Crown prosecutor Margaret Cunneen's claim she was "joking" in a secretly recorded conversation that sparked a corruption investigation has been contradicted by audio played to a parliamentary inquiry in a confidential session, multiple sources say.
The potentially explosive Australian Crime Commission recording and its transcript were made available to state MPs on Thursday after being tendered by Independent Commission Against Corruption chief Megan Latham.
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ICAC chief slams inspector's report
In her opening statement, ICAC Commissioner Megan Latham slams a report that was critical of its failed pursuit of Crown Prosecutor Margaret Cunneen as "so fundamentally flawed," it should be withdrawn or disregarded.
Multiple sources have told Fairfax Media the tone and content of the conversations contradict Ms Cunneen's assertion she was joking when using the phrase "fake chest pains" after a 2014 car accident involving her son's girlfriend, Sophia Tilley.
One said: "There is no way it could be construed that way."
They also said the conversation shows Ms Cunneen's concern that her car insurance – Ms Tilley was driving her car – might be voided if Ms Tilley had consumed alcohol, as she was a P-plater.
But on Thursday night Ms Cunneen backed up her assertion.
"In that case they don't know me," she said. "When the heat is off, when the stress is relieved I try to look at the light-hearted side."
Asked if she objected to the committee publicly releasing the recordings, she said "I don't give a damn" but argued it would be fair for her to see their contents first as she had been denied access to them by the ICAC.
But she also warned there are "grave concerns about the legality of disseminating people's private telephone calls, especially in circumstances when the person has never even been given notice. I've never seen [the transcripts], nor have my lawyers".
The ICAC launched an investigation into allegations Ms Cunneen tried to pervert the course of justice by advising Ms Tilley to "fake chest pains" to avoid a police breath test after the accident.
But Ms Cunneen later publicly claimed to have used the phrase in jest in the conversation with a smash repairer friend, George Kharadjian, and was referring to Ms Tilley's breast implants.
The crime commission is understood to have been targeting a tow-truck driver alleged to be involved in organised crime.
The tow-truck driver attending the accident is believed to have passed his phone to Mr Kharadjian, who discussed the accident with Ms Cunneen.
It has been reported that a second conversation between Ms Cunneen and Mr Kharadjian occurred the next day. Ms Cunneen says this is when the "joking" conversation took place.
According to a public statement previously issued by ICAC, Ms Tilley admitted she had consumed alcohol before the accident, in which she was not at fault. But she recorded a zero blood- alcohol reading.
The ACC passed details from the telephone conversations on to the ICAC, stating: "DPP Prosecutor possibly involved in corrupt conduct."
The cross-party committee conducting the inquiry, chaired by Liberal MP Damien Tudehope, is now under pressure to publicly release the recording and transcript and will reconvene on February 19.
The committee is seeking advice about a NSW parliamentary inquiry's powers to make public material covered by the federal Telecommunications (Intercept and Access) Act.
The inquiry is being held after ICAC Inspector David Levine in December issued a scathing report on the agency's conduct in its pursuit of Ms Cunneen. Inspector Levine accused ICAC of "unreasonable, unjust, [and] oppressive maladministration".
It followed the ICAC being forced to abandon its investigation after a successful challenge by Ms Cunneen to the High Court which found the watchdog had exceeded its jurisdiction.
The NSW Solicitor-General later said no prosecution should be pursued. Ms Cunneen has always denied the allegations. The ICAC hit back by describing Mr Levine's report as legally and factually flawed.
As foreshadowed by Fairfax Media, on Thursday Ms Latham tendered large volumes of material relating to its investigation of Ms Cunneen, including the phone intercept and a 32-page submission.
Notably, she urged MPs on the committee to not only read the transcript of the phone tap but also to listen to the audio, which they did.
Ms Latham said the committee should make the material public because it served to "undermine the basis for the adverse findings" in Mr Levine's report.
It would also address "speculative, false claims to which the commission has not previously been able to lawfully respond".
"The commission submits that consideration of this material leads to the conclusion that the report is so fundamentally flawed, so lacking in a proper factual foundation and infected by a denial of procedural fairness that it should be withdrawn as proposed by the former inspector, Mr Harvey Cooper, or that the committee places no reliance upon it," Ms Latham said.
Mr Levine did not respond to a request for comment.