10 year sentence for devious misconduct cloaked in the apparently worthy venture of training
Saturday, 03 June 2017
His offending against us all through his contempt of the Parliament is of the highest order. Like his theft from the members of the HSU he knew his responsibility, he knew the nature of the offence, he knew the penalties; but he consciously decided to go ahead and do it anyway.
It is deeply troubling that so many parliamentary colleagues knew of Thomson's conduct - yet even the Prime Minister Julia Gillard continued to provide him with unqualified support and glowing character assessments.
The Committee found Thomson guilty of a contempt of the House, the highest category of offence against the Parliament.
The principles which are of particular relevance for offences of wilful misconduct in public office are:
- The duties of Ministers are onerous and departures are to be dealt with strictly
- The real damage is not be measured by material loss to the State or gain to the offender; the real harm is the damage to the institutions of government and public confidence in them
- General deterrence and denunciation are to be given more weight than other sentencing considerations for offences of this nature
- Prior good character is of less weight for offences of this nature.
- The offenders’ conduct damaged the institutions of government and public confidence in them, which resulted in widespread harm to the community.
It tainted the State’s reputation for proper dealing and probity.
It tended to engender public cynicism such as might deter those considering standing for Parliament for fear that their motives will be misunderstood.
Junior public officials might be more inclined to misconduct themselves in the belief that such conduct is normal or accepted.
Conscientious public servants whose duty it is to give independent advice might be hesitant about speaking out, lest their careers be shortened or their prospects of promotion stymied by Ministers who regard an independent public service as an obstruction, rather than an essential part of a working democracy.
Departmental officers might have asked themselves why they should take such care to administer the State’s mineral resources if Mr Macdonald, the man who had the ultimate say as decision-maker, could be so cavalier about his responsibilities and so vain about the exercise of his power.
There are no isolated victims of crimes such as these since the harm was done to the community as a whole. The people of NSW were betrayed by Mr Macdonald.
Here's an extract from Aaron Patrick's book Downfall - you can order the book online at Amazon et al.
Peddling influence in the Labor Party – A lucrative ‘training’ mine – The Minister for Mining has lunch – Cheap cars and cheap land
Politics Labor style
Ian Macdonald’s path into politics was common among the Labor left: childhood hardship, protest and public service. Macdonald’s mother raised five children alone. A history student at Melbourne’s La Trobe University during the Vietnam War, Macdonald became a firebrand student activist and joined the Labor Party. After graduating with honours, he was hired as a research officer at the Australian Council of Overseas Aid.
Macdonald’s political activities at university caught the eye of the party’s left wing. The reforming New South Wales attorney-general Frank Walker offered him a job on his personal staff in Sydney. Macdonald became the political operative in the minister’s office, building support for Walker in the Left, including lining up candidates for public elections and jockeying for positions inside the government. He also got involved in some policy work. Macdonald concentrated on organised crime and the illicit drug industry, and became something of an expert on the Nugan Hand Bank, an Australian investment bank which collapsed in sensational circumstances in 1980 and was accused of being used for drug running, money laundering and large-scale tax avoidance.
The 1988 election, which ended the Labor government of Premier Barrie Unsworth, was a big step up for Macdonald. With the support of the Amalgamated Metal Workers’ Union and its leader, George Campbell, the obscure ministerial adviser was elected to the NSW upper house. The state’s Legislative Council, as the upper house is called, doesn’t have electorates, which means MPs don’t have to worry about constituents. While lower house MPs often spend their weekends attending local fetes, sporting contests and community meetings, upper house members only need to worry, once every eight years, about the support of the party officials who select the official list of candidates for the public to vote on.
Macdonald’s first speech in parliament on 8 June 1988, three months after he was elected, is one of the great ironies of his life. Liberal premier Nick Greiner planned to create an independent commission to clean out the government and police corruption that had become endemic under Unsworth and his Labor predecessor, Neville Wran. One of the worst scandals involved the minister for corrective services, Rex Jackson, who was jailed in 1987 for taking bribes to release prisoners early. (Jackson himself left prison early – for good behaviour – and bought a hot-dog van.) The commission would operate separate to the police and conduct its own investigations and public inquiries. The Director of Public Prosecutions would then use its evidence to prosecute corrupt officials.
Many Labor MPs were worried the commission’s powers would be too great. They felt the definition of corruption was too broad, the commission lacked democratic accountability and it would be able to destroy reputations based on evidence that wouldn’t be allowed in a regular courtroom. In parliament, Macdonald argued the Independent Commission Against Corruption law was potentially the most dangerous ever considered by the NSW parliament. ‘I fear that a great many citizens will be found guilty of corrupt conduct although they have committed no crime,’ he told parliament.
Macdonald’s prophecy proved eerily accurate. In 1992 Greiner’s reputation was tarnished by an ICAC investigation into whether he tried to induce an independent MP, Terry Metherell, to side with the Coalition by offering him a cushy government job. The commission found Greiner behaved ‘contrary to known and recognised standards of honesty and integrity’. His credibility shot, Greiner stepped down. The courts cleared him a week later.
Greiner was succeeded by John Fahey, who struggled to lead the scandal-prone government. The police minister, Terry Griffiths, was forced to resign over sexual harassment allegations. Another Coalition MP, Barry Morris, made bomb threats against a local newspaper in a bad Italian accent and was sent to jail.
After seven years in opposition, Labor leader Bob Carr won power in 1995 by one seat. Carr promised a cleaner, less wasteful approach to office. Carr had learnt lessons from his predecessors on both sides of politics. He successfully presented a unified, considered and responsible front to voters. His ten years in power became the longest continuous reign by a New South Wales premier. But Labor’s success hid a darker drama that would have terrible consequences for the party’s reputation in New South Wales and beyond.
Under the party’s rules, Carr’s government was answerable to the ‘caucus’, the collective noun for the state’s seventy-one Labor MPs. Caucus was, like in other states and federally, run along factional lines. The Right, known as Centre Unity, had roughly two-thirds of the state MPs, which allowed the faction to choose the leader and most of the ministers.
In theory, caucus was the ultimate authority over the government. It signed off on the main decisions and legislation. It selected the leader and the ministry. (The leader allocated portfolios.) In reality, the factional leaders told caucus what to do and it mostly obliged. Carr, and his successor in 2005, Morris Iemma, enforced tight discipline over their MPs through an alliance with the party’s head office, which was run out of a dingy office building bordering Sydney’s Chinatown. Head office, using the party’s rules for the selection of candidates, could threaten to remove MPs from their seats if they said or did things embarrassing to the government. MPs who bucked the system risked their careers.
In the early 1990s four men decided to challenge the established order: Graham Richardson, who was then a federal Labor minister; Morris Iemma, one of his advisers; Carl Scully, a lawyer who had joined the party when he was nineteen; and Eddie Obeid, a wealthy businessman who owned an Arabic-language newspaper, El Telegraph. With the support of John Della Bosca, the party state secretary, they set about challenging the dominant grouping in the Right, which was known as the ‘Trogs’ because someone had once referred to them as ‘troglodytes sitting in a cave’. The new group was named after the NSW Central Coast town of Terrigal, where the Obeid family had a holiday home and where the group first met. The Terrigals worked to replace retiring Labor MPs with their own candidates. They recruited many of the most ambitious activists from Young Labor, including Joe Tripodi, Reba Meagher, Michael Costa and Eric Roozendaal, and helped them win seats.
With Richardson’s help Obeid was appointed to the upper house. Through his ingratiating personality and sheer workload – he spent day after day on the phone networking – Obeid emerged as the Terrigals’ coordinator and leader. His office on the eleventh floor of the parliamentary annex overlooking Sydney’s Domain became a kind of barber’s shop for MPs from the Right. Anyone was welcome to drop by. Often five or six MPs were there at a time, gossiping, plotting and complaining. Political contacts were allowed to use the family ski lodge at Perisher Valley. Day after day Obeid patiently listened to gripes, soothed conflicts and doled out advice. He racked up favours. A short man with a warm smile and friendly manner, Obeid rarely raised his voice, was careful never to cause offence and liked to sum up situations with an apt homily. In politics you have to ‘walk between the raindrops’, he once said.
Obeid used his growing power in caucus to get himself elected to cabinet in 1999. Carr gave him the natural resources portfolio, which included oversight of the state’s mining industry. He continued to help the party raise money for election campaigns, mainly to get more Terrigals into parliament. In 2002 the Sydney Morning Herald reported that Obeid had sought a $1 million bribe for the Labor Party to help the Canterbury-Bankstown Rugby League Club get approval for a $900 million residential and commercial development at Liverpool in western Sydney.
When Obeid later sued the newspaper for defamation in the Supreme Court, Bob Carr, who was suffering from a severe case of the flu, appeared in 2006 as one of Obeid’s witnesses. Carr told the court he believed that Obeid hadn’t asked for the bribe. The Herald was so determined to damage Obeid’s reputation, Carr said, he decided, six months later, to ask him to resign from cabinet. ‘While I believed he was innocent – and ICAC said he was free of these imputations – the Herald would continue to go against him,’ Carr explained to the court. The judge ordered the Herald’s parent company, Fairfax, to pay Obeid $150,000 compensation with interest.
From the backbench, Obeid’s power grew. When Carr decided to step down in 2005, Obeid and the other Terrigals decided to replace him with one of their own, Iemma. Carr’s seventeen years as leader and three election victories had given him unquestionable authority over the party. Iemma was far more reliant on Obeid and the other Terrigals. Once a week Iemma had Obeid to his house for a private breakfast.
Among the Right, everyone knew the best way to get a better job, and a higher salary, was to stay onside with Obeid and his cronies. When Sydney’s high-profile lord mayor Frank Sartor was about to enter parliament in 2003, Obeid asked to meet for a coffee. Sartor, who was about fifty and wasn’t paid for a time as mayor, admitted he was worried about his lack of retirement savings. According to Sartor, Obeid asked him: ‘Well, what do you want to retire on?’ Sartor told him it would be nice to retire on a million dollars. ‘Well, I could help you with that,’ Obeid allegedly replied. Sartor didn’t take up the offer, which he thought improper, even though Obeid didn’t ask for anything specific in return.
When Obeid left cabinet, he was determined that Macdonald should go in. Macdonald’s bald, square head, powerful shoulders and expensive suits made him look like a nightclub bouncer who had aged into a prosperous property developer. A member of the Left, he was one of the sharper operators in caucus. He knew how to tell people what they wanted to hear. Often, later, they would wonder if what he said was true. Macdonald and Obeid, both members of the small upper house, were assigned to manage negotiations with the minor parties who held the balance of power in the late 1990s. They quickly realised they were kindred spirits.
Obeid wanted Macdonald put in the planning portfolio, an important job that required its minister to strike a balance between the property industry and heritage and environmental interests. Deciding the job was too sensitive for a political wheeler-dealer like Macdonald, Carr gave him agriculture and fisheries. A year later Macdonald got the primary industries portfolio as well, and minerals the following year.
By 2007 about half the members of the Right – roughly twenty-five MPs – were Terrigals. Because they voted as a disciplined bloc, and the rest of the Right didn’t, the Terrigals were able to control the whole faction, which in turn allowed them to determine which way caucus voted. A system of factional patronage had developed to reward loyal MPs. More than three-quarters of all Labor MPs had been given a position that meant they earned more than the backbencher’s $126,560 base salary. The nineteen ministers, deputy premier and premier got an extra $105,000 to $165,000 depending on their seniority. There were loadings of up to $105,000 for the speaker, deputy speaker, assistant speaker and government whip. Ten parliamentary secretaries got an extra $25,000, except for the ‘leader of the house’, who got an extra $63,000. Thirteen chairs of parliamentary committees, including the children and young people committee, got an extra $18,000. Ordinary members of the public accounts committee each got $3910. MPs who weren’t compliant could be stripped of their extra responsibilities.
Macdonald’s departments, which didn’t get a lot of public attention, played an important role in the state’s economy. When equine influenza spread through the state in 2007, it was regarded as one of the most serious threats to animal welfare in Australian history. To limit the spread of the disease, Macdonald approved strict rules regarding the movement of horses. A special area was established in the Hunter Valley that allowed horses to be transferred from stud to stud. The decision allowed the horse-breeding industry, which had a lot of money invested in the area, to continue operating.
Another of Macdonald’s responsibilities was important to the economy: approving and regulating mines. Booming coal prices were creating huge fortunes almost overnight. Nathan Tinkler, an electrician from Newcastle, borrowed $500,000 and took on debt to buy an unwanted coal deposit in Queensland. Eighteen months later he sold out to Macarthur Coal for cash and shares. When Macarthur became a takeover target the following year, the 32-year-old sold his stake for $440 million. Much of the money flowing into the industry was going to New South Wales, which has about 40 per cent of Australia’s black coal. Black coal is cleaner than brown coal, is used to produce steel and run power stations, and is in heavy demand in China. Rail links to Newcastle helped get the coal relatively quickly to ships for transport to Asia.
Few people knew the coal industry as well as John Maitland, the national secretary of the Construction, Forestry, Mining and Energy Union. After retiring from the union in 2006, Maitland started working on an audacious plan: to make himself millions of dollars from coal. He just needed Macdonald’s help.
As Maitland and Macdonald began working on this get-rich scheme, the rest of the government was distracted by attempts to sell the state’s power assets. The move, which was designed to avoid future power blackouts, was bitterly opposed by head office and elements of the union movement, including the head of the Electrical Trades Union, Bernie Riordan, who was also the party’s state president. Exhausted by the fight, Iemma quit as leader on 5 September 2008. The Terrigals replaced him with Nathan Rees, a minister from the Left who they thought would buoy the party’s public support and be easy to control. They were wrong.
Calling in favours
With a powerfully built chest, deep voice and walrus moustache, John Maitland looked like he’d walked out of a casting studio for old-school union leaders. He had spent decades fighting mining companies across Australia and loved to rally his members with the rhetoric of class struggle. In 1997 he told the managing director of Rio Tinto’s coal operations in New South Wales his job was at risk if he didn’t give in to the union. When the manager complained publicly about the threat, Maitland accused him of being a liar. There was no question in Maitland’s union that the ‘bosses’ – the executives who ran big mining companies like BHP Billiton – were the enemy.
On 22 January 2007, when many Australians were winding up their Christmas holidays, the now retired Maitland sent an unusual proposal to Ian Macdonald, minister for natural resources. Maitland wanted a licence to build an underground educational facility to teach people how to mine coal. He described the project as a ‘training mine’ that would help alleviate the shortage of experienced personnel that had driven up costs across the industry. The location he chose was Doyles Creek, a coal deposit 105 kilometres west of Newcastle. What better place to teach miners than above an actual mineral deposit in the heart of the New South Wales coal belt?
Maitland’s request may have been unique in the history of the New South Wales public service. There was no such thing as a ‘training mine’ licence in the state. What Maitland was actually seeking was an exploration licence, which he planned to use to set up the training facility. Exploration licences are normally sold to mineral exploration companies to allow them to measure how much coal there is underground, how deep it is and how much it will cost to extract. They are a step towards full-blown mining leases and are valuable assets. Granted the licence, Maitland would be free to search for coal in the area irrespective of whether he was training miners. In the proposal, Maitland insisted training was his primary objective, not searching for coal seams.
A month after Maitland’s unusual request arrived at the state ministerial offices in central Sydney, the Department of Primary Industries raised a warning flag. Brad Mullard, a senior public servant in charge of coal and petroleum development, told Macdonald other companies had expressed interest in the Doyles Creek deposit and were waved off by the government because of the environmental sensitivity of the area. The deposit sits on the edge of Wollemi National Park, a rough and spectacular reserve that is part of the Greater Blue Mountains World Heritage area. On the other side of the deposit is Jerrys Plains, a small town surrounded by vineyards with buildings dating to the 1870s. Mullard essentially posed a question to Macdonald: do you really want to encourage the construction of a coalmine next to a national park and a quaint town?
The rules were clear too. The estimated 62-million-tonne coal deposit was big enough that a competitive tender was required to select which company would get the right to exploit it, Mullard told Macdonald, although in special circumstances the rule didn’t have to be followed. He offered Macdonald three options: reject Maitland’s plan, sell the licence to the highest bidder, or seek advice from the Mine Safety Advisory Council, an independent government body that tries to reduce accidents in the industry. Mullard favoured going to the safety council, which had rejected a similar proposal in 1999.
Macdonald didn’t grant Maitland’s request. The public servant’s advice appeared to have killed the plan. Then, in March 2008, Maitland tried a different approach. Instead of going through Macdonald, Maitland wrote to the Department of Primary Industries requesting it issue him an exploration licence. Once again, the department baulked. A response prepared for a deputy head of the department, Alan Coutts, recommended some kind of competitive auction for the licence.
On 17 June Macdonald and two of his advisers treated Maitland to lunch at Parliament House in Sydney. Not long after, Maitland started calling in favours accumulated over decades in union, political and community circles to back his plan. Letters poured into Macdonald’s office expressing the urgent need for a training mine in the Hunter Valley. Two contained identical wording. They all argued the training mine would be good for the industry and the workforce. The advocates included Sharan Burrow, who was president of the Australian Council of Trade Unions; Greg Combet, the minister for climate change; Brian Flannery, the managing director of coal miner Felix Resources; Mick Buffier, the chief operating officer of Xstrata Coal in NSW; Cliff Marsh, the chairman of the Westpac Rescue Helicopter Service; Stuart Barnett, a lawyer at Slater & Gordon’s Newcastle office; Gary Kennedy, the secretary of the Newcastle Trades Hall Council; and local MPs Kerry Hickey and Robert Coombs. Even the vice-chancellor of the University of Newcastle, Nicholas Saunders, an eminent medical academic, offered his support. Under Maitland’s plan the university would receive an annual $250,000 research grant from the mine.
The correspondence seemed to work. Macdonald suddenly got keen on a training facility for a new generation of miners. He sent Maitland a letter on 21 August inviting him to apply for an exploration licence over the Doyles Creek deposit. Macdonald cited the wave of community support, including the letters from the Westpac Rescue Helicopter Service and the University of Newcastle. A subsequent search of the department’s records found the rescue service’s and university’s letters to Macdonald were dated after Macdonald formally invited Maitland to apply for the coal licence. Many of the other letters of support didn’t arrive until the following month.
Macdonald’s department, which had successfully fought off the training mine plan for a year, was out of the loop. It didn’t know about the offer to Maitland until two weeks later, when it got an email from a journalist who covered the coal industry for the Newcastle Herald. The reporter wanted to know if it was true that the big-name unionist had finally got his hands on the long dormant Doyles Creek deposit. (Macdonald later claimed his department advised him to offer Maitland the coal licence, an assertion contradicted by documents from his office and the department.)
The deal was sealed on 5 December, when Macdonald and Maitland met at Macdonald’s ministerial office. Macdonald formally offered him the exploration licence without a contest, according to a file note written by a departmental official. The official fee: $22,800.
The paperwork was completed in ten days. No announcement was made. Around 23 December, when the new premier, Nathan Rees, was preparing to fly to New York to marry his girlfriend, Stacey Haines, someone in his office apparently twigged to what was going on. A company controlled by a prominent trade unionist was being issued a potentially lucrative mining licence without any paper trail from the bureaucracy explaining the logic behind the decision.
Macdonald’s deputy chief of staff, Jamie Gibson, who had been at the lunch with Maitland six months earlier, issued a plea for help. He sent an email to Graham Hawkes, an official in the department, asking him to retrospectively prepare a memo to explain the decision because someone from ‘upstairs’ was concerned about the exploration licence. Gibson wrote:
Geez mate I am sorry but could we please get a page or 2 of dot points on Doyles Creek training mine – i.e. how good it will be, how it address the skills shortage as pointed out by the ACA, how it will be state of the Art, that $250K goes to Newcastle Uni each year for research and that they are subject to all normal royalty payments etc.
Upstairs have seen it and are having a bit of a panic. if we could get it asap that’s another one on my tab!
‘Upstairs’ was a reference to Rees’s office, on the fortieth floor of Governor Macquarie Tower. Macdonald was on level thirty-three. Rees, focused on preparing a budget and his impending wedding, didn’t get personally involved. There is no record of the reply to the email from Macdonald’s office. But the training mine plan had rung alarm bells among Rees’s staff.
Exploration licences are normally advertised before they are granted. News that Maitland’s company had been given a green light for Doyles Creek was conveyed to the world in a press release on Christmas Eve. Because few newspapers publish on Christmas Day and most journalists are on holidays, the 24 December press release was almost guaranteed to be ignored by the media, which it was. When lawyers from law firm Clayton Utz searched through the government’s files looking for a copy three years later, it wasn’t there.
Maitland, meanwhile, was pushing ahead with a plan that would make him wealthier than many of the corporate executives he had spent years fighting.
Here are a few tidbits from our stories on Ian MacDonald's early years of inculcation into the Labor way.