Court throws the book at disgraced former ministers for $30 million corruption efforts

By Melissa Coade

July 20, 2021

Former NSW Labor ministers Eddie Obeid and Ian MacDonald (L) and Obeid's son Moses were found guilty a coal exploration licence conspiracy.
Former NSW Labor ministers Eddie Obeid and Ian MacDonald (L) and Obeid’s son Moses were found guilty a coal exploration licence conspiracy. (AAP Image/Bianca De Marchi)

Former NSW Labor ministers Eddie Obeid,77, and Ian Macdonald, 72, are facing prison, with guilty verdicts for conspiracy over their conduct in the mid 2000s regarding exploration rights to a property that saw the Obeid family pocket $30 million. 

On Monday the NSW Supreme Court ruled that the duo, along with Eddie’s 52-year-old son Moses Obeid, had conspired to financially advantage the Obeid family and with Macdonald’s role in the saga as former NSW resources minister amounting to a wilful breach of his duties as a minister of the Crown. 

Justice Elizabeth Fullerton heard in a judge-alone trial that starting in 2008 Macdonald had shared ‘inside information’ with Obeid and his son Moses to provide them knowledge about who would win a coal exploration licence over the Obeids’ property in Cherrydale Park near the Bylong Valley

Macdonald’s favourable dealings with the Obeids saw him face eight counts of committing misconduct while in public office.

Fullerton heard that not only had Macdonald leaked information to Moses about the list of companies invited to tender and particulars about the EOI process, but that he had directed the NSW department of primary industries (DPI) to limit the size of the potential open-cut mine site so that only a select group of smaller mining companies could be invited to participate in the tender process. 

At trial, the defendants argued that the prosecution could not establish what department information concerning the exploration licence EOI could or could not be disclosed, because there was “no consistent or articulated departmental or government policy or practice that might dictate or even inform that approach”.

Fullerton’s decision analysed the DPI code of conduct as it concerned the ‘protection of confidential information’. She considered that the content and scope of the department’s code of conduct, and Macdonald’s code of conduct as minister, were both similar to the extent that they were both ‘intended to fix and preserve the highest standards of probity and integrity to which members of the executive and departmental officers should adhere in the public interest’. 

Crucially, Fullerton’s decision determined that ministers were additionally responsible for the day to day administration of the state, and the portfolio(s) under their control, as evident in their requirement to take a ministerial oath of office. 

While neither the pledge of loyalty nor the executive councillor’s oath of office inform, in any material sense, the ministerial duties of confidentiality and impartiality, they do reflect the trust and confidence that a Minister of the Crown owes to the State and the members of the community which embody it and the polity they serve in the execution of their Ministerial powers and duties for the public benefit,” Fullerton said in her decision. 

“I am satisfied the crown has proved beyond reasonable doubt that at the time the conspiracy was forged each of the accused knew that Mr Macdonald was subject to a duty of confidentiality and a duty of impartiality in the discharge of the public office he held as the minister for mineral resources, and that they each knew that what he agreed that he would do in that public office would constitute a breach of either or both of those duties and obligations.”

According to the Sydney Morning Herald, this inside information (including confidential maps of the exploration area) was then allegedly used by the Obeids to obtain a 25% stake in Cascade Coal – the winning bidder of the exploration licence. 

Knowledge of the licence being put out to tender was also used by the Obeids to tip off their friends who purchased neighbouring properties in Cherrydale Park, near Mount Penny.

Together, the associate landowners then approached Cascade Coal who accepted a deal to purchase the collective land at a price four times the land’s value when it was time for mining works to commence. 

Last February it was made known that the NSW government was in settlement negotiations with Cascade Coal and NuCoal after they lost their exploration licences because of their dealings with the disgraced politicians Obeid and Macdonald. The loss resulted in $850 million in lost earnings for both companies over a seven year period but the compensation figure is reported to be for a lesser value.

The NSW Independent Commission Against Corruption (ICAC) began investigating Obeid (himself a former NSW minister for mineral resources, and fisheries) and Macdonald’s dodgy mining interests deal in 2013. Part of ICAC’s recommendations was that both Cascade Coal and NuCoal be stripped of their licences due to their connection with the disgraced ministers. 

Justice Fullerton noted that Moses Obeid played a ‘hands on role’ to make the most of MacDonald’s ministerial misconduct. While Eddie Obeid had a lesser role in the corruption, Fullerton said it was inconceivable that he was not a participant. 

In the closing paragraphs of Justice Fullerton’s judgment, she noted that it was not simply an arcane feature of the Westminster system of government that ministers who are executive members of the executive are ‘entrusted with powers, duties and responsibilities exclusively for the public benefit’. 

The people of New South Wales are entitled to expect that, in the office of a minister in the executive government of NSW, consistent with the oath or affirmation that their elected representatives take when admitted to that office, that he or she will act as a minister of the crown at all times conscientiously and honestly in the public interest. 

“The very solemnity of that promise recognises that the exercise of ministerial powers, duties and responsibilities in the public interest will be rendered nugatory if a minister is motivated by personal interests or, as is the case here, where Mr Macdonald, in his capacity as minister for mineral resources, agreed with another member of parliament and a member of that person’s family that he would deliberately breach his duties and obligations to advantage, favour or promote their personal financial interests,” the decision read. 

This is not the first time Eddie Obeid’s misconduct has got him into hot water — in 2016 he was given a prison sentence for abusing his public office to secure cafe leases in Sydney’s Circular Quay for members of his family

And the DPP is yet to confirm whether five other outstanding corruption allegations against Eddie Obeid will be prosecuted in the courts. 

A sentencing hearing for Macdonald, Eddie and Moses Obeid has been scheduled for 8 September, 2021.


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