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ICAC, a bottle of wine and a massive memory fail created the perfect storm to bring down a premier. By Mike Seccombe.

Barry O’Farrell’s resignation after misleading ICAC

Barry O’Farrell, who resigned as NSW premier on Wednesday.
Credit: AAP Image

July 31, 2013, was a very happy day for the Liberal Party in general, and Tony Abbott in particular.

That was the day the NSW Independent Commission Against Corruption brought down its findings about dirty dealings in the former NSW Labor government. It recommended two former ministers, Eddie Obeid and Ian Macdonald, face criminal charges over a coalmining deal.

Abbott immediately set about the task of smearing federal Labor with the muck of state Labor. He asserted guilt by association, citing factional links between certain federal ministers – he named Bob Carr and Anthony Albanese – and the corrupt NSW pollies. This was despite the fact there was no evidence whatsoever that Carr and Albo had done anything wrong.

The ICAC findings, Abbott said, were another reason to chuck federal Labor out of office. “People want to see the guilty party punished,” he said. “And you don’t punish the guilty party by giving them another term of government.”

Those words should come back to haunt the prime minister now. For while ICAC has yet to find any Liberals guilty of corruption – its investigations continue; watch this space – it has comprehensively demonstrated the Liberal Party, just like Labor, is deeply beholden to influence pedlars and shonks.

This poses an interesting question: if voters were to take Abbott’s advice and refuse to vote for a guilty party, and if both major parties are guilty, then who the hell do they vote for?

Caught red-handed

You have to imagine this will make for a very uncertain result come the next NSW election, just over 11 months from now. The one thing that appears certain is that the electors of NSW won’t have the option of voting for a party led by Barry O’Farrell.

For on Wednesday morning, having admitted he gave false evidence to ICAC the previous day, O’Farrell announced he was resigning the premiership.

The circumstances would have been comic, had they not been so serious. It all happened because someone gave O’Farrell a bottle of wine.

The giver was not just anyone, though. It was Nick Di Girolamo, a major fundraiser for the Liberal Party, a close family friend of the corrupt Obeids, and the principal of Australian Water Holdings, the company that is the focus of the current ICAC investigation.

It was not just any wine, either, but a $3000 bottle of Penfolds Grange Hermitage, 1959 vintage. On Monday, ICAC heard that the bottle was ordered from Vintage Cellars on April 20, 2011, then sent via courier to the O’Farrell family home at Roseville, on Sydney’s affluent north shore, and left on the front porch.

Counsel assisting the commission, Geoffrey Watson, SC, produced a receipt from the courier company, as well as a record of a 28-second phone call from O’Farrell to Di Girolamo that night.

In evidence to ICAC, Di Girolamo said he had chosen the vintage because it was the year of O’Farrell’s birth and that he would have sent a note with it “to sincerely congratulate him at finally getting into office after 16 long winters in opposition”. He said O’Farrell rang to thank him for the wine.

But when the premier came to give evidence, he denied having ever received such a gift. He denied it categorically, he denied it cockily, recklessly and with embellishment.

“I’m certain I would remember receiving a bottle of Penfolds, particularly one that was my birth year,’’ he said. “I would understand a vintage of the 1950s would require me to declare it to my ministerial declaration and parliamentary declaration [of pecuniary interests].’’

And later he put out a media release saying the receipt from the courier company “only shows AWH were billed for the pick-up of an item from their offices at Bella Vista”.

“The document does not show the item was ever received by me or my wife on either Wednesday 20 April or Thursday 21 April or Good Friday 22 April or at any other time,” he said.

 “No-one was at my home from mid-afternoon Thursday 21 April through to late Easter Sunday. We were holidaying in Queensland.

“The 1959 Grange was not received by me or my wife.”

Why would he do that? The standard formulation for witnesses before ICAC, when confronted with evidence of unsavoury associations, is to deny any recollection while before ICAC, and not to elaborate outside ICAC.

Whatever his reasons, Tuesday ended with O’Farrell still defiant.

On Wednesday morning, though, everything changed. O’Farrell was advised by ICAC that it had new evidence: a note to Di Girolamo in O’Farrell’s handwriting.

“Dear Nick and Jodie,” it began. “We wanted to thank you for your kind note and the wonderful wine. 1959 was a good year, even if it is getting ever further away! Thanks for all your support.”

It was signed with kind regards by O’Farrell on behalf of himself and his wife, Rosemary.

According to Watson, the note was received by ICAC at 9.17am. Di Girolamo had sprung a trap, largely of O’Farrell’s own making.

Within an hour O’Farrell had called the media together to announce his resignation. He continued to deny knowledge of the bottle of Grange. However, he said: “I’ve accepted that I have had a massive memory fail.”

O’Farrell’s incautious denials are all the more perplexing because he had been forewarned that someone was preparing to hit him over the head with that bottle of Grange.

That warning came not from ICAC but from a reporter – Andrew Clennell of Sydney’s Telegraph – some six weeks ago. On the afternoon of March 6, Clennell texted O’Farrell, on the basis of information given to him by a source:

“Did nick give/send you a bottle of grange when you became premier?”

A couple of hours later came the premier’s reply: “Confirm no recollection or record of the alleged gift.”

One might think a politician as experienced as O’Farrell would have been alerted by Clennell’s call, even if he honestly could not remember the transaction. Clearly someone was spreading dirt about him, and they had to have been doing it for malign reasons.

And if that was not enough to make him speak cautiously, he would surely have been aware of previous evidence to the ICAC hearing that people associated with the AWH affair were even prepared to try to fit people up with false allegations of corrupt behaviour.

Resignation

The irony is that if O’Farrell had displayed a little more caution in the witness box, he would probably have remained premier. Sure, he might have been subject to a bit of political heat for having a conveniently bad memory and for not having declared the gift, but he could not have been accused of having perjured himself.

As Watson said to the commission at the outset, and again on Wednesday after O’Farrell’s resignation, there was no suggestion that he had behaved corruptly.

Indeed, there are those who suggest O’Farrell should not have stepped down. His close friend, NSW Planning Minister Brad Hazzard, said he counselled against it.

But that view overlooks the gulf between the legalities of the matter, and behavioural norms of the political-business elite on the one hand and the expectations of the public on the other.

That gulf was clearly demonstrated in an interview with Nick Greiner on ABC television on Wednesday night. Like O’Farrell, Greiner was a Liberal premier forced to resign as a result of an ICAC investigation. He went on to a career as a director of numerous companies, including tobacco companies, and in 2011 was appointed head of Infrastructure NSW by the O’Farrell government.

It was suggested to Greiner that it didn’t pass the “smell test” for a premier to receive a $3000 bottle of wine from someone whose company was lobbying for a lucrative government contract.

“Would you have accepted a bottle of wine under those circumstances?” asked the interviewer, Sarah Ferguson. Greiner: “Yes.”

You would?

“Of course.”

As long as the gift was declared on the parliamentary register, of course.

No worries. Drink up.

The premier's defenders

Others went even further in defending this moral exceptionalism of the political class.

Gerard Henderson, a former chief of staff to John Howard, not only defended O’Farrell – politicians received so many “gestures of kindness and affection” that it was hard to keep track of them all – but set out to shoot the messenger, ICAC.

Henderson said he had opposed the idea of setting it up in the first place. ICAC’s only two big victims in 25 years of operation, he argued, were two “honest and reforming” Liberal premiers, Greiner and O’Farrell.

At the very least, he suggested, ICAC should conduct its affairs in secret.

It was an extraordinary performance on several fronts: for the fact that it airily dismissed the commission’s exposure of massive corruption involving the Obeids; for its refusal to acknowledge that ICAC didn’t do the damage to O’Farrell, he did it himself; and for prescribing less transparency as the solution to public corruption.

In The Sydney Morning Herald, another attack was launched on the commission. The paper’s Peter Hartcher reported a couple of federal Liberal ministers – unnamed, of course – condemning ICAC as a kangaroo court and destroyer of the innocent.

Fair enough to report it, of course. In fact, it pointed to the hypocrisy of conservative politicians, happy enough to take political advantage when Labor figures were ICAC’s focus, but ferociously critical when its attention turned to some of their own.

But Hartcher went on to offer an endorsement: “the ICAC has set back its own cause by seeming diverted by trivial pursuit when it should be uprooting serious corruption.”

Surely he was not suggesting that an investigation of the duchessing of ministers of the Crown by people with long and deep political connections, some with a documented history of corrupt behaviour, while in pursuit of a $1 billion deal with government, is a trivial matter.

No doubt he was referring more specifically to the matter of the wine. Even so, the gift of a $3000 bottle of Grange clearly is not seen as trivial by the public, even if is by the plutocrats and their apologists.

It didn’t matter where you went to gauge public opinion – the letters pages of the papers, the callers to talkback radio – the majority view was that ICAC was doing its job, that while it was bad luck for O’Farrell, he did it to himself and that more needed to be done to limit the influence of lobbyists.

The punters instinctively recognise what the political class chooses not to: that little freebies like meals and wine and corporate boxes at the football are significant.

Psychologists recognise this. I recall speaking with one about a year ago, while doing a story on the debate within the medical community about the influence of pharmaceutical company largesse on doctor’s prescribing practices.

The industry was considering whether it should follow the example of the United States, and compel all medical professionals to publicly declare individual payments or “transfers of value” greater than $10. The legislation enacting this was called the “Sunshine Act”, on the basis that sunlight was the best disinfectant.

This doctor referred to research showing that if you do someone a few favours – even small ones like a free meal or a sponsored airline ticket – it brings a personal dimension to a professional transaction. It creates a sense of obligation. The inclination to reciprocate is part of human nature. Even when there is no direct payback, favours get stored away in our mental favour banks. We don’t really need a psychologist to tell us that, though. Common sense tells us.

ICAC’s critics have made a big deal of the fact that Di Girolamo’s company did not manage to convince the government to back its billion-dollar proposal.

But Di Girolamo did have easy access to the premier’s office to discuss AWH’s business dealings. And in 2012 cabinet decided he should be appointed to the board of the State Water Corporation, after being recommended by O’Farrell’s chief of staff.

That’s not to say there was anything wrong with that appointment. But it does further highlight the fact that until ICAC began looking into it, the whole subject of Di Girolamo’s lobbying of the government was quite opaque.

Need for reform

If there is anything positive to come out of the whole O’Farrell affair, it is perhaps that it seems to have got a lot of people focused on the need to open up the political process to greater scrutiny and, yes, democracy.

If you talk to any of the academics, journalists or even bureaucrats who have to contend with our clunky regime for recording political donations, you will hear it’s in need of radical overhaul. Not just in NSW, which actually is better than most jurisdictions in Australia, but everywhere, state and federal. There are holes in them through which the parties regularly drive large trucks of money from dubious sources.

If you talk to the reformers in either of the major parties, they will tell you there is a need to democratise candidate selection, to loosen the grip of the unions on the Labor side and the corporate influence pedlars on the conservative side.

And then there is the ever-growing problem of lobbyists. The NSW government made a rather half-hearted attempt at doing something about this a few years back, establishing a register of professional lobbyists. It is woefully inadequate.

Promptly after O’Farrell’s fall, Greens MLC John Kaye put out his party’s suggestion: “All meetings between businesses seeking a favourable government decision and ministers, parliamentary secretaries, senior bureaucrats or ministerial staffers must be minuted and made publicly available,“ he said.

It’s not such a radical idea. In fact, ICAC itself recommended something similar, if less sweeping, back in 2010.

It found the NSW regime for regulating influence pedlars was “a major corruption risk, and contributes significantly to public distrust”.

“Those who lobby may be entitled to private communications with the people that they lobby, but they are not entitled to secret communications,” the report said. “The public is entitled to know that lobbying is occurring, to ascertain who is involved and, in the absence of any overriding public interest against disclosure, to know what occurred during the lobbying activity.”

It called for all “meetings and other communications between lobbyists and government representatives to be recorded and made publicly available.”

That is to say, it called for sunlight, the best disinfectant.

This article was first published in the print edition of The Saturday Paper on Apr 19, 2014 as "Having a Barry". Subscribe here.

Mike Seccombe
is The Saturday Paper's national correspondent.