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As former NSW premier Gladys Berejiklian faces ICAC, it is abstemious public servants who have exposed her conflict of interest. By Mike Seccombe.

Clay targets: How public servants blew the whistle on Berejiklian

Years before Gladys Berejiklian’s startling admission to the Independent Commission Against Corruption last October, a raft of senior bureaucrats and political staffers working for the New South Wales government knew something odd was going on.

Not that they suspected a “close personal relationship”. They were as surprised as everyone else to learn of the premier’s five-year affair with disgraced former Liberal member for Wagga Wagga Daryl Maguire.

But those public servants, who assessed and deemed not worth funding two developments put forward by Maguire, who had felt political pressure to clean up deficient grant proposals and expedite approvals, knew something was up.

Some of Berejiklian’s ministerial colleagues also were aware, to a greater or lesser extent, that things were not proceeding as usual. But it was the bureaucrats, steeped in the tenets of orderly government process, who felt it most keenly.

Ministerial colleagues have testified that Berejiklian should not have been involved when the political decisions were taken in relation to the two projects championed by her former boyfriend. But it is the accumulation of evidence from unelected government functionaries, given to ICAC in public session during the past two weeks and in private ones in the preceding months, that has been most damning of Berejiklian. They detail a litany of deviations from normal government processes preceding those final political decisions.

Process matters, even though some politicians, particularly conservative ones, frequently denigrate “red tape”. Due bureaucratic process exists to weigh the benefits of projects against the costs, to ensure that taxpayers’ money is not wasted on things that are not useful to the community, and to be a bulwark against pork-barrelling, private profiteering and corruption.

ICAC’s investigation of Berejiklian has involved a deep dive into the often arcane workings of government process. It is not your standard money-in-a-bag type investigation. The suggestion is not that Berejiklian, as NSW treasurer and later premier, stood to gain financially. Rather, it is that a conflict of interest existed between Berejiklian’s public duties and her personal relationship with Maguire.

ICAC is investigating whether this conflict resulted in a breach of public trust in connection to grant-funding for a couple of projects in Maguire’s electorate. Specifically, funding for a shooting range and conference centre for the Australian Clay Target Association in 2016-17, and the relocation of the Riverina Conservatorium of Music and construction of a new recital hall in 2018.

ICAC also is examining whether Berejiklian breached section 11 of the Independent Commission Against Corruption Act 1988, which required her to report any suspicion she held of corrupt conduct by Maguire, or allowed or encouraged that corrupt conduct.

Berejiklian has denied any wrongdoing.

The latest round of hearings produced nothing that might be described as a bombshell moment until Thursday, when Maguire was called back before the inquiry.

Maguire told ICAC that he had loved Berejiklian, that he believed she loved him, that they had contemplated marriage and talked of having a child. More pertinently, he said the relationship was ongoing throughout the period ICAC is investigating – indeed, it continued until the latter half of last year, some two years after he left politics. He still has a key to her house.

In evidence given on Friday, Berejiklian said she always worked within the law and that she did not believe her relationship affected her decision-making. She said she was not aware of any corrupt conduct and regarded Maguire’s business deals as “pie in the sky” and unlikely to eventuate.

Asked why she didn’t disclose the relationship to colleagues, she said: “We didn’t share finances. We didn’t live together. I was not confident in his level of commitment. I did not regard him as a member of my family.”

Maguire told the commission he “encouraged her to take a close interest” in his various schemes, and “would have discussed” them with her in private as well as in the course of their official capacities.

In taped phone calls played at the hearing, Maguire told Berejiklian he needed money for the conservatorium and a stadium to turn Wagga Wagga into “the blazing star of the southern universe”. Berejiklian told him he would be “getting everything”.

In another call, after he resigned, he told Berejiklian the way to keep his seat was to “just throw money at Wagga”. She said: “I’ll throw money at Wagga. Don’t you worry about that.”

Maguire mentioned his stadium again and complained that the “bureaucracy” had rejected it. Berejiklian replied: “Yes, but I can overrule them.”

Here again was the question of process, already underscored by the public servants and staffers who had given evidence. The tone was set on the first day of the hearing, on Monday last week, when the director of the NSW Office of Sport, Michael Toohey, a lifelong public servant, said he had serious doubts about the business case underpinning the unsolicited grant application for $5.5 million from the Australian Clay Target Association (ACTA). He characterised it as “flimsy” and “deficient”.

For reasons he could not fathom, this proposal for a relatively small amount of money in budgetary terms was a focus of urgent attention from the government’s expenditure review committee (ERC), chaired by the treasurer, who at that time was Berejiklian.

He was puzzled, he said, as to “why were we pushing an allocation of funds to a local member, based on such scant, inadequate information, which didn’t meet the NSW government’s own standards and policies?”

Toohey told the committee of having received an email in November 2016 from his superior, the now former executive director of the NSW Office of Sport, Paul Doorn, saying, “Fancy a challenge?”

A request had come from the office of then Sports minister Stuart Ayres – who, like all the other witnesses who have appeared, is not accused of wrongdoing – to provide a submission to ERC putting the case for the ACTA proposal for the construction of a shooting range and conference centre. The submission was to be done within a day.

Neither Toohey nor Doorn could recall such a rushed request before. Toohey was scathing about the proponents’ “imaginative” claims of community benefit, including that it would help secure the state’s bid to host the Invictus Games, which, he noted, “doesn’t have shooting events”.

Doorn said his office was “surprised” when the project subsequently was awarded the $5.5 million conditional grant. In his assessment, “we didn’t think it stacked up”.

Both men said they would have raised concerns had they known about the relationship between Maguire and Berejiklian.

Nigel Blunden, who was a senior staffer advising then premier Mike Baird on strategy, also struggled to understand the rationale for funding the gun club, and also was ignorant of Berejiklian’s secret relationship, even though, as he said to an earlier private session, it was his job to know such things.

Had he known, he said, he would have sought advice on how to deal with it.

Blunden’s contribution to proceedings, much of it in the form of emails and memos retrieved by the commission, was more colourful than the bureaucrats who preceded him.

On learning in early December that the ACTA proposal was due to go before ERC, Blunden wrote to Ayers’ chief-of-staff and to Berejiklian’s office, asking for it to be pulled from the agenda, saying it seemed like a lot of money to be considering without a firm business case.

He thought it had been pulled, but after a few days it was back on the agenda. In his oral evidence, Blunden said he did not know how that happened. But in a briefing note he sent to Premier Baird at the time, he suggested “Daryl fired up and Gladys put it back on.”

“No doubt they’ve done a sweetheart deal with Daryl,” he wrote, referring to Berejiklian and Ayres, “but this goes against all of the principles of sound economic management.”

Blunden told the inquiry his reference to a sweetheart deal was meant flippantly, but there was no mistaking his concerns about the project and the way it was being pushed.

His note began by quoting a line from the Tom Cruise movie Risky Business: “Sometimes you gotta say WTF”.

Blunden opposed funding the gun club proposal not just on economic grounds – because of its “inept and inadequate business case” – but also on political grounds. He said government grant-funding should “at the very least” be directed to marginal seats, rather than a safe one like Maguire’s. A couple of days later the grant was approved, conditional on an improved business case.

When he appeared, Ayres denied any “sweetheart deal” and said he thought the proposal had considerable merit. He also said that while it would have been “prudent” for Berejiklian to declare her relationship, he could not see any actual conflict of interest because she stood to gain no financial benefit.

Blunden was not the only one to allude to political considerations in the allocation of grant money.

Baird, who followed him into the witness box, said he was aware that the shooting club submission was being pushed despite an inadequate business case, but also understood concerns, following the government’s loss in the Orange byelection, that the party was out of touch with regional voters.

He said he was “incredulous” when Berejiklian revealed her secret relationship, and that “good practice” suggested she should have disclosed it.

He also said Maguire could be “aggressive”, “abusive” and “relentless” in pursuing his agenda.

Former deputy premier John Barilaro sang from the same song sheet, but rather more loudly. Maguire, he said, was “a pain in the arse … like a dog with a bone” – a description Maguire himself happily adopted when he appeared on Thursday.

Barilaro did not think the gun club proposal “would have actually ended up on the ERC agenda in the first instance, unless there was some probity arrangements made around the issue of the [Berejiklian–Maguire] relationship”.

Had the relationship been known, he said, she would not have been in the room.

Barilaro enumerated several other concerns. For one, it was highly unusual that a project so small would come before ERC as a standalone item. Another was the way in which it was expedited, outside the usual competitive grants process. A third was that it was “deeply unusual” for a project to come before ERC without an identified source of funding.

The grant wound up booked against the Regional Growth – Environment and Tourism Fund, for which he was responsible.

The problem remained that the business case for the ACTA proposal had been assessed as not having a benefit–cost ratio (BCR) high enough to warrant funding.

Only many months later, and after external consultants had been brought in at taxpayers’ expense, did a revised ACTA business case pass the BCR threshold.

Chris Hanger, a deputy secretary in the Department of Regional NSW, gave evidence that it was unusual for private consultants to be brought in. But he had been informed by Barilaro’s office that there was “particular interest” in the ACTA proposal from Premier Berejiklian’s office. He understood Berejiklian herself wanted the business case reassessed, after a first-round failure.

Another senior bureaucrat, Gary Barnes, secretary of the Department of Regional NSW, testified to the pressure bureaucrats felt. He said he believed Maguire “had the ear” of Berejiklian.

Asked if he gave the project particular priority, because of his understanding that it had a particular “political imprimatur”, he said: “I think we all did.”

The other subject of ICAC, the Riverina Conservatorium of Music, came with a larger price tag of $30 million, broken into two parts: $10 million for its relocation and $20 million for the new recital hall, of which only the first tranche has been paid.

As with the gun club, the business case for the recital hall was found to be deficient. As with the gun club, various functionaries painted a picture of relentless “hassling” by Maguire, and a perception, as articulated by Gary Barnes, that it had “particular priority” with Premier Berejiklian’s office.

There was documentary evidence to support his belief. In an email written on August 1, 2018, Berejiklian’s chief-of-staff, Neil Harley, described the conservatorium as a “longstanding wish-list item” of Maguire’s. The note was sent two days before Maguire quit politics following admissions to ICAC that he had used his political position and office for private gain, including that he had set out to “monetise” his roles as an MP and parliamentary secretary, that he used his NSW Parliament House office for the business of his company, and that on multiple occasions took delivery of thousands of dollars in cash related to a fraudulent scheme to provide Australian visas to Chinese nationals.

In another email, sent on August 20, Harley wrote that he personally did not want to “push this project”, but the premier did.

On the same day, Berejiklian’s former director of strategy, Brad Burden, sent an email to Harley and others: “We need the full $20 million team.”

There was more, much more, damaging evidence about the way process worked, or didn’t, in relation to Maguire’s projects.

But perhaps the most intriguing evidence of all came from Sarah Cruickshank, a friend of Berejiklian’s and also a former chief-of-staff. She described a phone call she received from her boss one Friday night in July 2018.

Berejiklian called to tell her – more than two years before it became public at ICAC – that she had had a relationship with Maguire.

Cruickshank said Berejiklian assured her the relationship was over before she became premier.

The former staffer reluctantly agreed with counsel that the premier had lied to her.

And that evidence goes to make a point both specific and universal: politicians are people, and even the most apparently straight people sometimes lie, or are compromised in other ways. That’s why we need due process, and that’s why we need bodies like ICAC.

This article was first published in the print edition of The Saturday Paper on Oct 30, 2021 as "Clay targets: How public servants blew the whistle on Berejiklian".

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Mike Seccombe is The Saturday Paper’s national correspondent.