ICAC finds former NSW Government minister and MPs corrupt

Thursday 3 August 2017

The NSW Independent Commission Against Corruption (ICAC) has found that former NSW minister for infrastructure Anthony Kelly and former members of Parliament, Edward Obeid Sr and Joseph Tripodi, engaged in serious corrupt conduct in relation to their actions concerning a public private partnership (PPP) proposal by Australian Water Holdings (AWH) Pty Ltd which, had it proceeded, could have resulted in substantial financial rewards for that company and the Obeid family.

The Commission’s report on Operation Credo, Investigation into dealings between Australian Water Holdings Pty Ltd and Sydney Water Corporation and related matters, was released today. It notes that Edward Obeid Sr’s son, Edward Obeid Jr, was working for an AWH-related company, Australian Water, from at least about July 2007. By that time, Edward Obeid Sr was aware that his son was involved with AWH, and by November 2007 he knew that AWH wanted to proceed with a PPP proposal for the purchase, supply and operation of water infrastructure in the North West Growth Centre in north-western Sydney.

He knew that Edward Obeid Jr was interested in acquiring shares in AWH and that by July 2008 there was interest in an Obeid family entity acquiring shares in that company. If approved, the AWH PPP proposal meant any such investment would be extremely profitable for the Obeid family. The Commission is satisfied that Edward Obeid Sr used his position as a member of Parliament to promote AWH’s interests to a number of ministers and premiers at a time when he knew that his family or a family entity could benefit if they acquired shares in the company and the PPP proposal proceeded.

The Commission finds that Mr Kelly’s former chief of staff, Gilbert (Laurie) Brown, engaged in serious corrupt conduct through his involvement in preparing a cabinet minute in 2010 to the Cabinet Standing Committee on the Budget (the Budget Committee of Cabinet), with the intention of improperly favouring Edward Obeid Sr by enabling AWH to proceed to direct negotiation with the NSW Government concerning the PPP proposal.

An initial draft Cabinet minute, prepared by Department of Premier and Cabinet associate director of investment and economic development Brian McGlynn, recommended that the AWH PPP proposal be rejected on several grounds including that it would not provide value for money for the state, Sydney Water Corporation (SWC) or the community. The proposal would also not transfer sufficient risk to AWH, and there was no prospect that the PPP would lead to an acceptable outcome for the NSW Government.

The McGlynn draft Cabinet minute was sent to Mr Brown at Mr Kelly’s office. As minister for infrastructure, Mr Kelly was responsible for submitting any Cabinet minute on the AWH PPP to the Budget Committee of Cabinet. The Commission finds that Mr Brown, a long-time friend of Edward Obeid Sr’s, subsequently helped draft a new minute that was instead favourable towards the AWH PPP proposal proceeding. He helped draft this minute with material he obtained, in large part, from Mr Tripodi, knowing that the new minute substantially misrepresented the truth and was highly deceptive. The Commission finds that Mr Brown undertook this course of action, because he believed it was what Edward Obeid Sr wanted.

The Commission finds that Mr Kelly engaged in serious corrupt conduct when he misused his office as a minister of the Crown by arranging for the preparation and submission of the minute to the Cabinet Standing Committee on the Budget, with the intention of improperly favouring Edward Obeid Sr. Mr Tripodi engaged in serious corrupt conduct when he misused his position as a member of Parliament to prepare a draft Cabinet minute with the intention that it would be used by Mr Brown and Mr Kelly as the basis for the minute that would be submitted by Mr Kelly to the committee. All of these actions were undertaken with the intention of improperly favouring Edward Obeid Sr by enabling AWH to proceed to direct negotiation with the NSW Government concerning its PPP proposal for the North West Growth Centre.

The Commission is of the opinion that consideration should be given to obtaining the advice of the Director of Public Prosecutions with respect to the prosecution of Edward Obeid Sr, Mr Kelly, Mr Brown and Mr Tripodi for common law criminal offences of misconduct in public office.

Operation Credo  also investigated allegations in relation to approaches made to the NSW Liberal Party by AWH in relation to its PPP proposal. The ICAC makes no findings against any individual in relation to that part of the investigation.

The Commission also investigated whether persons having an interest in AWH obtained a financial benefit by inflating charges made to SWC. No findings of corrupt conduct were made in relation to that matter.

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

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