The Fall and Fall of Santo Santoro

Queensland politics is weird.

Despite the State’s growth and development in the two decades since Premier Joh Bjelke-Peterson left office, somehow, politics in the Sunshine State always manages to surprise. And so it must seem to southern observers this week, many of whom have been left bewildered by the precipitous fall from grace of the most powerful man in Queensland conservative politics, Santo Santoro.

First, Santoro got caught owning shares in a company whose interests overlapped with his ministerial portfolio. This led to a reprimand. Then, the wonderfully named Minister for Ageing had a ‘seniors moment’ of his own, neglecting to tell the Prime Minster and the Senate that he had traded some 72 other parcels of shares since becoming a Minister. Santoro was forced to resign (or be sacked by a furious Prime Minister).

Finally, on Tuesday 20 March, in a late-night bombshell speech to a sparsely populated Senate, Santoro dramatically resigned from Federal politics. Showing his customary bad grace, he announced that:

it is part of the current political environment, where scrutiny is only applied in one direction, and where we have reached an unprecedented double-standard, that my continued presence here presents an excuse for that double-standard to be played out, in the nation’s papers, on a daily basis.

Thus exited Santo Santoro so crest-fallen he forgot to even mention his nemesis, the ABC. No doubt, he can now commiserate with the recently resigned Ian Campbell and Kelvin Thompson or the Triple J journalist, Steve Cannane, whom he falsely accused of anti-Semitism about all those diabolical double-standards, played out, in the nation’s papers, on a daily basis.

Santoro described his forgotten share trading as ‘the product purely of poor attention to compliance’ but just how extensive the transactions were is only now coming to light, as journalists comb through the documents released last Friday when he first resigned from the Ministry.

Santoro is no mere stock market dabbler who just happened to forget a few trades. ‘Boutique merchant bank’ is a better description of the way Santo Santoro Consulting has operated in recent years, helping to underwrite Initial Public Offerings in eight Queensland companies under the overall direction of lead underwriter ABN AMRO Morgans.

Chairman of ABN AMRO Morgans, Tim Crommelin, told The Courier-Mail that Santoro was a ‘normal client with a normal retail-broker client relationship.’ (It’s curiously gratifying to know that in the high-powered world of merchant banking, Federal Ministers are just ‘normal clients’ like everyone else.)

Even so, the scale of capital involved must be impressive, especially when you consider that some of the shares that Santoro has held onto have done very well indeed since their initial floats. For instance, the engineering company Ausenco  issued shares at $1.00 in June 2006 and is now trading at $6.48 an appreciation of nearly 650 per cent. That’s not a bad little earner.

Perhaps not surprisingly, Santoro is refusing to disclose exactly how much he has earned from his investments. ‘I have not calculated that,’ he told The Courier-Mail last week, adding, in true Santoro style, ‘To be honest, that is my private business. I declare my income to the Tax Department.’

The problems for Santoro and the Queensland Liberals, however, look set to run and run. The day before his resignation speech to the Senate, it was reported that Santoro had been lobbied, while he was a Minister, by Allan Pidgeon, a mate from the Queensland Liberals whom Santo thanked in his maiden speech to Parliament. And it will be interesting to see whether the new Minister for Ageing, Christopher Pyne, follows up on the Prime Minister’s demand for an inquiry into Santoro’s connections to Russ Egan Junior, as announced on the ABC’s 7:30 Report on Monday, 19 March:

JOHN HOWARD: in relation to the other matter, if there’s anything untoward about that, I’m sure the new Minister will tell me, and I’m now giving him notice on your program to have a look at it.

The electoral damage in Queensland to John Howard’s Government over the Santoro affair could be extensive. Once informed of Santoro’s missing share trades, the powerful and parochial The Courier-Mail quickly smelt blood ‘SENATOR SLACKO,’ its headline screamed on 17 March. (The word ‘slacko’ has since been mysteriously removed from the News website certainly Santoro’s only victory this week. You can still read the offending headline in the Newstext archives, but you’ll need to subscribe.)

Santoro may be gone now, but the story of his rise to the Ministry is instructive.

Thanks to Sean Leahy

Interestingly, Santoro was never actually elected as a Queensland Senator. Instead, he was chosen by State Liberal Party machine to replace John Herron who stepped down in 2002. Now, he will leave Federal Parliament after serving five years as a Senator, a Parliamentary Secretary and then a Minister all without ever facing Australian voters. That’s not what this correspondent calls ‘representative democracy.’ It’s a flaw in the Australian Constitution that will be repeated in a fortnight if Peter Beattie follows convention and names a Liberal Party candidate to replace Santoro’s Senate seat.

Santoro’s departure marks the nadir of a remarkable career in Queensland power politics. Over the past 15 years he carved out one of the strongest power bases at the State branch level of any major Australian Party, Labor or Liberal. His faction was regularly described as the ‘only’ faction in the Queensland Liberals, and during his reign it dominated their State Executive deciding pre-selections, Senate tickets, and a host of smaller favours to loyal foot soldiers.

Santoro’s reign in many ways resembled the career of West Australian Liberal Noel Crichton-Browne or Labor’s Graham Richardson. He was a brutal and effective political infighter who used control of the Party’s purse strings to win the numbers and crush factional opponents.

Santoro first emerged in the late 1980s, winning the State seat of Merthyr in a by-election, after the resignation of corrupt Bjelke-Peterson Minister Don ‘Shady’ Lane (who went to jail after the airing of Chris Masters documentary ‘The Moonlight State’ in 1987 led to establishment of the Fitzgerald Inquiry.)

In the 1990s, Santoro fought a Party-wide war with the moderate (or ‘Western suburbs’) f
action of the Liberals led by Bob Tucker. Santoro won, stacking the Party machine with his minions, who then went on to run a series of disastrous State election campaigns, including the 1998 debacle where the Liberals chose to preference One Nation and lost much of their western suburbs heartland as a result. Despite the debacle, it didn’t stop Santoro entrenching his dominance of the Liberal Party’s Queensland State Executive.

The factional infighting continued. In the early 2000s Santoro’s faction, including fellow Queensland Senator George Brandis, helped local businessman Michael Johnson exploit a little-known clause in the State Liberal charter that let non-Australian citizens join branches. Johnson signed up 300 new members, many of them from Hong Kong, to win control of the blue-ribbon Ryan branch in Brisbane’s leafy west (Tucker’s home turf). Johnson’s candidacy was subsequently overturned in a court action when it became apparent that he hadn’t renounced his British citizenship.

The brouhaha meant Bob Tucker won pre-selection after John Moore retired only to lose the by-election in March 2001 on the back of the unpopularity of the GST and a perception that Liberal voters were being taken for granted. Six months later, Johnson had sorted out his citizenship, got elected to the State Executive and had the numbers to do over Tucker in the next pre-selection for Ryan which duly returned to the Liberal fold at the full Federal election later that year.

But Santoro’s overweening wrath bore the seeds of his downfall.

Johnson and Santoro fell out shortly after the Liberals’ disastrous State election campaign last year. Johnson then put together a rainbow coalition of anti-Santoro forces including Tucker and another former Santoro ally-turned-enemy, Bob Carroll to win power on the State Executive. Many suspect it was actually Johnson’s forces that leaked the devastating information about Santo’s dodgy share register to The Courier-Mail last week.

Seasoned observers of Queensland politics have known about the problems in the Queensland Liberal Party for decades. It has kept conservative forces out of government in the State for 16 of the last 18 years, as I pointed out in my coverage of last year’s Queensland election for New Matilda.

As the former State Liberal Leader Bob Quinn observed last year, after being unceremoniously dumped in favour of bungling GP Dr Bruce Flegg just one week before Peter Beattie announced the State Election, ‘It just goes to show that not all your political enemies are on the other side of the fence; sometimes you need to be aware that things can go wrong inside your own Party.’

How true Quinn’s last words as Queensland Liberal leader now ring.

Things have gone very wrong in the Queensland Liberal Party, and the accident-prone State branch is now in real danger of costing John Howard another Federal election victory almost exactly 20 years after the ‘Joh for PM’ campaign in 1987 cost him his first.

But the final words in this sordid drama simply must go to Santo Santoro, who ended an open letter to his constituents resigning from the Ministry with this bizarre quote from Bruce Lee, ‘Defeat is not defeat unless accepted as reality in your own mind.’

It’s a touching farewell from the man who describes the Prime Minister ‘as one of my oldest friends.’