CORRUPTION AND CRIME COMMISSION REPORT ON THE INVESTIGATION OF ALLEGED PUBLIC SECTOR MISCONDUCT IN CONNECTION WITH THE ACTIVITIES OF LOBBYISTS AND OTHER PERSONS THE HON ANTHONY DAVID MCRAE MLA AND MR REWI EDWARD LYALL 21 November 2008 ISBN: 978 0 9805050 1 6 © 2008 Copyright in this work is held by the Corruption and Crime Commission. Division 3 of the Copyright Act 1968 (Commonwealth) recognises that limited further use of this material can occur for the purposes of “fair dealing”, for example, study, research or criticism. Should you wish to make use of this material other than as permitted by the Copyright Act 1968, please write to the Corruption and Crime Commission at the postal address below. This report and further information about the Corruption and Crime Commission can be found on the Commission Website at www.ccc.wa.gov.au. Corruption and Crime Commission Postal Address PO Box 7667 Cloisters Square PERTH WA 6850 Telephone (08) 9215 4888 1800 809 000 (Toll Free for callers outside the Perth metropolitan area.) Facsimile (08) 9215 4884 Email [email protected] Office Hours 8.30 a.m. to 5.00 p.m., Monday to Friday CORRUPTION AND CRIME COMMISSION Hon Nicholas Griffiths MLC Hon Grant Woodhams MLA President of the Legislative Council Speaker of the Legislative Assembly Parliament House Parliament House Harvest Terrace Harvest Terrace PERTH WA 6000 PERTH WA 6000 Dear Mr President Dear Mr Speaker In accordance with sections 84 and 93(1) of the Corruption and Crime Commission Act 2003, the Commission presents the Corruption and Crime Commission Report on the Investigation of Alleged Public Sector Misconduct in Connection with the Activities of Lobbyists and Other Persons: The Hon Anthony David McRae MLA and Mr Rewi Edward Lyall. Yours faithfully The Hon L W Roberts-Smith RFD QC COMMISSIONER 21 November 2008 ABBREVIATIONS AND ACRONYMS ABC Australian Broadcasting Commission “the Act” Corruption and Crime Commission Act 2003 ALP Australian Labor Party “Canal Rocks” Canal Rocks Pty Ltd “the Commission” or CCC Corruption and Crime Commission CPSS Commissioner of Public Sector Standards (Cth) Commonwealth DPI Department for Planning and Infrastructure EISC Economics and Industry Standing Committee “the FOI Act” Freedom of Information Act 1992 LPS Local Planning Scheme (Previously known as Town Planning Scheme (TPS).] MLA Member of the Legislative Assembly of the Parliament of Western Australia MLC Member of the Legislative Council of the Parliament of Western Australia ODP Outline Development Plan OPSSC Office of the Public Sector Standards Commissioner PMA Precious Metals Australia “the Privileges Committee” Procedure and Privileges Committee of the Legislative Assembly of the Parliament of Western Australia “the PSM Act” Public Sector Management Act 1994 “the Shire” Shire of Gingin “the SD Act” Surveillance Devices Act 1998 (WA) SD Surveillance Device(s) TI Telecommunications Intercept (or Interception) “the TI Act” Commonwealth Telecommunications (Interception and Access) Act 1979 TPS Town Planning Scheme (Now known as Local Planning Scheme (LPS).] WAPC Western Australian Planning Commission WMC Western Mining Corporation v TABLE OF CONTENTS ABBREVIATIONS AND ACRONYMS ………………………………………. v EXECUTIVE SUMMARY ..………………..………….…………………….... xi Background ……………………………………………………………………. xi Mr Anthony David McRae …………………………………………...……… xi Alleged Misconduct …………………………………………………… xi Mr Burke and Mr Grill: Activities as Lobbyists ……………………...xii Mr McRae and Fund-Raising ………………………………………...xiii The Gingin Matter ………………………………………………….… xiv Mr McRae and Mr Grill ……………………………………………..... xvi Mr McRae’s Impropriety as Minister ………………………………. xxiv Mr McRae’s Misconduct …………………………………………... xxvii Serious Misconduct Opinion ……………………………………….. xviii Recommendation ………………………………………………...…. xxix Mr Rewi Edward Lyall ………………………………………………………. xxx Background ……………………………………….………………..... xxx Mr Lyall’s Meeting with Mr Grill and Mr Lombardo on 8 September 2006 …….....………………….…………….... xxxi Millbank on Moore: No Misconduct ………………..………….…. xxxii Mr Lyall’s Contact with Mr Grill in Relation to Artrage …..…...… xxxii Artrage: No Misconduct ………………………….……..……..….. xxxv Executive Summary: Endnotes ………..…………..………………….... xxxvii CHAPTER ONE FOREWORD …...…………………….…..……..……………………………... 1 1.1 Commission Investigation …..……………………..………….………. 1 1.2 Commission Jurisdiction …………..……………………...…..…….... 3 1.3 Definitions …………………………………………………………….… 4 1.3.1 Public Officer ....…………………………….………….……... 4 1.3.2 Misconduct ………………..………………………………...… 4 1.4 Reporting by the Commission …………………………….………..… 5 1.5 Disclosure ………………………………………………………………. 7 1.6 Telecommunications Interception Material ………….…................... 9 1.7 Privacy Considerations ………………………………………………... 9 1.8 Opinions of Misconduct: Standard of Proof ……………......…......... 9 CHAPTER TWO A DEVELOPMENT PROPOSAL AND A MINISTERIAL CONVERSATION …………………………….………..... 13 2.1 Millbank on Moore Development ..……..………………………....... 13 2.2 Mr Burke ……………………………………..…………………….….. 14 vii 2.3 Mr Grill …………...………………………………...…………….……. 15 2.4 Lobbying by Mr Grill and Mr Burke ……………………….…….….. 15 2.5 Mr McRae’s Reversal of the Millbank on Moore Decision ……..... 16 2.6 Mr McRae’s Telephone Call to Mr Grill on 11 October 2006 ….… 17 2.7 Investigation Sparked by the Telephone Call of 11 October 2006 ………………………………………………...... 25 2.8 Mr McRae’s Interview with Commission Investigators on 6 February 2007 …………………………………..……..……….. 27 2.9 Decision to Hold Mr McRae’s Hearing in Public ……...………....... 28 2.10 Commission Public Hearings in February 2007 ………......…….... 29 2.11 Mr McRae’s Appearance at a Commission Public Hearing ……... 29 CHAPTER THREE EVENTS FOLLOWING THE PUBLIC HEARING ……………...………... 33 3.1 Mr McRae’s Statements to the Media ……..…………………...….. 33 3.2 Restrictions of the Commonwealth Telecommunications (Interception and Access) Act 1979 ……….……………..………... 34 3.3 Private Hearing on 6 July 2007 ………………………………..…… 35 3.3.1 Mr Grill’s State of Knowledge ……………………………... 35 3.3.2 Mr McRae’s State of Knowledge ………………………...... 36 3.3.3 Alternatives put forward by Mr McRae ……………..…..… 37 3.3.4 Mr McRae’s Conduct ……………………………………..... 38 3.3.5 Omitted Telephone Conversation ……………………….... 39 3.3.5.1 Meeting Request ………………………..…….…. 44 3.3.5.2 Canal Rocks Meeting ………………………..….. 46 3.3.6 Commission’s Omission of Call from Public Hearing ...… 48 3.4 Parliamentary Inspector Correspondence ……………………….... 49 CHAPTER FOUR LOBBYING ………..………………………………………………………….. 51 4.1 External Influences on Public Officers …………………........….…. 51 4.2 Fund-Raising and the Sale of Access ……………………......……. 52 4.3 Current Legislative and Regulatory Framework in Western Australia ………………………………..………..…………. 53 4.4 Parliamentary Codes of Conduct in Western Australia ………….. 54 4.5 Influence of Mr Burke and Mr Grill within the Australian Labor Party ……………………………...…………………….……… 57 4.6 Use of Influence in Lobbying by Mr Burke and Mr Grill ..….….….. 60 4.7 Fund-Raising Assistance Provided by Mr Burke and Mr Grill ….... 61 viii CHAPTER FIVE MR ANTHONY (TONY) DAVID McRAE ………..………..……………….. 69 5.1 Mr McRae ……………………………….……………………….……. 69 5.2 Riverton ………………………………………………………….…….. 72 5.3 Importance of Campaign Funding in Riverton ………………….…. 72 5.4 Assistance by Mr Burke and Mr Grill in Mr McRae’s Promotion to Cabinet ………………………………………………… 75 5.4.1 Cabinet Vacancy: January 2006 ……………..…..……….. 75 5.4.2 Cabinet Vacancy: May 2006 ……...……..………………… 78 5.4.2.1 Mr McRae’s Appreciation …………..………...… 83 CHAPTER SIX MR McRAE’S FUND-RAISING IN 2004 AND 2005 …………..…………. 87 6.1 Introduction ……………………………………………………….…... 87 6.2 Economics and Industry Standing Committee 2004 …………...… 87 6.3 Fund-Raising Dinner: 1 September 2004 …..…………………....... 88 6.4 Events Subsequent to Economics and Industry Standing Committee Inquiry .……………..……….………….…..… 89 6.5 Donation Request 7 January 2005: Email to Mr Grill ………......... 90 6.6 Donation Request 7 January 2005: Email to Mr Smith ….............. 91 6.7 Donations to Mr McRae’s Campaign …………...………….…….… 93 CHAPTER SEVEN COMMISSION ASSESSMENTS, OPINIONS AND RECOMMENDATIONS: MR McRAE ……….……….………...….… 97 7.1 Millbank on Moore Decision …………………………...…….….….. 97 7.2 Telephone Call of 11 October 2006 ………………………….…..... 97 7.3 Assessment of Misconduct …………………………………….….. 116 7.3.1 Serious Misconduct Opinion ……………………………... 120 7.3.2 Recommendation ………………………………………….. 121 CHAPTER EIGHT MR REWI EDWARD LYALL …………………………………………….... 123 8.1 Mr Lyall’s Position …………………………………………………... 123 8.2 Mr Lyall’s Relationship with Mr Grill ……………………….…….... 123 8.3 Canal Rocks Meeting on 30 June 2006 ……………………..….... 125 8.4 Millbank on Moore ……..………………………….……………..…. 128 8.4.1 Mr Lyall’s Meeting with Mr Grill and Mr Lombardo on 8 September 2006 …………………………………..… 129 8.4.2 Telephone Contact between Mr Lyall and Mr Grill following the Meeting …………….……...…. 131 ix 8.5 Mr Lyall’s Contact with Mr Grill in Relation to Artrage …………... 139 8.6 Commission’s Opinions in Relation to Mr Lyall ………….………. 146 APPENDICES ………………………………………………………………. 153 APPENDIX 1 Letter to Mr C P Shanahan SC, Acting Commissioner, Corruption and Crime Commission, of 11 April 2008 from Mr Malcolm McCusker AO QC, Parliamentary Inspector, and enclosed Draft Paper (13 pages) entitled Complaint by Mr Tony McRae …….….......................................................... 155 APPENDIX 2 Statement of Ms Fiona Crowe …………………………………….. 173 APPENDIX 3 Series of “Yes” and “No” Answers to Questions Provided by Ms Fiona Crowe on 30 November 2007 to Mr A D McRae …………………………………….…………………