This Is The End Of Arthur Sinodinos

If you were to run a pool on which minister would be to first to stand aside in Tony Abbott’s ministry, Arthur Sinodinos would surely be bottom of the list.

The Assistant Treasurer is widely considered to be one of the savviest political operators in the government. Few of Abbott’s minsters can boast his experience in the halls of power. Sinodinos was John Howard’s chief of staff for a decade, placing him at the centre of executive government for nearly all of Howard’s reign.

The urbane former Treasury bureaucrat was generally thought of as one of the keys to Howard’s political acumen, a man of genuine intellectual rigour, policy acumen and sound judgment.

When he entered parliament as a senator for New South Wales, he was immediately elevated to the shadow ministry. When Abbott won office last year, Sinodinos was duly rewarded with a junior ministry, under Joe Hockey as Assistant Treasurer. Given his wide-ranging responsibilities as Howard’s right-hand man, it was a role he was expected to perform with aplomb.

All of which makes Sinodinos’ sudden fall from grace and prominence in an investigation by the Independent Commission Against Corruption quite surprising.

And yet here we are. Yesterday, after days of pressure from the media and the ALP, Sinodinos gave a short statement to the Senate in which he repeated that he would cooperate with the ICAC inquiry, and would stand aside from his ministerial duties while it continued.

“I do not want this sideshow to be an unnecessary distraction to important work of the government which I am proud to serve,” he told the Senate. "Whilst this process is under way I will therefore be standing aside as Assistant Treasurer."

Given his experience, given his acumen, give his judgment, the question has to be asked: what the hell was he doing getting mixed up with the Obeids?

The Obeid family, headed by Eddie Obeid, New South Wales’ most notorious former minister, weaved his web throughout New South Wales Labor. Obeid controlled the factional system at the heart of the ALP. He made and unmade premiers, sat in cabinet, and held important legislative positions.

He also used that power to enrich his family, for instance by arranging for the secret purchase of a coal mining tenement with a dodgy licence stitched up by his mate, Ian Macdonald, when he was the mining minister.

Now it appears that Obeid’s tentacles have stretched across party divides. According to evidence presented to ICAC this week, the Obeid family owned a 30 per cent state in a company called Australian Water Holdings, of which Sinodinos was a director for three years, and chairman for 12 months.

Australian Water Holdings was a water infrastructure company that was not very good at digging ditches and laying pipes. But, aided by the impeccable political credentials of men like Sinodinos, it was supremely good at lobbying. This allowed it to secure lucrative contracts with the state-owned utility, Sydney Water, which in turn allowed it to pay exorbitant salaries to directors and staff.

The whole financial model of AWH seems, not to put too fine a point on it, dodgy. Under a “cost-plus” contract, AWH was allowed to charge Sydney Water for so-called “administrative” costs.

These costs apparently stretched to include not just hefty salaries for staff and directors, but also donations to political parties, including the NSW Liberal Party and Joe Hockey’s 2010 election campaign. In effect, public funds were being used to finance political donations.

Sinodinos denies knowledge of these donations. At the time those political donations were made, he was not only the Chair of AWH, he was also the Treasurer of the NSW Liberals. In fact, ICAC has heard that the whole reason he was hired was because of his superior “connections”, including of course to the Liberal Party.

It was also during Sinodinos’ time as director and chair of AWH that the Obeid connection formed. Australian Water Holdings employed Obeid’s son, Eddie junior. Both Sinodinos and Eddie junior were at a meeting in February 2011 in which AWH CEO Nick Di Girolamo agreed to sell $15 million worth of shares, or 30 per cent of the company, to lawyer John McGuigan.

Sinodinos denies knowing that the Obeids were to be the ultimate owners of that stake, but AWH director John Rippon told ICAC this week that “everyone” at the company knew the Obeids were buying in. As we know from previous ICAC inquiries, McGuigan was part of the dodgy Cascade Coal cabal that had formed a secret partnership with the Obeid family to sell coal mining leases in the Bylong Valley.

In fact, according to ICAC testimony, some of the money from the Cascade Coal deal was used by the Obeids to buy that stake in AWH. As the Australian Financial Review’s Neil Chenoweth writes today, the February 2011 meeting puts Sinodinos “at the very point where coal scandal met water scandal”.

What was someone like Sinodinos doing at a company like AWH anyway? It’s hard to believe that that financial considerations weren’t far from his mind. Sinodinos was being paid well as the chairman, at around $2,000 an hour. But if AWH snared the next contract with Sydney Water, worth $1.2 billion, Sinodinos stood to make much, much more.

In January 2011 he was awarded a 5 per cent stake in the company, plus a 2.5 per cent bonus stake if Sydney Water signed on. ICAC has heard that might have been worth as much as $20 million. As Andrew Elder points out in a perceptive blog post, during his time as Howard’s chief of staff, almost everyone Sinodinos met with with would have earned more than he did.

Nothing is forever in politics, but you’d have to say Sinodinos’ political career is finished.

Even if Sinodinos is completely cleared, it’s hard to see him coming back. Indeed, he may have a hard time staying in Parliament. Although his colleagues – including Abbott himself – were vigorously defending him right up until the moment he decided to pull the plug, it is inconceivable that Sinodinos could ever return to the ministry in the wake of this investigation.

After all, his one major policy decision as Assistant Treasurer, to roll back Labor’s Future of Financial Advice reforms, was already under fire. Labor’s modest reforms were designed to prevent financial planners from gouging clients with commissions they didn’t deserve – or even know about – and to lessen the risk of disasters like Storm Financial.

Sinodinos’ decision to junk them brought widespread criticism, even from within the financial planning sector. In the context of the ICAC inquiry, it also looks uncomfortably like a pattern of rewarding fat cats and insiders at the expense of taxpayers and consumers.

In February 2013, Sinodinos gave an account of his involvement at AWH to the Senate. That speech will now be examined forensically, to discover whether he misled Parliament. As Penny Wong said this week, “the Independent Commission Against Corruption has made a number of statements that fly in the face of assertions made by Senator Sinodinos in this chamber.”

Even if we take Sinodinos at his word, the uncomfortable implication is that the man Tony Abbott had entrusted as the nation’s Assistant Treasurer was unaware of a highly sensitive political donation between two entities, both of which he was financially responsible for.

The best you could say is that Sinodinos was asleep at the wheel. Whatever else may come to light about the involvement of the Cascade Coal gang and the Obeids, the fact remains that Sinodinos chaired a company whose entire business model relied on gouging the taxpayer by charging for improper expenses.

Australia enjoys an enviable international reputation for transparency and the rule of law. Voters rightly have little tolerance for corruption in public life, as their rough treatment of the disgraced Labor government in New South Wales demonstrated.

But the continuing revelations of the scale of the Obeid family’s activities should make every thinking citizen stop and reconsider. Voters will be forgiven for wondering just how far the cancer has spread.