Junk Explained: Let’s Catch Up With Eddie Obeid And The ICAC

Remember how we voted out that NSW Labor Government, because we thought they were corrupt? Well it turns out they really were.

After finding that he had managed to improperly make profit worth millions of dollars from coal deals in the Upper Hunter in 2009, the Independent Commission Against Corruption (ICAC) is currently hearing evidence for a second inquiry into one of NSW Labor’s most powerful members, Eddie Obeid Senior, whose dominance of the NSW Right faction of the ALP is legendary. And things aren’t looking good for Eddie and his large, wealthy family.

The Most Powerful Man in NSW

Eddie Obeid Snr is a fascinating study of old-school Machiavellian political power. Migrating from Lebanon to Australia at the age of six, Obeid became a businessman and ultimately a millionaire, at which point he was groomed by the famed Labor powerbroker Graham Richardson to enter the NSW Legislative Assembly.

Obeid then used his position, his wealth and his talent for manipulating the people around him to acquire extraordinary power over the Labor caucus and, by extension, the government itself. To give you an idea of how powerful he was, Obeid orchestrated the removal of Bob Carr from the premiership (they were sworn political enemies), the subsequent removal of Morris Iemma, and later Nathan Rees.

Obeid has nine children, almost all of whom manage the family’s considerable (and diverse) businesses interests, and the family is extremely close — to the point where they all share the same bank account, Obeid Family Trust No (1). Many of his sons have already appeared before the commission, and ICAC found Moses, the oldest son, to have engaged in corruption.

The Last Investigation

ICAC dominated the news earlier in the year when, it investigated the actions of Eddie Obeid and the then-Mining Minister Ian MacDonald, over the process by which coal exploration licenses were granted in the Bylong Valley. Why? Because Eddie Obeid had bought a farm that just happened to have gigantic coal reserves underneath it.

This could have been simply a happy coincidence for the Obeids, except that they were in possession of confidential maps of potential mine sites in the Bylong Valley, and encouraged their friends to buy up farms nearby. All the properties owned by Obeid and their associates quadrupled in value when the Mt Penny tenement was created.

And: it gets better. The Obeids then started surreptitiously making deals with the mining companies that wanted to mine their land. Cascade Coal for instance, the company that eventually secured the rights to the mine site, paid Obeid subsidiaries $30 million for ‘intellectual property’ in the event of their bid being successful.

This investigation made it very clear that the Obeids had engaged in corrupt practices, and that Eddie Obeid used his political influence over Ian MacDonald to financially benefit himself, his family and his associates; ICAC estimated that he could have made up to $100 million from the deal, making it one of the largest corruption cases in Australian history.

The Current Investigation

There are actually three current investigations into matters related to Eddie Obeid, but the one currently being heard — named Operation Cyrus — is about a cafe in Circular Quay called ARC cafe.

ARC is your average, run-of-the-mill tourist trap, with overpriced food of unspectacular quality and eye-wateringly bad coffee. I actually tried it last week.

The cafe is owned by the Circular Quay Restaurants Pty. Ltd., which is a front for the Obeid family — a fact that has already been confirmed at the hearings this week . What is suspicious is that the Obeids have had some extraordinarily favourable decisions made to keep the leases on their cafes, despite being months behind on rent, to the tune of $275,000. The investigation is focusing on the question of whether or not Obeid used his considerable political influence to ensure these decisions.

These favourable decisions were made by Ports Minister, and notable factional ally/protege, Joe Tripodi. Tripodi was a former president of Young Labor who, with Obeid, co-founded the most powerful sub-faction of the NSW Right, named ‘The Terrigals’ after the location of Obeid’s beach house where they first met. The two were known to be close; indeed, after the premier Nathan Rees sacked Tripodi from cabinet, Obeid arranged to sack Nathan Rees.

The most interesting question of this inquiry is whether or not Tripodi knew that these cafes were owned by the Obeids or whether, as he claims, he was deceived by his closest political ally into making these bizarre decisions, which resulted in Obeid profiting from his political clout. We don’t know for sure, but, dramatically, the investigation was broadened during the hearings to treat Tripodi as a suspect rather than simply a witness as he was originally slated.

What Does All This Mean?

If Tripodi is found to have acted corruptly, the impact will be huge. He was a notable figure in the former government, and one who had considerable influence over his fellow MPs. More broadly, if Tripodi is found to be corrupt then the NSW Labor Party can no longer say that Obeid and Macdonald were isolated instances; it will effectively prove that there was a culture of corruption amongst the last state government.

A culture of corruption is devastating to a political party’s brand, and considering that Labor’s current parliamentary leader, John Robertson, is enduring criticism for failing to report a million dollar bribe from a property developer (who had connections to Eddie Obeid, and was later murdered in his driveway), it looks like things actually could get worse for NSW Labor.

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Joe McKenzie is a writer and editor of Vertigo, the UTS student magazine. You can follow him on twitter at @ajoemckenzie where he obsessively follows the ICAC hashtag.