INVESTIGation INTO THE CONDUCT OF THE HON EDWARD OBEID MLC AND OTHERS CONCERNING CIRCULAR QUAY retail LEASE POLICY ICAC REPORT JUNE 2014 INVESTIGation INTO THE CONDUCT OF THE HON EDWARD OBEID MLC AND OTHERS CONCERNING CIRCULAR QUAY retail LEASE POLICY ICAC REPORT JUNE 2014 This publication is available on the Commission’s website www.icac.nsw.gov.au and is available in other formats for the vision-impaired upon request. Please advise of format needed, for example large print or as an ASCII file. ISBN 978-1-921688-54-6 © June 2014 – Copyright in this work is held by the Independent Commission Against Corruption. Division 3 of the Copyright Act 1968 (Cwlth) recognises that limited further use of this material can occur for the purposes of “fair dealing”, for example study, research or criticism, etc. However if you wish to make use of this material other than as permitted by the Copyright Act, please write to the Commission at GPO Box 500 Sydney NSW 2001. Level 21, 133 Castlereagh Street Sydney, NSW, Australia 2000 Postal Address: GPO Box 500, Sydney, NSW, Australia 2001 T: 02 8281 5999 1800 463 909 (toll free for callers outside metropolitan Sydney) TTY: 02 8281 5773 (for hearing-impaired callers only) F: 02 9264 5364 E: [email protected] www.icac.nsw.gov.au Business Hours: 9.00 am - 5.00 pm Monday to Friday © ICAC The Hon Don Harwin MLC The Hon Shelley Hancock MLA President Speaker Legislative Council Legislative Assembly Parliament House Parliament House Sydney NSW 2000 Sydney NSW 2000 Mr President Madam Speaker In accordance with s 74 of the Independent Commission Against Corruption Act 1988 I am pleased to present the Commission’s report on its investigation into the conduct of the Hon Edward Obeid MLC and others concerning the Circular Quay retail lease policy. Assistant Commissioner, the Hon Anthony Whealy QC, presided at the public inquiry held in aid of the investigation. The Commission’s findings and recommendations are contained in the report. I draw your attention to the recommendation that the report be made public forthwith pursuant to s 78(2) of the Independent Commission Against Corruption Act 1988. Yours sincerely The Hon Megan Latham Commissioner © ICAC Contents Summary of investigation and results 6 Chapter 5: Edward Obeid Sr and Minister Tripodi 28 Results 6 The role of Mr Tripodi 28 Recommendation that this report be made public 8 Edward Obeid Sr makes representations to Mr Tripodi 28 Chapter 1 : Background 9 Mr Tripodi rings Mr Scanlan 29 How the investigation came about 9 Why the Commission investigated 9 Chapter 6: What Mr Tripodi knew 32 Conduct of the investigation 10 Chapter 7: The position of the Commercial The public inquiry 10 Lease Policy in 2007 38 Patrick Low’s evidence 39 Chapter 2: The Circular Quay leases 11 Circular Quay – the early years 11 Chapter 8: Mr Dunn breaks the circuit 42 New management and new ownership of Cafe Sorrentino The catalyst for change 45 and Quay Eatery 13 Wrapping up negotiations 45 A donation is made 15 Chapter 9: Critical questions 47 Chapter 3: Edward Obeid Sr and Minister Costa 19 Mr Dunn 47 Developments at Circular Quay involving Maritime Did Mr Tripodi change the policy to benefit the Obeid and Mr Costa 19 family interests? 50 Edward Obeid Sr engages in “low level lobbying” The remaining question as to Mr Tripodi’s of Mr Costa 22 non-disclosure 53 Edward Obeid Sr – a figure of great power 53 Chapter 4 : Edward Obeid Sr and Minister Roozendaal 25 The $50,000 donation 53 Edward Obeid Sr makes representations to Edward Obeid Sr’s lobbying of Mr Scully, Mr Costa, Mr Roozendaal 25 Mr Roozendaal and Mr Tripodi 54 4 ICAC REPORT Investigation into the conduct of the Hon Edward Obeid MLC and others concerning Circular Quay retail lease policy Chapter 10: Corrupt conduct and s 74A(2) statements 56 Corrupt conduct 56 Steve Dunn – corrupt conduct? 56 Joseph Tripodi – corrupt conduct? 57 Edward Obeid Sr – corrupt conduct? 59 Section 74A(2) statements 60 Chapter 11: Corruption prevention 62 A chronic state of flux: the opportunities 62 A new future: the move to contested leasing arrangements 62 Contested leasing is over before it starts 63 Parliamentary influence 64 Maritime’s ongoing struggle to develop a Commercial Lease Policy 64 The present situation 64 Managing the latest plan 65 Appendix 1: The role of the Commission 67 Appendix 2: Making corrupt conduct findings 68 ICAC REPORT Investigation into the conduct of the Hon Edward Obeid MLC and others concerning Circular Quay retail lease policy 5 Summary of investigation and results This investigation by the NSW Independent Commission The Commission found that Edward Obeid Sr engaged in Against Corruption (“the Commission”) concerned the corrupt conduct by misusing his position as an MP: following allegations that: 1. in about 2000 to make representations to minister • between 1995 and 2011 the Hon Edward Obeid the Hon Carl Scully that Mr Scully should benefit MLC (“Edward Obeid Sr”) misused his position Circular Quay leaseholders by ensuring they as a member of Parliament (MP) to attempt to were offered new leases with five-year terms and influence other public officials to exercise their options for renewal for five years at a time when official functions with respect to retail leases at Edward Obeid Sr was influenced in making the Circular Quay in Sydney without disclosing that representations by the knowledge that Circular he, his family or a related entity had an interest in Quay leaseholders had donated $50,000 to the certain of the leases Australian Labor Party (ALP) as payment for the carrying out of what they understood to be a • between 2000 and 2011 certain public officials, promise that their interests as leaseholders would including the Hon Joseph Tripodi, improperly be looked after by the government exercised their official functions with respect to retail leases at Circular Quay for the purpose of 2. between 2003 and 2006 by making benefiting Edward Obeid Sr or his family. representations to ministers Michael Costa and The Commission also conducted a public inquiry held as the Hon Eric Roozendaal to change government part of an investigation into other allegations that Edward policy to allow for direct negotiations for new Obeid Sr misused his position as an MP. These allegations leases with existing Circular Quay leaseholders were concerned with whether Edward Obeid Sr misused rather than proceed with an open tender process his position to advance his own personal financial position and deliberately failing to disclose to them that his or that of his family by influencing other public officials to family had interests in Circular Quay leases and exercise their official functions to favour Direct Health would benefit financially from such a change in Solutions Pty Ltd (Operation Meeka) and with respect to policy the review and granting of water licences at Cherrydale 3. to benefit his family’s financial interests by making Park (Operation Cabot). These allegations are dealt with representations to Mr Tripodi and Mr Dunn to in a separate report. pressure them to change government policy to allow for direct negotiations for new leases with Results existing Circular Quay leaseholders rather than proceed with an open tender process. Chapter 10 of the report contains three corrupt conduct findings against Edward Obeid Sr, a corrupt conduct For the purposes of s 8 of the Independent Commission finding against Mr Tripodi and a corrupt conduct finding Against Corruption Act 1988 (“the ICAC Act”), Edward against Steve Dunn who, at the time, was deputy chief Obeid Sr’s conduct in (1) and (3) above could involve the executive officer of the Maritime Authority of NSW dishonest or partial exercise of his official functions as (“Maritime”) and head of its Property Division. an MP and therefore come within s 8(1)(b) of the ICAC 6 ICAC REPORT Investigation into the conduct of the Hon Edward Obeid MLC and others concerning Circular Quay retail lease policy Act. Edward Obeid Sr’s conduct in (2) and (3) above the common law criminal offence of misconduct in public could constitute or involve a breach of public trust and office and therefore come within s 9(1)(a) of the ICAC therefore come within s 8(1)(c) of the ICAC Act. In each Act. case, his conduct could constitute or involve the common law criminal offence of misconduct in public office and Statements are made pursuant to s 74A(2) of the therefore come within s 9(1)(a) of the ICAC Act. ICAC Act that the Commission is of the opinion that consideration should be given to obtaining the advice of The Commission found that Mr Tripodi engaged in corrupt the Director of Public Prosecutions (DPP) with respect to conduct in 2007 by deliberately failing to disclose to his the prosecution of Edward Obeid Sr for the common law Cabinet colleagues his awareness of the Obeid family’s criminal offence of misconduct in public office in relation to financial interests in Circular Quay leases, knowing that his representations to: those interests would benefit from Cabinet’s endorsement of changes to the Commercial Lease Policy by effectively • Ministers Costa and Roozendaal to change eliminating any material prospect of a public tender process government policy with respect to Circular Quay for those leases and instead permitting direct negotiations leases without disclosing to them that his family for their Circular Quay tenancies. had interests in Circular Quay leases and would benefit financially from such a change in policy For the purposes of s 8 of the ICAC Act, Mr Tripodi’s • Minister Tripodi to change government policy with conduct could constitute or involve the dishonest or partial respect to Circular Quay leaseholders knowing exercise of his official functions and a breach of public that such a change would benefit his family’s trust and therefore come within s 8(1)(b) and s 8(1)(c) of interests in Circular Quay leases.