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Arthur Sinodinos told about donations to Liberal Party, says AWH investor

A corruption inquiry into the Obeid family-linked company Australian Water Holdings has heard explosive claims its then chairman, Liberal Party heavyweight Arthur Sinodinos, was warned it was racking up massive debts, including tens of thousands of dollars in donations to the Liberal Party.

The evidence of AWH investor Rod de Aboitiz, who appeared at the Independent Commission Against Corruption on Thursday, contradicts long-standing claims by Senator Sinodinos that he was unaware the company was making donations to the Liberal Party.

Mr de Aboitiz told the ICAC that he confronted Senator Sinodinos, then non-executive chairman of AWH and honorary treasurer of the NSW Liberals, in May 2010 about ''out of control'' costs at the company.

He said he was concerned the directors were paying themselves ''extremely high'' salaries and racking up excessive costs. He said he told Senator Sinodinos: ''Arthur, you know that solvency is a big issue for a director.''

Mr de Aboitiz said Senator Sinodinos ''assured me that the board was on top of it''.


Asked if he was comforted by that assurance, Mr de Aboitiz said: ''It's Arthur Sinodinos. Of course I was comforted.''

AWH was then locked in a dispute with the state-owned Sydney Water about $2 million in costs.

Sydney Water had contracted AWH to provide infrastructure in Sydney's north-west and had agreed to cover the costs, but had become suspicious about how the money was being spent. The ICAC has previously heard AWH was billing Sydney Water for chauffeur-driven limousines and more than $75,000 in donations to the Liberal Party.

Mr de Aboitiz said he emailed Senator Sinodinos giving some of the excessive costs. ''At that time there was $20,000 that I think was owing to the Liberal Party,'' he said.

Mr de Aboitiz said there were also payments to ''a company called Eightbyfive'', which was allegedly a slush fund linked to former Liberal minister Chris Hartcher. The fund is the subject of a second corruption inquiry starting in April.

The Australian Financial Review has reported on Friday that the alleged slush fund received $183,342 from AWH while Senator Sinodinos was the chairman or deputy chairman.

The report says that the ICAC documents show that between April 2009 and May 2011, AWH paid the amount to the alleged Liberal Pary-related slush fund, operated by Tim Koelma, staffer for former NSW state Energy Minister Chris Hartcher.

The AWH payments were booked as public relations services from Mr Koelma, the report says. The Eightbyfive payments were in addition to the $76,000 AWH donated to the NSW Liberal Party.

Mr de Aboitiz said the remuneration package awarded to Senator Sinodinos when he was appointed non-executive chairman suggested he took an active role in the business. He received a 5 per cent stake in the company and promised a 2.5 per cent bonus if the NSW government accepted a public-private partnership proposal.

''If you're getting a bonus and a bonus of this size, wouldn't it suggest … that you're driving [the business] in a much more hands-on than arm's length fashion to earn or activate such a bonus?'' Mr de Aboitiz said.

The ICAC is investigating allegations the family of corrupt former Labor minister Eddie Obeid secretly owned 30 per cent of AWH, and that Mr Obeid lobbied colleagues to favour the company.

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