Clear air to repair NSW parliament’s costly blunders

Gladys Berejiklian’s freshly re-elected government in NSW now has four clear years in which to make amends for two of the most expensive errors ever made by a state parliament.

It will cost millions of dollars to set things right, but the sooner the NSW Premier addresses this disaster, the greater the likelihood it will fade into history before the next election.

The government’s first mistake was placing too much faith in a report it received in 2013 from the Independent Commission Against Corruption that focused on the allocation of a coal explor­ation licence by the previous Labor government.

The second mistake was acting on that information before any of ICAC’s allegations had been tested in court.

It is now known that ICAC ­failed to inform parliament about crucial matters that might have raised doubts about the commission’s conclusions.

Inconvenient facts, known to the commission, were simply not part of the narrative that was presented to parliament.

The NSW government, which was then led by Barry O’Farrell, cannot be blamed for these omissions. But it must take responsibility for its own actions.

The trouble started in January 2014, when the government, with the support of the Labor opposition, enacted legislation based on what it had been told by ICAC.

Parliament was gambling, in effect, that ICAC had its facts — and the law — right and there was no need to wait for the justice system to rule conclusively on the commission’s allegation that the allocation of a coal exploration licence had been affected by misconduct in public office.

Parliament also was kept in the dark about secret testimony taken by ICAC at an inquiry known as Operation Acacia from two former premiers, Kris­tina Keneally and Nathan Rees.

Extracts of their testimony at closed-door compulsory examinations were read aloud last year in the NSW upper house by the Liberal Party’s Peter Phelps. Their evidence is at odds with ICAC’s asser­tion that it was “aberrant” for a minister to allocate a coal explor­ation licence without seeking cabinet approval.

Like all ICAC reports, the “findings” that were sent to parliament were no more than unproven allegations.

Any government that makes public policy on such a basis is tempting fate, particularly when the allegations have been arrived at by an agency that omitted important facts and is not bound by the rules of evidence. But the O’Farrell government went much further than merely setting policy. It relied explicitly on the information it had received from ICAC. It legislated a direct attack on private property that was taken from its owners not because of anything they had done but because of unproven allegations against others. That was wrongheaded from the start. Even worse was the fact NSW refused to pay compensation.

O’Farrell’s legislation, explicitly referring to ICAC and Operation Acacia in its title, cancelled a coal exploration lic­ence because parliament believed what it had been told by the commission; and ICAC believed the manner in which the licence had originally been issued had been tainted by corruption that amounted to misconduct in public office.

This had a direct impact on mining company NuCoal Resources, which acquired its licence when it bought the original licence holder, Doyles Creek Mining, 14 months after the licence had been issued.

As the law stands today, not one of the people from Doyles Creek Mining who had been accused of corruption in the Acacia report has been found guilty in court of anything associated with the allocation of a coal exploration licence.

The only Doyles Creek conviction concerns a procedural matter linked to the ICAC inquiry, not the allocation of a licence. John Maitland, former chairman of Doyles Creek Mining, was fined $3000 for misleading the commission about a telephone call in which he revealed he had been asked questions by ICAC.

Doyles Creek director Craig Ransley has been acquitted twice in court while fellow directors Andrew Poole and Mike Chester have never been charged with any offence.

Because NSW jumped the gun and stripped NuCoal of its licence without the benefit of anything approaching “due process”, international investors are hopping mad.

Their argument is simple: under the law of NSW, they have done nothing wrong and neither has the company in which they invested. An act of parliament imposed a financial penalty on innocent parties and they want their money back. NuCoal alone estimates that its shareholders are owed more than $100 million.

But those who were hurt by the expropriation extend far beyond shareholders.

NuCoal drilling contractors Warwick and Terry Howarth launched legal proceedings last week claiming the expropriation wiped out their business and cost them $28m.

After five years, this affair might finally be reaching a tipping point.

On March 22, lawyers for the NSW DPP, Lloyd Babb SC, gave notice in the Supreme Court that he would not seek to overturn a decision of the NSW Court of Appeal quashing ICAC-related convictions against Maitland and a former mineral resources minister who had allocated the licence to Maitland’s company.

Both men are awaiting retrial because their original jury had been misdirected on the law. But right now, the decision of the Court of Appeal means there was no misconduct in public office when that licence was granted to Doyles Creek Mining.

Babb’s decision not to go to the High Court means the DPP accepts that the law governing misconduct in public office, as reformulated by the Court of Appeal, is now settled.

That has significant implications.

The Court of Appeal’s reformulation, based as it is on submissions from lawyers for the former minister, increases the likelihood that Babb again might throw in the towel and accept that there will be no retrial because the new approach to misconduct in public office means there is no reasonable prospect of a successful prosecution. Even if Babb squibs that decision and proceeds with a retrial, the new approach to the law means the trial will be very different the second time around.

Keneally’s secret testimony would be significant. Nobody knew it existed until after charges had been laid for the first trial.

This time, if a retrial proceeds, Keneally might even be called to give evidence in person. There is no suggestion this Labor senator has done anything wrong.

The jury at retrial would be asked to decide if the former minister would have allocated the licence to Doyles Creek Mining but for any collateral benefit to Maitland. If the answer is “yes” — or if Babb throws in the towel — the focus would turn to the likely government response.

The outcome of these proceedings may influence the fate of ICAC as well as the commonwealth integrity commission that has been promised by both sides of federal politics.

The debate over the role of anti-corruption commissions, and their relationship with the justice system, is intensifying.

Just this week, Transparency International and Griffith University’s AJ Brown issued a draft report calling for a high-powered national corruption watchdog with powers that dwarf those of the commission in NSW.

If enacted, that plan would create a national integrity commission with power to co-ordinate with its state counterparts and crack down not just on corruption, but on potential corruption and “undue influence”.

After the federal election, that proposal will inevitably form part of the debate over the design of the promised national integrity commission.

But for Berejiklian, the immediate issue is how to remedy a five-year-old injustice by compen­sating the innocent.

Even though ICAC wanted the licence cancelled, it also urged the government to compensate innocent parties.

Only a court can determine questions of guilt and innocence. So, given the paucity of convictions, Berejiklian would be on solid ground if she moved quickly to amend O’Farrell’s legislation to give effect to this unaddressed ICAC recommendation.

Chris Merritt, Legal Affairs Editor
The Australian
WTF (used with permission)

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