DISGRACED former NSW Labor resources minister Ian Macdonald has been accused of lining up a $4 million payment from a friend who was in business with the Obeid family as Mr Macdonald's share of an allegedly corrupt mining deal he helped to facilitate.
The sensational claim, made in the form of evidence tendered to a hearing yesterday of the Independent Commission Against Corruption, is the most serious allegation against a minister in ICAC's 25-year history.
It comes on the eve of Mr Macdonald's own evidence on Monday to the inquiry, which is looking at his involvement in the granting of coal exploration licences in 2008 over land in the Bylong Valley, about 150km west of Newcastle, owned by the family of Eddie Obeid, himself a former Labor MP and a close ally of Mr Macdonald.
Evidence put before the inquiry by counsel assisting, Geoffrey Watson SC, suggests Mr Macdonald stood to make $4m if a proposed $500m takeover of Cascade Coal, the company that held the exploration licence on the Obeid family farm, went ahead.
Ultimately, the deal fell over when directors of the publicly owned White Energy became suspicious that the Obeids were involved.
Greg Jones, a long-time friend of Mr Macdonald, was accused by Mr Watson of attempting to organise the payment for Mr Macdonald for his role in opening up coal exploration at Bylong.
It was also revealed yesterday that Mr Jones lent Mr Macdonald almost $200,000, as well as allegedly providing "$30,000 in cash and gifts" to the former minister.
Mr Jones was a shareholder in Cascade Coal, along with significant business and mining figures including John Kinghorn, Travers Duncan and Brian Flannery.
The Obeid family held a share in Cascade, which the company agreed to buy out for $60m in an effort to "sanitise" the mining venture from association with the controversial family. They have so far received $30m.
While Mr Jones claims he did not tell Mr Macdonald of his interest in Cascade until 2011, Mr Watson asserted that he informed Mr Macdonald of his interest as far back as 2009.
"Did you say to him if the mine was approved, you would pay him 5 per cent of your take?" Mr Watson asked.
"No," replied Mr Jones.
"Nothing like that?" Mr Watson said. "No suggestion you might pay him $4m?"
"No," Mr Jones replied again.
Mr Macdonald and Mr Jones were long-time friends, meeting when they worked as young staffers for former NSW Labor MP Frank Walker.
Mr Macdonald appointed Mr Jones to the NSW Wine Council and other bodies.
Mr Jones was so concerned at adverse publicity for Cascade as a result of the relationship that his directorship was not revealed and his shares were held by Mr Kinghorn, the founder of RAMS home loans.
Mr Jones was taken through notes seized from his Sydney office that stated, in his handwriting: "Cascade Coal Mt Penny 5 per cent . . . $4m approved by 6 June 2010."
Mr Watson asked: "Now, 5 per cent, why have you written that?"
"No idea," Mr Jones replied.
Mr Jones was also asked what was meant in the notes by the use of the words "approval of Angel Mine", a term he had earlier explained meant a highly profitable investment.
"I understand the term angel deal, I don't know what Angel mine . . . it could have been another deal," he said.
Mr Watson put it to Mr Jones that he drew up the notes with Mr Macdonald to plan his "cut" of the deal.
"It was Ian Macdonald wasn't it? He was going to get a cut, that's the fact of the matter?"
"No," Mr Jones replied.
ICAC also revealed Mr Jones lent Mr Macdonald $195,000 in late 2009, amid the negotiations between Cascade and White Energy for the takeover of Cascade. So far, Mr Macdonald has repaid $50,000 of the loan and Mr Jones has written off $45,000 of the debt.
Asked why he would do such a thing, Mr Jones replied: "Maybe it was to be paid back later . . . and maybe it was . . . I don't know whether I wrote it off or gave it up. I don't know."
The hearing saw notes from Mr Jones showing "$30,000 in cash and gifts" that Mr Jones agreed had been given to Mr Macdonald.
Mr Watson asserted the money was reward for work Mr Jones had done on the Sydney and Dubai V8 Supercar races.
Asked about the payment, Mr Jones replied: "I don't know . . . um, perhaps money I've lent him over time.
"No, I, I, there was, there was no, um, financial benefit for Macdonald in the V8s."
Mr Jones was also questioned on whether he planned to pay Mr Macdonald $330,000 from a forestry deal he was aiming to invest in - an area that also fell within Mr Macdonald's portfolio.
Mr Watson said: "Have a look at Hume Forests. Isn't the $330,000 something which if the deal comes off was going to be paid to Macdonald?"
"Ah, no," Mr Jones replied.
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