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Probing the political culture of corruption in NSW


Bottles of Penfolds GrangeThe Independent Commission against Corruption in New South Wales is continuing to provide stunning insights into the compromised relationship between the major political parties and government in that state. It has moved on from Labor to the Liberal party and from political lobbying to political donations. But the essence of the story remains the same.

NSW Labor's reputation for probity could hardly fall any further given the revelations surrounding Eddie Obeid and Ian MacDonald, not to mention union leaders. Now it is the turn of the Liberal Party and the hearings have claimed the scalp of the Liberal State Premier, Barry O'Farrell over his failure to declare on his pecuniary interests register and to even recollect the gift to him of a $3000 bottle of 1959 Grange wine.

The gift came from Nick di Girolamo, the chairman of Australian Water Holdings and a Liberal Party fundraiser, and was given shortly after the Liberals' success in ousting Labor at the March 2011 state elections.

Previously Senator Arthur Sinodinos was forced to stand down as Assistant Minister for Finance in the Abbott Government in relation to his role in dealings with the same company. Three Central Coast MPs, including former minister Chris Hartcher, are now sitting on the cross-benches because of the wider donations scandal. And Marie Ficarra, once parliamentary secretary to the new Premier Mike Baird, has also just stood down.

At the heart of the donations scandal is the laundering of donations to the Liberal Party for its 2011 election campaign through the use of dodgy front companies. The MPs in question have set out to breach the 2009 rules specifically outlawing donations from developers. In general they have laundered up to $700,000 in donations by passing them through front companies, Eightbyfive and the Free Enterprise Foundation.

Not only have these MPs been implicated but so have party officials. Another Liberal Party fundraiser, Paul Nicolau has now resigned as chairman of the official Liberal Party fundraising organisation, the Millenium Fund. Nicolau is NSW executive director of another enthusiastic lobbyist, the Australian Hotels Association.

Even the new post-O'Farrell government is not squeaky clean as Girolamo was appointed to a government board by Baird when he was Treasurer, and reports circulated that his new deputy, Gladys Berejiklian, was close to certain Liberal-affiliated lobbyists. It was almost impossible for MPs not to be associated with lobbyists such as former Liberal MP, Michael Photios, because they were so influential in the party organisation.

Lobbying and fundraising, both legitimate activities, are two sides of the one coin. The former is largely about influencing governments in office, while the latter is more concerned with influencing the outcome of elections. They overlap when, like Labor's Brian Burke in Western Australia, those who are doing the lobbying are also heavily involved in fundraising for the party.

In recent times the direction of public policy has been to try to make both activities more transparent through public declarations of interest and to stop individuals wearing two hats; party office-holding and lobbyist.

Sinodinos had the latter problem, though company directors were not covered by the subsequent ban on lobbyists also serving as party officials. The Prime Minister, himself a product of the NSW Liberals, has taken up the reform cause. Trust in government depends upon such openness.

What is striking about the ICAC hearings is not just the bombshells that cause a premier or a minister to fall from grace but the revelations of the business-as-usual world of politics that sees lobbyists, fundraisers, party officials, MPs and ministers all clustering around the honeypot. Casual self-interest appears to reign unchallenged, and the culture of political life at the top-end is corrupted.

NSW may be worse than other states in this regard but we cannot say this with any confidence.

It is unclear just how respect for political life in NSW can be recovered. The Labor Party opposition Leader, John Robertson, is calling for everything to be on the table in order to re-establish confidence in politics. But he represents a still discredited party. Baird, the new Premier, has raised the possibility of full public funding of elections as a way to drive out corrupt donations. But that is tackling just one part of a much bigger problem.


John WarhurstJohn Warhurst is an Emeritus Professor of Political Science at the Australian National University and a Canberra Times columnist. He is author of Behind Closed Doors: Politics, Scandals and the Lobbying Industry

Topic tags: John Warhurst, ICAC, Eddie Obeid, Arthur Sinodinos, Brian Burke, Barry O'Farrell



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Existing comments

Why didn't O'Farrell just say he had no idea a bottle of wine would cost $3000? If someone gave it to my as a gift I'd mix it with chilled lemonade and make a nice sweet shandy.

AURELIUS | 02 May 2014  

Life's too short to drink cheap wine ...One woman interviewed, Kelly Cheng, paid 1.5 million Yen for one bottle of Lafite. “I just want to own it,” she said. “Whether I will drink it or not, I don’t know.”

Annoying Orange | 02 May 2014  

Lachlan Macquarie, who ran the last efficient and honest government in NSW, remarked that 'everyone in this colony has been convicted, or ought to have been'.

RobJ | 09 May 2014  

Oh yes ICAC continues to thrill with news that nothing much has changed since the Rum corps in NSW. However there is so much coming from NSW because NSW has ICAC. For genuine reform there needs to be a federal body doing the same as ICAC. Tony Windsor suggests a bill to institute such a body ought be the first priority of the new Senate crossbenchers. The real problem is that big companies run their governments and governments know they have a symbiotic relationship with the unelected companies and the Murdoch press.

Michael D. Breen | 09 May 2014  

NSW certainly appears to be the corruption capital of Australia, but perhaps that is because NSW has an ICAC and the other States do not. Nor is there a Federal body like ICAC, and if there were it would be very interesting to see how things would play out.

Alan Slatyer | 09 May 2014  

All that ICAC has accomplished is to name and shame and /or force ministers to resign their positions. The perpetrators that made them victims remain free to carry on their trade. Where wrong doing is exposed why does not ICAC submit their findings to the DPP for prosecution? Or, does the DPP have to conduct another investigation and waste time and money before a case is filed?From where I sit, ICAC is just another reality show that enjoys the occassional news when politicians, carpetbaggers, influence peddlers, lobbyists are exposed.

Jan | 09 May 2014  

Not sure why you gave Tony Abbott such an unequivocal and unexamined wrap: "The Prime Minister, himself a product of the NSW Liberals, has taken up the reform cause. Trust in government depends upon such openness". At least two more articles this week raise very serious questions about Abbott's probity. See: ICAC probe inches closer to Abbott. Neil Chenoweth http://www.afr.com/p/national/icac_probe_inches_closer_to_abbott_tlnRTpGLPgO4FzI08Ha5BOand The Righteous And The Wicked – Life in Dobell post Craig Thomson, and ICAC heats up. Peter Wixxy. http://wixxyleaks.com/?p=5061

Maurene Grundy | 09 May 2014  

All political conflicts of interest should be transparent, declared and documented; not doing so should be unlawful and ICAC should be able to fine individuals and companies. Conspiracy to hide such conflicts (front companies/foundations etc) should be (and may indeed already be) illegal and subject to criminal proceedings!! Easy.

Eugenew | 09 May 2014  

Sure Fitzgerald cleaned up the similar crude corrupt practices of Qld politics ,but all the while the sophisticated corruption ,ie legislating the corruption, went on regardless & still is .One such piece of legislation was to crush the hopes of many young rural dwellers by quarantening substancial areas of the states Pastoral Leases from partial resumption on expiry of such leases .How ? By granting automatic 20 year lease extensions .Who was the major beneficiary ? The then State President of the National party whose company held a 40 + living area aggregation of such leases . Now their recent new land tenure legislation is heading the same way .There is mock gesture of benevolence towards residents of Indigenous Communities to have capacity to purchase their homes from local councils.( absurdly unviable ,no real commercial value, no potential capital gain & litany of associated reasons) .If it were to happen it would require extinguishment of Native Title on the portion .If that were achieved ,with idealist approval of the masses, the gate would be open for the same afore mentioned Pastoralist to request equal treatment for his LEASES .He could then persue his long declared intent of converting them to Freehold Title .& revel in Golden handshake .Regards John

john kersh | 12 May 2014  

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