Eddie Obeid, Ian Macdonald found guilty of coal licence conspiracy

Former NSW Labor ministers Eddie Obeid and Ian Macdonald and Obeid’s son Moses have been found guilty of conspiring over a mine licence.

The conviction of Eddie Obeid is a much-needed vindication for ICAC. Picture: Toby Zerna

Disgraced former NSW minister Eddie Obeid is almost certain to return to prison after a judge found the one-time Labor kingpin, along with his adult son Moses and his former ministerial colleague Ian Macdonald, guilty of a conspiracy to commit misconduct in public office over the allocation of coal licences in NSW.

In a major victory for the Independent Commission Against Corruption, NSW Supreme Court judge Elizabeth Fullerton found Macdonald’s decision to grant a coal exploration licence, delivering a $30m windfall to the Obeid family, constituted a “gross departure” from his duties as a minister of the crown.

The trio had been charged with one count of the common law offence of misconduct in public office related to a conspiracy for Macdonald, 72, to rig a state government tender process in favour of granting a coal exploration licence over the Obeid family’s farm at Mount Penny, west of the Hunter Valley in NSW.

Ian Macdonald. Picture: AAP

Almost 10 years have elapsed since counsel assisting ICAC, Geoffrey Watson SC, declared that Macdonald and Obeid Sr had engaged in corrupt conduct “on a scale probably unexceeded since the days of the Rum Corps”.

Justice Fullerton’s guilty verdict is a much-needed vindication for ICAC, which has been accused of wielding too much power and ruining too many reputations in its pursuit of wrongdoing.

The crown had alleged that ­between September 2007 and January 2009, Eddie Obeid, 77, and Moses Obeid, 52, entered into a conspiracy with Macdonald in which the then mineral resources minister agreed to “do what he could, if and when the opportunity presented” when it came to coal exploration licences.

At trial, the court heard Moses Obeid met with an investment banker who drew up a list of ­companies, resulting in negoti­ations with Monaro Coal. When Monaro ran into fin­ancial problems, the Obeids began negoti­ations with Cascade Coal, which put in a tender after the process was reopened by Macdonald.

The “inside information” provided by Macdonald, in breach of his ministerial obligations, en­abled the Obeids to acquire a 25 per cent stake in a winning bid by Cascade Coal.

When Cascade was awarded the exploration licence in Oct­ober 2009, it led to a $30m windfall for the Obeid family.

In gathering that information, Macdonald had assisted the Obeid family “in their pursuit of the possibility of a coal release area” being designated near Mount Penny, Justice Fullerton said. Moses Obeid, meanwhile, sought to maximise the financial benefits of Macdonald’s misdeeds, adopting a “hands on” approach to exploiting the information generated by Macdonald’s “successive acts of misconduct.”

Moses Obeid. Picture: Jane Dempster

The crown alleged the Obeids also acquired neighbouring properties after receiving information from Macdonald that the Mount Penny coal release area would be included in an ­expression of interest process.

Justice Fullerton, who heard the year-long trial without a jury, said the people of NSW were “entitled to expect” that a minister would act at “all times conscientiously and honestly in the public interest”.

“It is fundamental to our system of government that ministers who occupy office as members of the executive government are entrusted with powers, duties and responsibilities exclusively for the public benefit,” Justice Fullerton said.

When prosecutor Sophie Callan SC closed the crown’s case in February, she said there was an “overwhelming circumstantial case” that proved the trio’s guilt.

She told the court that Macdonald had committed eight acts of misconduct in public office.

On Monday, Justice Fullerton found five of the eight acts had been established, including that he asked the department he controlled for information about coal reserves and the licence.

As well, he shared departmental documents with Eddie and Moses Obeid.

In May 2008, Justice Fullerton said, Macdonald “wilfully breached” his ministerial duty and obligation of impartiality by seeking information “he knew or expected” would be held by the NSW government.

As the head of the family, it was unlikely the conspiracy to secure a commercial advantage over Mount Penny would have occurred “without the knowledge and sanction” of Eddie Obeid, Justice Fullerton said.

It was also implausible Macdonald would have suggested to his department that they redraw a new coal exploration area encompassing Cherrydale Park without Eddie Obeid’s express knowledge, she said.

The trio return to court for detention applications on Thursday.