Tuesday, 04 December 2012 09:18
A mining company would have scrapped a proposed $500 million coal deal in the New South Wales upper Hunter if it had known the Obeid family was involved, a corruption inquiry has heard.
The Independent Commission Against Corruption (ICAC) is examining former Labor minister Ian Macdonald's decision in 2008 to issue mining exploration licences in the Bylong Valley and how Labor powerbroker Eddie Obeid gained from it.
It has been alleged the Obeids stood to make millions of dollars out of a mining deal between Cascade Coal and White Energy linked to the sale of a mining exploration licence in the coal-rich region.
The inquiry has been told White Energy agreed to buy the assets of Cascade for $500 million in November 2010 but the deal fell through.
Graham Cubbin, a non-executive director at White Energy at the time, told the ICAC on Monday that he would have been "very worried" if he had known the Obeids were involved.
"There would have been a lot of adverse publicity, and I think that would have meant the end of the transaction," Mr Cubbin said.
He said his reputation would have been "trashed" if he had gone ahead with the deal and the state government had not granted a mining lease over the critical Mt Penny tenement.
"There was too much downside risk for White Energy," he said.
The inquiry was also shown minutes from a March 2011 meeting involving Mr Cubbin and Cascade investor, Richard Poole, at which Mr Poole allegedly stated he was not aware of any payments being made to Eddie Obeid or entities associated with him.
Earlier, former Obeid family lawyer, Sevag Chalabian, said Mr Poole told him to disguise the Obeid's involvement in the Bylong Valley.
"He was the one who was telling you that the Obeids' interests had to be carefully disguised?" counsel assisting the commissioner, Geoffrey Watson SC, asked.
"Yes," Mr Chalabian replied.
Mr Watson suggested that the Obeids' interests had to be masked because otherwise the State Government might set aside the exploration licence.
The inquiry heard that Mr Poole told Mr Chalabian that a complex installation of trusts and corporate entities was needed "so no one could find the Obeid name".
Mr Chalabian said that despite the involved corporate arrangements there was a deal for $60 million between Cascade and the Obeids.
He agreed with Mr Watson's suggestions that the Obeids currently held 717,000 shares in Cascade.
For the latest news click here
For the latest Drive features click here
For the latest Travel features click here
For the latest Food & Drink features click here
Follow myresources.com.au on Twitter