a vision for the Australian people. It's about looking after the battlers, caring about poverty, caring about inequality."

ICAC and Kevin Rudd's move to clean up NSW Labor comes in response to a series of reports by Fairfax investigative reporter Kate McClymont.