Obeid Was At The Heart Of ALP Power


In his sadly under-appreciated novel from 2000, Last Drinks, Andrew McGahan created one of Australia's notable recent works of crime fiction. The novel's central character was a minister in the Bjelke-Peterson government called Marvin McNulty, closely modelled on Don Lane, the former Special Branch copper who went on to weave a web of corruption through the top levels of Queensland's government.

“Like the fall of Rome, the fall of Troy,” McNulty says in the novel. “Like we'd flown too high and challenged the gods. It started out so small, just a whisper, but someone lost their nerve, someone let it slip, and suddenly it was out.”

For Don Lane and his gang of thieves in the National Party, the moment it slipped was when Joh Bjelke-Peterson went on an overseas trip, and the deputy Premier Bill Gunn made the mistake of appointing a corruption commission led by the redoubtable Tony Fitzgerald. Fitzgerald and his investigators were able to get a Licensing Branch sergeant named Harry Burgess to roll over; Burgess spilled the beans on a chain of corruption that led all the way to the top.

For Eddie Obeid, the moment it slipped occurred when a tip-off to the Independent Commission Against Corruption led that agency to start probing an unpublicised New South Wales coal mining deal. ICAC started tapping phones. The rest was history.

The Commission turned up damning evidence that showed NSW Mining Minister Ian Macdonald had done a deal with the Obeid family to ensure they profited from a coal mining lease underneath a property they owned in the Bylong Valley. Macdonald drew up the tenement and made sure the Obeids secured it, shielding the decisison from cabinet and top public servants in his own department. The mining lease was later sold for millions to a consortium of rich-listers led by mining magnate Travers Duncan, called Cascade Coal.

ICAC tells a story of corporate malfeasance as well as political corruption. In the roaring bull market in coal prices of the late 2000s, coal leases were worth big dollars. Duncan stitched up a related party deal in which mid-cap listed company White Energy, of which he was the director, would buy Cascade. The owners of Cascade were also four of the directors of White Energy. The deal would have turned the initial $1 million coal lease into a $499 million profit. Amazingly, Travers Duncan is still the chairman of White Energy today, along with his partners in the Cascade deal, Brian Flannery and John Kinghorn. Memo to investors: get out now.

Of course, the real story of the ICAC findings is the byzantine levels of corruption and impropriety inside NSW Labor. Much has been written of the descent of the once-proud party in the state. Much more is to come.

The stench of the ALP is hard to escape. Under Bob Carr and the three premiers that followed him, Labor harboured a minister who used public funds to pay for underage sex. One front bencher surfed porn on the Parliamentary servers. Another stripped down to his undies and danced on the green leather sofa in a late night revel in his office.

Of course, some will argue that these lurid incidents overshadowed the good work that Labor did in office. Kimberley Ramplin makes a brave attempt at that today in The Guardian. But when there are this many bad apples, one does start to wonder at the quality of the tree.

In fact, the ICAC findings reveal precisely how far the corruption had penetrated. Eddie Obeid was no mere functionary in a minor position. He was a cabinet minister. He held important committee roles, including a deliciously ironic stint on the Standing Committee on Law and Justice.

More importantly, he controlled the ALP factional system in NSW. Through his unassailable position as the godfather of the “Terrigals” faction formed with Joe Tripodi, Obeid was able to command the loyalty of the greater part of the New South Wales Parliamentary Labor Party. With that power, he stacked branches, arranged preselections, worked committees, and rewarded favourites. He made and unmade premiers. He was, in a very real sense, running the state.

Obeid was not some rogue operator. He was at the very heart of Labor's system of power. His methods were indistinguishable from celebrated power brokers such as Graham Richardson – Obeid's former mentor. Obeid controlled the NSW Right faction. The NSW Right controlled the party, including federally.

If Eddie Obeid was corrupt, then the greater part of the Labor Party was too, because Obeid controlled it. It was Labor's factional system that allowed a man such as Obeid to seize control of the apparatus of state power, and use to enrich his family. As a result, many of Labor's most important figures remain implicated, including the foreign minister, Bob Carr. It was Carr who appointed Obeid to his first ministerial position, remember.

This explains why Kevin Rudd's tilt at Labor Party reform will be so difficult. Preventing another Obeid is tantamount to dismantling the factional system itself. And a Labor Party without factions seems almost unimaginable. The factional system permeates the entire party, all the way down to the grassroots.

As both Lord Acton and Elias Canetti have taught us, power has a way of transforming those who wield it. Even today, Obeid was in vintage form, truculently unloading on Labor colleagues. “I am a very respected person by all those that dealt with me,” he intoned. He will fight to the end.

Obeid does not appear ashamed of his actions. He doesn't even think he's done anything wrong. Perhaps in his own mind, he hasn't. In the Machiavellian world of Labor factional politics, the only values that matter are power, loyalty and mutual reward. We'll have to wait for a lengthy series of court cases to find out whether Obeid has broken any laws. But as far as the rules of the modern Labor Party are concerned, he played fair and true.

Ben Eltham

Ben Eltham is New Matilda's National Affairs Correspondent.