The NSW Independent Commission Against Corruption has been authorised by law to engage in undisclosed communications with the state government during the course of its inquiries, according to a draft report to state parliament.
The draft report, which has been prepared by ICAC Inspector Bruce McClintock SC, rejects accusations of wrongdoing against former ICAC Commissioner David Ipp that had been based on communications between the commission and the state government during a major inquiry.
Those contacts have been outlined in a complaint that lists a series of letters, meetings and telephone calls that took place while ICAC was conducting an inquiry known as Operation Jasper.
This inquiry examined the way the previous Labor government had allocated coal exploration licences and led to the state government expropriating the licences while rejecting ICAC’s call for innocent parties to be compensated.
That decision, by the government of former premier Barry O’Farrell, imposed big losses on foreign shareholders in the affected companies, NuCoal Resources and Cascade Coal, and has embroiled the federal government in a potential trade dispute with the US.
American investors in NuCoal have complained to their government that the expropriation breaches a free-trade treaty that guarantees the security of US-owned assets in Australia.
In the past few weeks, the federal and NSW governments took part in a three-way telephone conference on the affair with representatives of the US government.
The free-trade treaty requires prompt and adequate compensation for seized US assets, but it also means any seizure must be done with due process.
On that point, the aggrieved US shareholders in NuCoal — who believe Australia owes them $131 million — are expected to take an interest in recent disclosures about the way the Jasper inquiry was conducted.
They already knew this inquiry, like all ICAC inquiries, was not conducted according to the rules of evidence. They also knew that the United Nations Human Rights Committee in Geneva is considering whether ICAC’s procedures breach the International Covenant on Civil and Political Rights. And they also knew that some of the findings in the Jasper report rely for their validity on retrospective legislation that renders lawful those actions by ICAC that would otherwise have been unlawful.
Two other factors have now added to doubts about whether any government action that relied upon ICAC’s procedures would be viewed by Americans as due process. On one view, this concept requires independent courts rather than politicians to be the custodians of justice.
US officials now know that ICAC, which is not a court, took secret evidence from a former premier of NSW that contradicts one of the Jasper report’s conclusions and is not mentioned in the report.
They also know that this inquiry, which focused on the conduct of the previous Labor state government, was not conducted at arm’s length from Labor’s Coalition successors in Macquarie Street. From today, American investors will also know that this was authorised by NSW law.
Mr McClintock’s draft report, which has been obtained by The Australian, says the complaint about Mr Ipp’s interaction with the O’Farrell government during the Jasper inquiry has no substance because the legislation governing ICAC means it is “perfectly appropriate” for an ICAC commissioner to communicate with a premier or a minister.
The complaint against Mr Ipp was lodged in November by businessman John Atkinson, a former managing partner of the Hong Kong and China practices of Baker & McKenzie and an investor in Cascade Coal.
He was found corrupt by ICAC almost five years ago but has never been charged with any offence. NSW law does not permit him to test the merits of the Jasper report that says he is corrupt and his attempt to overturn that finding on the narrower basis of error of law was rejected in 2016. The covering letter of his complaint to Mr McClintock says he has documentary evidence of interaction between ICAC and the O’Farrell government that began months before the Jasper inquiry was formally called by parliament.
His list of contacts between ICAC and the state government goes beyond details that were revealed by The Australian two years ago.
Mr Atkinson’s complaint provides names and dates for each of the contacts but Mr McClintock’s draft report says the complaint is based on an incorrect premise and is without substance.
“It is perfectly appropriate (subject to the general principles of administrative law which bind it) for one officer of the executive, that is, the Commissioner, to communicate with another, for example, the premier or a minister,” the draft report says.
The draft report contains no assessment of the subject matter of the discussions between ICAC and the O’Farrell government. However it indicates that the full list of contacts will be provided to parliament and made public as Mr McClintock proposes to include the text of Mr Atkinson’s complaint in his final report.
The complaint says Mr Ipp’s interaction with the executive arm of government during the Jasper inquiry “certainly sits uncomfortably with the use of the word ‘independent’ in the commission’s own name”.
“Further, it would fail the ‘pub test’. The public would rightfully expect complete independence,” Mr Atkinson wrote.
The draft report on ICAC’s undisclosed contacts with the Coalition government has come to light soon after it emerged that the commission had withheld secret evidence that contradicts some of the Jasper report’s adverse conclusions about Labor’s former minister for mineral resources, Ian Macdonald. Macdonald has since been jailed for misconduct in public office.
The Liberal Party’s Peter Phelps, who has obtained a transcript of the secret evidence, told the state’s Upper House last month that the evidence given in private by former Labor premier Nathan Rees contradicted evidence Mr Rees later gave to ICAC at a public hearing.
The secret evidence, according to Dr Phelps, is exculpatory of Macdonald and its suppression by ICAC should be the subject of an inquiry, he told parliament.
In February, 2016, this newspaper reported that it had obtained a collection of documents indicating that ICAC and the O’Farrell government had talks about proposed recommendations while the Jasper inquiry was still under way.
Court challenges alleging the relationship with the government was so close that ICAC was biased have failed and there is no suggestion that Mr Ipp’s conduct, or that of Mr O’Farrell, breached the ICAC Act.
Those challenges were run by businessman Travers Duncan, who like Mr Atkinson was an investor in Cascade Coal and was found by ICAC almost five years ago to be corrupt. Like Mr Atkinson, he has not been charged with any offence.
While Mr Duncan’s court challenges failed, the proceedings uncovered documents whose authenticity has not been questioned.
Among the documents held by The Australian — and referred to in Mr Atkinson’s complaint — is a file note prepared by Chris Eccles, who was director-general of the Department of Premier and Cabinet in January 2013.
It says Mr Ipp made a telephone call on January 31 to Mr Eccles to discuss “exploration licences and mining leases at Mt Penny”.
Another document held by The Australian — and referred to by Mr Atkinson — is a briefing note dated January 15 that was prepared for Mr O’Farrell by Paul Miller, the general counsel of the Department of Premier and Cabinet.
It shows that Mr Ipp had outlined the content of a letter he wanted to receive from the government concerning the Jasper inquiry.
Mr Miller’s briefing note, which was written six months before the Jasper report was published in July 2013, referred to the “proposed” recommendations from the inquiry.
It says: “It appears that the commission has suggested that the letter be sent as a ‘diplomatic’ matter given that recommendations of the type proposed are somewhat unusual, in so far as they would constitute an opinion as to appropriate executive government action, rather than merely findings as to the presence (or absence) of corrupt conduct … ”
When The Australian revealed the existence of these documents, Mr O’Farrell said his dealings with Mr Ipp had always been appropriate. Mr Ipp had pointed to the failure of all proceedings alleging he was biased.
After the High Court ruled in 2015 that ICAC had exceeded its jurisdiction by pursuing deputy senior Crown prosecutor Margaret Cunneen SC, the commission agreed to withdraw its corruption finding against Mr Atkinson because it had exceeded its jurisdiction. But before this could be done, the NSW government — then led by former premier Mike Baird — enacted retrospective legislation validating the commission’s past actions that lacked a basis in law.
In a covering letter to Mr McClintock, Mr Atkinson writes that the retrospective legislation “makes lawful ICAC decisions that the High Court determined to be an abuse of power”.
“This specific legislative act effectively rendered me corrupt for life — notwithstanding that ICAC itself had offered to withdraw corruption findings against me and others,” Mr Atkinson wrote.
Chris Merritt
Legal Affairs Editor
(WTF) Used with permission