ICAC finds corrupt conduct in relation to Doyles Creek coal exploration licence

Friday 30 August 2013

The NSW Independent Commission Against Corruption (ICAC) has found that former NSW minister for mineral resources Ian Macdonald engaged in corrupt conduct by acting contrary to his duty as a minister of the Crown in granting Doyles Creek Mining Pty Ltd (DCM) consent to apply for a coal exploration licence (EL) for land at Doyles Creek and granting the EL to DCM, both grants being substantially for the purpose of benefiting the company's chairman, John Maitland.

The Commission's report, Investigation into the conduct of Ian Macdonald, John Maitland and others, released today, finds that but for the purpose of benefiting Mr Maitland, Mr Macdonald would not have made those grants.

The Commission finds that Mr Maitland and Mr Macdonald were "mates" and enjoyed a close and friendly professional relationship. Mr Maitland originally outlaid approximately $165,000 to acquire his shares in DCM. DCM was listed on the Australian Securities Exchange in early 2010 through its acquisition by NuCoal Resources NL. DCM was valued at around $100 million in the prospectus. By 31 December 2011, Mr Maitland had realised around $6 million from the sale of some of his shares, with the market value of the remaining shares as at 31 December 2011 being around $9 million. Overall, the original shareholders in DCM, whose total initial investment was $1.53 million, have made or stand to make a total of $84.74 million from their shares.

Mr Maitland, Craig Ransley and Andrew Poole, the directors of DCM, applied for the EL at Doyles Creek on the basis that DCM intended to build a training mine which they argued would produce a significant public benefit sufficient to justify a direct allocation of the EL to DCM without the need for a competitive tender.

The Commission finds that, in the course of the application process, Mr Maitland, Mr Ransley and Mr Poole published to the Department of Primary Industries (DPI) a number of false or misleading statements about such matters as the size of the coal resource at Doyles Creek, the identity of the institutions that had entered into a partnership with DCM in relation to the operation of a training mine and the nature of those partnerships.

The ICAC finds that Mr Maitland engaged in corrupt conduct by making and publishing to the DPI several false or misleading statements in relation to DCM's application for consent to apply for the EL and for the EL. The Commission finds that Mr Ransley engaged in corrupt conduct by agreeing to Mr Maitland publishing to the DPI some of those false or misleading statements, and by making false or misleading statements and agreeing to Mr Maitland publishing those statements to the DPI.

Corrupt conduct findings are also made against Mr Poole for agreeing to Mr Maitland publishing to the DPI some of the false or misleading statements, and against DCM shareholder and financial advisory company Paradigm Capital director, Michael Chester, for making false or misleading statements and agreeing to Mr Maitland publishing those statements to the DPI. Those statements related to the financial capacity of DCM to finance coal exploration and the establishment of a commercial mine.

The Commission found that Mr Macdonald approved DCM's application for consent to apply for the EL, and the subsequent application for the EL, knowing the DPI opposed directly allocating the EL to DCM. Mr Macdonald granted DCM consent to apply for the EL in August 2008 without the knowledge or involvement of the DPI. Mr Macdonald failed to take account of DPI's advice to him that DCM's proposal to establish a training mine at Doyles Creek had serious problems and failed to obtain advice from other bodies about the merits of the training mine proposal.

The Commission rejected Mr Macdonald's assertion at the public inquiry that he directly allocated the EL to DCM because he believed the decision was in the public good and would accrue political benefits to the Australian Labor Party (ALP) at the 2011 NSW state election. The DPI advised Mr Macdonald that it was open to him to allocate the EL "on a competitive basis with a requirement to establish a training program as part of any allocation". Adoption of this option by Mr Macdonald would have brought significant benefits to the state, including plans for the establishment of a training mine that could have exceeded the size and quality of DCM's proposal and additional financial contributions that would have been attracted by a competitive process.

The report notes that Mr Macdonald and Mr Maitland, a former leader of the Construction, Forestry, Mining and Energy Union (CFMEU) Mining and Energy Division had a close and friendly professional relationship that arose through their membership of the ALP. The Commission finds that Mr Macdonald granted the EL to DCM to benefit Mr Maitland, a man with whom he had a close professional relationship, to whom he was closely politically aligned, to whom he was indebted for political support, and who was a "mate".

Mr Ransley recruited Mr Maitland to ResCo (the predecessor of DCM) because he wanted someone who knew their way around the corridors of power. In late 2006 the directors of DCM identified Doyles Creek as an attractive site for coal exploration and the possible establishment of a commercial mine. It then became Mr Maitland's job at DCM to manage the EL application process politically. This meant dealing with Mr Macdonald.  As at August 2008, Mr Maitland had been requesting Mr Macdonald for more than a year to grant DCM the EL. On DCM's behalf, Mr Maitland had first raised the direct allocation with Mr Macdonald and subsequently had been DCM's point of contact with the minister. As DCM chairman, he had sat with Mr Macdonald at meetings and over meal tables throughout the application process, lobbying for and seeking a direct granting of the EL.

The Commission is of the opinion that consideration should be given to obtaining the advice of the Director of Public Prosecutions (DPP) with respect to prosecution of Mr Macdonald for the common law offence of misconduct in public office, and Mr Maitland, Mr Ransley and Mr Poole for various offences relating to making and publishing false or misleading statements to the DPI.

The Commission will also furnish to the Commonwealth DPP evidence that may be admissible in the prosecution of Mr Maitland, Mr Ransley and Mr Poole for offences under the Corporations Act 2001 in relation to their relevant conduct with respect to the false or misleading statements. 

 Fact sheet

Investigation report

Media contact: ICAC Manager Communications & Media, Nicole Thomas, 02 8281 5799 / 0417 467 801

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