View from The Hill

View from The Hill

Assistant treasurer Arthur Sinodinos dragged into ICAC inquiry

Senator Arthur Sinodinos will appear before an ICAC inquiry into his time with Australian Water. AAP/Stefan Postles

On any objective measure of experience and policy brainpower Arthur Sinodinos, widely respected chief of staff to former prime minister John Howard, should be in cabinet. Indeed, at one stage Tony Abbott reportedly flagged he’d want him as finance minister.

It didn’t happen. After the election, Mathias Cormann, a fellow senator, was installed in Finance and Sinodinos became Assistant Treasurer, outside cabinet.

Sinodinos has felt the slight. Asked on the ABC’s Lateline last week if the Audit Commission’s report would be released before the West Australian Senate election, he said: “That’s a decision for my betters”. Pressed on whether it should be, he replied: “What should happen is a judgment made by my colleagues who are senior to me and who I love very much.”

As a long serving prime ministerial adviser Sinodinos was often involved in the management of issues of propriety. Now he finds his own propriety under the spotlight.

The NSW Independent Commission against Corruption is investigating allegations of corrupt conduct involving public officials and people with an interest in Australian Water Holdings, which sought a large contract with Sydney Water. AWH had secret links with the notoriously politically powerful and corrupt Obeid family. The inquiry is embroiling both sides of politics.

Among many other matters, counsel assisting the inquiry, Geoffrey Watson, SC, at an opening public hearing on Monday outlined the recruitment of Sinodinos, then in the business world, to the AWH board, in anticipation of a state Liberal government taking power in NSW several years later.

Watson said then AWH CEO Nick Di Girolamo, who had strong Liberal connections, set out to build links between the company and the party. In October 2008 he organised for Sinodinos to take up a directorship with AWH and its subsidies. “At the time Mr Sinodinos was the treasurer of the New South Wales branch of the Liberal Party and he was soon to become its president.

"Mr Sinodinos became the fifth director of Australian Water Holdings at a time when there were only about 10 employees. Not many companies could sustain a ratio of one director for every two employees,” Watson said, adding that “Mr Sinodinos’ commitments were not onerous.”

“There could not have been more than 100 hours during a year. For this Mr Sinodinos was paid $200,000 per year plus bonuses.”

Sinodinos was given five per cent of the share capital at no cost. He was also “on a bonus so that he would receive a further 2.5% of the share capital in the event that the government approved Australia Water Holdings’ [public-private partnership] proposal”, Watson said.

If the PPP had come through Sinodinos “would have enjoyed a $10 million or $20 million payday”. (It didn’t – it was squashed by Labor premier Kristina Keneally.)

Watson told the hearing it was “presently difficult to offer observations” on Sinodinos’ conduct. He had other involvements which would come under scrutiny in another inquiry.

He added: “It’s quite apparent that Mr Sinodinos’ true role in Australian Water Holdings was to open lines of communication with the Liberal party and there will be evidence that he tried to do so.”

In a statement to the Senate on February 28 last year Sinodinos said he had been “shocked” to learn the company was financially linked to the Obeid family, something which should have been disclosed to him.

“I became non-executive chairman of AWH on 3 November 2010. I was not aware that, at around this time, the CEO of the company had negotiated what has been reported as a personal loan agreement with members of the Obeid family, secured against shares in Australian Water Holdings.”

He said he had “played no role” in the awarding of a January 2012 contract to AWH by Sydney Water. By then he was in the Senate and out of the company. He also said in the statement that two days previously, his lawyers had written to AWH renouncing any entitlement to the shareholding, which had never been issued to him.

In relation to the big political donations AWH had made to the Liberals, Sinodinos said “these were handled by the management of the organisation at their discretion. I do not recollect donations to political parties being discussed at the board level.”

The ICAC inquiry heard on Monday that Di Girolamo had charged Sydney Water “expenses” that were in fact donations to the Liberals. “It seems that Sydney Water has unwillingly, unknowingly been a principal donor to the Liberal Party,” Watson said.

This has prompted the NSW Liberal party to declare immediately it will refund the more than $75,000 it received.

The Daily Telegraph reported last August that in 2011 Sinodinos, then NSW Liberal president, wrote to Sydney Water, with a copy to NSW premier Barry O'Farrell, lobbying for the contract. A spokesman for Sinodinos told the paper he did not specifically recall the letter.

Sinodinos told the Senate on March 3, “It is in public arena that I did write a letter,” but he reiterated that he had no role in the award of the contract, because by the time that came up he was no longer involved in the company.

The Conversation asked the Prime Minister’s office what the official position was in relation to Sinodinos. Was the PM happy for him to remain in his job, given the ICAC inquiry?

Its reply was: “The Minister will cooperate fully with the ICAC inquiry. There is nothing further to add.”

Sinodinos will appear before the inquiry, in a story with some way to play out.

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