It has been revealed the directors of White Energy were suspect of their company’s $500 million offer to buy Cascade Coal whose only asset at the time was an exploration licence, the Independent Commission Against Corruption inquiry was told.
Graham Cubbin, a non-executive director of White Energy said the possible involvement of Labor powerbroker Eddie Obeid and his family in Cascade Coal troubled him, the SMH reported.
To add to Cubbin’s professional worries was a potential conflict of interest. Cascade was owned by several White Energy Directors, including Brian Flannery, Travers Duncan, John Kinghorn and John McGuigan, who under the deal were to be paid $500 million for a coal licence that the company had bought from the NSW government for only $1 million.
Cubbin told ICAC he was unaware who had valued Cascade Coal at $500 million in November 2010, when just a year earlier it was valued at just $25 million.
Cascade Coal was awarded the exploration licence in 2009 in a public tender run by the then resources minister Ian Macdonald.
It has been alleged the licence was corruptly acquired.
Cubbin told the commission he was assured by Cascade the Obeids had no involvement what-so-ever in the company, when in fact the family held a 25 per cent share and had negotiated a $60 million payout.
According to the Obeid family’s former lawyer Sevag Chalabian, investment banker and Cascade director Richard Poole had gone to an enormous amount of trouble to hide the Obeid’s interest in the company.
Chalabian agreed Poole was concerned about the ''whiff of corruption'' if the Obeid’s involvement was discovered.
The inquiry has heard that the discovery of the family’s involvement could have led to the state government cancelling the exploration licences in question.
ICAC was told Eddie Obeid jnr ran messages between Poole and Chalabian over the payment of the first $30 million to the Obeid family, part of which was paid through Poole's wife's bank account, the SMH reported.
Cubbin responded to this allegation saying he would have been ''shocked and incredibly worried'' if he knew the $30 million was being paid to the Obeids to ''sanitise Cascade Coal''.
However, documents have been uncovered which reveal Poole told Cubbin he was not aware ''of any payments being made to Eddie Obeid or any entities associated with him or to other Labor Party politicians''.
Instead, ICAC was told Poole and McGuigan’s associates in 2008 created a number of fake letters pretending to be mining companies petitioning the government to re-open the tender.
Questioned about the fake letters was Neil Whittaker an executive at White Energy whose signature appears on one of the letters, he said he was unaware the letter’s purpose was to fool the government.
ICAC is currently investigating allegations that MacDonald supplied inside information to the Obeids which assisted the family’s acquisition of holdings which led to the reopening of the tender and Cascade securing coal exploration licenses, including the Mount Penny coal licence.
Australian Mining reported in November it was alleged that in granting the coal licences, former mineral resources minister Ian Macdonald ensured coal assets were being "given away to friends, political supporters and business associates of the minister".