Sydney Water unwittingly became a major Liberal Party donor in an alleged wide-ranging, multimillion dollar corruption scandal that has engulfed both sides of politics.
The allegations involve ex-Labor ministers Joe Tripodi and Tony Kelly and a Labor staffer trying to trick cabinet colleagues with a fake document to secure a huge business deal from which the current Federal Assistant Treasurer Arthur Sinodinos stood to gain.
Labor powerbroker Eddie Obeid allegedly told a colleague in a parliament lift to “sack the bitch” when faced with a perceived stumbling block to the deal.
On Monday, the NSW Independent Commission Against Corruption (ICAC) launched public hearings for Operation Credo, with investigations focusing on the activities of privately-held Australian Water Holdings and state-owned Sydney Water between 1992 and 2012.
Liberal party fundraiser and former Sydney lawyer Nicholas Di Girolamo was AWH’s CEO until he resigned in February.
Mr Obeid and his family allegedly had a strong financial interest in the company, while Senator Sinodinos was employed as a director.
During an explosive opening address, a packed gallery heard that AWH secured a deal with Sydney Water in 1992 to create water infrastructure in Sydney’s northwest, which was then ripe for residential development.
Counsel assisting the inquiry Geoffrey Watson SC alleged that AWH began making donations worth tens of thousands of dollars to the Liberal Party, with the amounts then charged back to Sydney Water as administration costs.
The payments were alleged to have been made under the guidance of Mr Di Girolamo.
“On what I have seen those donations were bundled up into the expenses and charged back to Sydney Water,” Mr Watson said in his opening address.
“It seems that Sydney Water has – unwittingly and unknowingly – been a principal donor to the Liberal Party.”
Sydney Water did not know the money was being channelled to the Liberals because it could not access documents relating to its destination, Mr Watson said.
NSW Premier Barry O’Farrell has been interviewed by ICAC, but there were no findings of corruption, Mr Watson said.
Mr Watson also outlined how AWH in 2010 submitted an unsolicited business proposal for water supply infrastructure in Sydney’s northwest to the NSW Labor government, then led by Premier Kristina Keneally.
The public-private partnership (PPP) proposal was initially taken seriously but an independent assessor later advised it be rejected.
That recommendation was turned into a cabinet minute.
AWH’s value would have soared from about $47 million to $246 million over six years had the deal been approved, evidence tendered to the ICAC showed.
Senator Sinodinos stood to be paid a 2.5 per cent bonus, potentially worth millions, if the deal went through.
Mr Watson alleged Mr Tripodi altered the cabinet minute to make it look as though the deal had been approved by the expert.
Former Labor planning minister Mr Kelly and his chief of staff Laurie Brown altered or at least approved the false cabinet minute, Mr Watson added.
Mr Obeid, whose son Eddie is alleged to have used $3 million to buy shares in AWH, also lobbied ministers to approve the PPP deal.
In a further allegation, Mr Watson claimed that Mr Obeid tried to have Sydney Water senior managers Dr Kerry Schott and Ron Quill sacked, when it appeared the deal was faltering.
The ICAC inquiry is expected to last three weeks.