Outgoing New South Wales Premier Barry O’Farrell may have been a shock casualty of the Independent Commission Against Corruption’s Credo inquiry, but sympathy for a popular leader should not give way to a premature declaration that his government was free of corruption.

Public hearings start soon in ICAC’s related Spicer inquiry, focused specifically on Liberal Party fundraising. Given yesterday’s events, it would be foolish to predict what might come out of it. Already yesterday, conservative columnist Paul Sheehan was speculating there must be more to O’Farrell’s resignation than a repeated memory failure over a $3000 bottle of wine.

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The Credo evidence is in, but Commissioner Megan Latham has yet to hand down her findings. It is fair to say that nothing appears to have emerged that alters the initial assessment of counsel assisting ICAC Geoffrey Watson SC, who said in his March opening address: “We’ve looked carefully at the activities of Mr O’Farrell and Mr [former finance minister Greg] Pearce, and we have found no evidence to implicate either in any corruption.” Both were the focus of relentless lobbying by Australian Water Holdings.

Despite lobbying by AWH and its CEO Nick Di Girolamo, AWH did not succeed in its long campaign to establish a $1 billion public-private partnership to deliver the water and sewer infrastructure to Sydney’s North West Growth Centre. The PPP would have delivered a windfall gain to AWH shareholders, including $60 million to the family of corrupt Labor politician Eddie Obeid and up to $20 million to former assistant treasurer Senator Arthur Sinodinos (whose position looks ever-more shaky).

The main focus of Operation Credo, let’s recall, was on lobbying of the previous Labor government by AWH, particularly a breathtaking 2010 attempt to doctor a cabinet minute and turn an unfavorable reaction into a favorable recommendation on the PPP.

But as Watson noted, for at least the first five months after O’Farrell’s election in March 2011, AWH’s lobbying effort (italics mine) “was working  — the proposal was consistent with Liberal Party policy and the noises from the politicians were generally positive”. Despite every relevant expert telling the government the proposed PPP was a crock, the AWH proposal would not go away, and in May that year di Girolamo even succeeded in getting a face-to-face meeting with O’Farrell, which Pearce described as “cosy”.

As Watson set out right at the beginning, AWH also succeeded in getting an openly hostile Sydney Water to agree to have former judge Terence Cole QC consider the PPP. As it turned out, Watson said, Cole’s evaluation was “devastating” to AWH and di Girolamo’s argument that AWH’s existing open-ended contract with Sydney Water gave it the right to establish a PPP, finding AWH had “no more than an agreement to agree”. That was at the end of August, 2011, and it then took another five months before AWH and Sydney Water were able to reach a settlement — striking a new, 25-year contract worth $100 million — and finally kill off the PPP altogether, after which time di Girolamo quit the company. Watson said his initial view was that the new contract between Sydney Water and AWH — still on foot — was “fair and proper” but it was for ICAC to determine whether it was product of corrupt conduct or not.

Further, as the ABC’s 7.30 revealed last night, Greens MP John Kaye has obtained documents showing in mid-2012 di Girolamo was appointed to the board of the State Water Corporation by Treasurer Mike Baird, against advice.

Baird, almost certain to become premier this afternoon, appointed di Girolamo after he had come last in a recruitment process to join the board of Sydney Ports Corporation, with the chairman advising he was a lawyer with narrow experience who did not possess the skills required to fill the gaps on the ports board but was “likely to be suitable for other smaller boards”.

Kaye says the board of State Water  is larger than the board of Sydney Water and there was no subsequent interview for di Girolamo, who got a plum post worth $34,000 a year in what looks like a straightforward case of jobs for donors. According to the Greens tally, AWH and di Girolamo donated $118, 583 to the Liberal Party between 2008-2011.

As Kaye told Crikey this morning: “Mr Baird as premier has to answer the question why was Mr di Girolamo appointed to the State Water board on his signature with documents that showed he was not qualified, he had not been through a board appointment process, and when he had been through a process it had said he was unsuited except for smaller boards. Instead he signed off on the appointment of a major party donor to a plum job.”

“The irony is that Mr di Girolamo was filling a position vacated by [former Health Services Union president] Michael Williamson, who is now serving a prison term and whose appointment was the subject of savage criticism by the then-Coalition opposition. It looks like in March of 2011 the people of NSW turfed out the HSU and brought in AWH”.

It’s yet more of the NSW disease, and it’s not cured yet.

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Peter Fray
Peter Fray
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