Quest for the perfect trap

THIS is the week Australian politics entered the surreal: when Godwin Grech revealed his entrapment of the opposition, a gobsmacked Malcolm Turnbull said the saga was "almost beyond belief" and confessed regret at ever meeting Grech, and when the political media turned on Turnbull for failing to assume a Uriah Heep humility.

THIS is the week Australian politics entered the surreal: when Godwin Grech revealed his entrapment of the opposition, a gobsmacked Malcolm Turnbull said the saga was "almost beyond belief" and confessed regret at ever meeting Grech, and when the political media turned on Turnbull for failing to assume a Uriah Heep humility.

This issue is loaded with hypocrisy and incredulity. Its political utility is now close to exhausted; Turnbull has been seriously damaged but, more significantly, the Liberal Party is exposed as a shambles unable to unite behind Turnbull, yet devoid of any alternative, and confirming on a daily basis to Kevin Rudd and Julia Gillard that their onslaught has triggered the Liberal impulse to self-destruction.

The Rudd government intends to further exploit the issue by seeking a reference to the Senate privileges committee to explore whether Turnbull and Liberal Senator Eric Abetz are in contempt of the Senate. This is a stunt, pure and simple.

Although the Senate could jail Turnbull for contempt, the Liberal leadership at present is probably worse than doing time.

The government, however, should rethink this tactic. The key witness would be Godwin Grech (if medically able to testify), whose distaste for the Rudd government and all its works is visceral, despite the fact that Turnbull dumped on him this week. Creating another forum for Grech would be high risk.

Government advisers reading Grech's extraordinary reply of several thousand words to the Auditor-General's report (at Appendix 1) will find one of the most lethal critiques of the Rudd government.

Grech feels unappreciated, badly treated by Treasury, unsupported in his efforts to manage the OzCar program, resentful at the Rudd government's style, angry about what has happened to Treasury, still keen to implicate Rudd's office in the John Grant affair and only too ready to reveal that an effort was made to influence his previous evidence to the Senate, and that this came not from Turnbull or Abetz but from the Rudd government in the form of a senior Treasury officer.

In his written and considered statement Grech says that about 11.30am on June 19 he was told by Treasury deputy secretary Jim Murphy that "if you are asked any questions in the Senate this afternoon about John Grant and the Prime Minister or the PMO (Prime Minister's Office) you should simply say that you've confused the Grant case with some other case. It is very important that you do not make any trouble."

The irony is that Grech has made nothing but trouble, initially for Rudd but more enduringly for Turnbull. The accuracy, of course, of Grech's account of the above conversation cannot be assumed. But if the issue becomes contempt, then Grech has already laid his own accusation against the Treasury and the Rudd government.

The wider point is that Grech is a political missile fuelled with resentment towards the Prime Minister, now rebuffed by the Turnbull opposition, facing the likely end of his career but possessed of a sharp brain still able to do damage. While Labor has a majority on the Senate privileges committee its chair is shadow attorney-general George Brandis, whose legal background means he has firm views about what constitutes contempt. "My approach to this inquiry, if it occurs, will be strictly forensic," Brandis told this column yesterday.

The humiliation for Turnbull is that he was made a goose by Grech, a sickly public servant with a penchant for self-pity, hard work and political manipulation, who claimed to be his friend. This is Turnbull's sin. The leader universally assumed to be street smart in a Kerry Packer fashion was exposed as lacking in political and human judgment.

The supreme irony is that Rudd has been handed an immeasurable gift by Grech who, embarking on a campaign to nail Rudd, only succeeding in bringing Turnbull to near ruin. There are many fabled whistleblower sagas, but none to match this spectacular backfire.

The pivotal day was June 5 when Grech, already known to the opposition, emailed Turnbull in the following terms: "Malcolm, Perhaps one way of getting me before a committee to give evidence is to refer the OzCar Guarantee Bill which is scheduled for Senate consideration in just over a week to a committee inquiry ... I am the only person in Treasury to have worked on OzCar -- quite remarkable really given that they normally allocate teams of about 10 people to such projects, but I have carried this on my own from the very start ... I am happy for you to use my name in parliament or in media interviews when pressing for this ... I am happy to meet with you and perhaps Abetz (nostaffers) -- to show you the various emailsI have."

Grech had previously supplied Abetz with a detailed list of questions, along with answers, that the Liberal senator could put to him at the Senate estimates hearings on June 4.

The meeting with Turnbull and Abetz occurred on June 12 at Lucy Turnbull's Sydney office. Grech briefed them at great length on the John Grant saga, his dealings with the Treasurer's office, Grant and Ford Credit. He provided another list of questions to be put to the Prime Minister and Treasurer in parliament. Grech told them about the February19 email he had received from Rudd's office seeking assistance for Grant and showed them the email.

It seemed to be the perfect leak. Grech was the primary source, not second or third hand. Here was the senior Treasury officer who ran the OzCar program, the sole figure in Australia with access to all the information, giving the opposition the inside details plus documents explaining how they exposed the government. The answer to the question why Turnbull didn't check his evidence is simple: this meeting was the confirmation. Grech came to Sydney with his brief and his documents. He was the ultimate source; there was nobody else to ask.

"We had no reason to doubt the truth of anything he said to us," Turnbull says. "We had never heard the alleged connection between Mr Grant and OzCar before MrGrech made contact with us. Mr Grech is a very senior public servant. He's very well regarded by everybody that's dealt with him. We had no reason to doubt his word." After this meeting the opposition was ebullient, sure that Rudd was in real strife.

But Grech had succumbed to frustration and the quest for the perfect trap. While convinced he had received the February 19 email from Rudd's office seeking help for Grant, he could not locate it. Grech's solution was to fabricate a new email to duplicate what he believed was the missing original. He told The Australian the "sentiment" was the same, if not the exact words. But he never told Turnbull or Abetz that he had faked the email he showed them. In seeking to trap Rudd, he unknowingly created the deception that would trap Turnbull.

"The idea that a senior public servant would forge a communication like this and then show it to the opposition is extraordinary," Turnbull said. At this week's media conference Turnbull kept stressing that Grech was "a person that we knew very well", leaving the impression that he had been a fruitful source of earlier material that had embarrassed the government and that, obviously, had not been faked.

Turnbull is now being mocked by the media for his poor judgment and failing to conduct "due diligence." His real blunder was to call prematurely for the resignation of Rudd and Wayne Swan. There is no evidence whatsoever that Turnbull acted improperly. Nor is there any evidence that he intimidated, improperly influenced or encouraged Grech to give misleading evidence to the Senate committee. Just the reverse: Grech made the running and had his own story to tell.

If the Senate privileges inquiry proceeds, prepare yourself for some fearful hypocrisy, notably the claim that politicians are guilty of contempt if they rehearse answers with witnesses before giving evidence. Take a reality check and realise that public servants giving evidence regularly rehearse with their superiors or their ministers what they are likely to say. This is how the executive works, thank you.

The Auditor-General's report has cleared Rudd and Swan of any impropriety. Turnbull has been forced to withdraw his charge against them but his leader's authority seems shot. The Rudd government has moved beyond spin: it has succeeded in making the opposition the issue while scrutiny of its own policies is negligible. Watch for the coming debate on the government's emissions trading scheme; this is a deeply flawed bill unacceptable to nearly every group yet observe how the issue will become Turnbull's failure to support it.