ICAC: Arthur Sinodinos stood to make 'tens of millions' from Australian Water Holdings deal

Labor and Liberal figures including federal Assistant Treasurer Arthur Sinodinos stood to make tens of millions of dollars from a company linked to the family of crooked former powerbroker Eddie Obeid,  a corruption inquiry has heard.

Senator Sinodinos, then NSW treasurer of the Liberal Party, was installed on the board of the Obeid-linked Australian Water Holdings (AWH) in 2008 ‘‘to open lines of communication with the Liberal Party’’, the Independent Commission Against Corruption heard on Monday.

‘‘There will be evidence that he tried to do so,’’ counsel assisting,  Geoffrey Watson, SC, said in his opening address.

The former AWH chairman was earning $200,000 a year for ‘‘a couple of week’s work’’ and would have ‘‘enjoyed a $10 or $20 million payday’’ if Australian Water had won a lucrative contract with the state government.

Senator Sinodinos has since abandoned his rights to shares in the water infrastructure company and denies any wrongdoing.   ‘‘[He] will attend ICAC as a witness and is looking forward to assisting the inquiry,’’ his spokeswoman said.

Mr Watson alleged the inquiry would show corruption across political party lines. The company assiduously lobbied the Coalition government after the March 2011 state election.

‘‘It might be said – readapting Shakespeare – that corruption ‘acquaints a man with strange bedfellows,’’’ he said.

The ICAC is examining allegations that the Obeids were ‘‘secret stakeholders’’ in AWH and that Mr Obeid corruptly lobbied Labor colleagues on behalf of the company. The inquiry heard the family stood to make up to $60 million if the government entered into a partnership with AWH.

Mr Obeid’s political allies, Joe Tripodi and Tony Kelly, allegedly helped to doctor a cabinet minute in 2010 to benefit AWH, which was ‘‘tantamount to fraud’’.

Mr Watson said Mr Obeid had tried to ‘‘eliminate’’ two senior public servants who stood in his way.

‘‘Of all Mr Obeid’s machinations, the most foul is his involvement in an attempt to ruin the reputations of Dr Kerry Schott and Ron Quill of Sydney Water,’’ he said.

Mr Obeid allegedly told then Labor minister Phil Costa that ‘‘you need to sack that bitch’’, in a reference to Dr Schott, and that Liberal MP Chris Hartcher would make a corruption complaint against her.  Mr Watson said that Mr Obeid was ‘‘right on the money’’ and an anonymous complaint was made to the ICAC. ‘‘The source of that complaint is very interesting. This is where the misconduct leaps across party lines,’’ he said.

A second ICAC inquiry, starting on April 28, will examine allegations AWH and other ‘‘unscrupulous businessmen’’ paid into  a slush fund linked to Mr Hartcher in exchange for favourable treatment.

The ICAC heard that Senator Sinodinos’ ‘‘other involvements’’ will come under scrutiny.

But Mr Watson said that former Labor treasurer Michael Costa, who is also a former chairman of AWH, was not accused of any wrongdoing and ‘‘his role seems to have been a positive one’’.

There was also ‘‘no evidence to implicate’’ Liberal Premier Barry O’Farrell and his former finance minister Greg Pearce in corruption.

The inquiry heard that Nick Di Girolamo, a prominent Liberal Party fund-raiser and Obeid associate, transformed Australian Water from a non-profit venture into a commercial operation charging exorbitant ‘‘administration costs’’ to Sydney Water. This included $75,636 in donations made by AWH to the Liberal Party.

‘‘It seems that Sydney Water has – unwillingly, unknowingly – been a principal Liberal Party donor,’’ Mr Watson said. The party said on Monday it would refund  Sydney Water.

Mr Di Girolamo became  chief executive of AWH – then called the Rouse Hill Infrastructure Consortium – in early 2007. He took a salary of $1.1 million and bonuses of up to $275,000 when the company had around 10 employees and only one contract. ‘‘Salaries of that size were absurdly high. The Prime Minister of Australia was being paid $330,000 a year,’’ Mr Watson said.

The Obeids allegedly became ‘‘secret stakeholders’’ in AWH in 2010 when they agreed to pay $3 million for a 30 per cent stake in the company. But the family insist the money was a loan. One of the terms of the ‘‘loan’’ agreement was that Mr Obeid’s youngest son, Eddie jnr, would be employed by AWH on a salary of $350,000 a year.

Mr Watson said that Mr Di Girolamo used some of the $3 million to pay off debts relating to a racehorse called Partners In Crime.

The first witness in the three-week inquiry will be called on Tuesday.

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