Video settings

Please Log in to update your video settings

Video will begin in 5 seconds.

Video settings

Please Log in to update your video settings

Corruption contemptible says Keneally

Honest public servants thwarted the attempt to use AWH to set up a lucrative partnership with Sydney Water, according to the former NSW Premier.

PT2M14S 620 349

Former NSW Premier Kristina Keneally has claimed credit for blocking a controversial proposal by a company linked to the Obeid family, saying it was two powerful women who rejected the plan.

Speaking outside the Independent Commission Against Corruption on Thursday, Mrs Keneally said that she and former Sydney Water boss Kerry Schott thwarted a proposal by Australian Water Holdings for a lucrative partnership with the state government.

It was ''thwarted because two women in powerful positions said 'no'", Mrs Keneally said.

Witness Kristina Keneally arrives at the ICAC enquiry in Sydney.

Witness Kristina Keneally, the former Premier of NSW, arrives at ICAC on Thursday. Photo: Edwina Pickles

The commission is investigating allegations that the family of corrupt former Labor minister Eddie Obeid owned a secret 30 per cent shareholding in AWH, and that Mr Obeid corruptly lobbied colleagues to favour the company.

Mrs Keneally told the inquiry Mr Obeid called her in mid-2010 to discuss a proposal by AWH for a public-private partnership with the state government.

The inquiry has heard the Obeids stood to make up to $60 million from the PPP.

Witness Kristina Keneally, the former Premier of NSW, arrives at ICAC.

Witness Kristina Keneally, the former Premier of NSW, arrives at ICAC on Thursday. Photo: Edwina Pickles

Mrs Keneally said she could "count on one hand" the number of times she had spoken to Mr Obeid on the phone, and she turned to her husband when the phone rang and said "oh, for God's sakes".

Mrs Keneally said Mr Obeid did not deny that his youngest son, Eddie junior, worked for the company.

She said she told Mr Obeid and his political allies, Joe Tripodi and Tony Kelly, that the proposal would have to "stand on its own two feet".

Dr Kerry Schott: in charge of Sydney Water.

Dr Kerry Schott: in charge of Sydney Water. Photo: Arsineh Houspian

When she voiced concerns about the Obeids' links to the company, the three men allegedly said that Liberal Party figures were also involved.

Mrs Keneally said Mr Tripodi assured her the then Liberal Opposition would not "make a fuss" if her government approved AWH's proposal because members of its own party had ties to the company.

She said she was unaware until later that Liberal Senator Arthur Sinodinos was on the board.

The inquiry has heard allegations that Mr Tripodi and Mr Kelly doctored a cabinet minute to support AWH's proposal, contradicting advice by experts in the premier's department to reject the plan.

Mr Kelly allegedly made repeated attempts to get the cabinet minute approved, including by taking steps to have it considered by cabinet's powerful budget subcommittee.

Mrs Keneally said that if this was a "dastardly plan" by Mr Kelly to sidestep cabinet it was a "silly one" because cabinet still had oversight of the committee.

"It was the cabinet minute that simply wouldn't die," Mrs Keneally said.

She eventually told Mr Kelly to withdraw the minute and not to resubmit it.

The proposal was "dead in the water, at least as far as the Keneally Labor government was concerned", she said. She "drove a stake through the heart" of the plan.

Mrs Keneally denied a suggestion by the barrister for Mr Obeid, Stuart Littlemore, QC, that she avoided talking to the Labor powerbroker because she did not want to appear to be his "puppet".

"Didn't he put you into your job?" Mr Littlemore said.

"No. It was the caucus that did," she said.

Asked by counsel assisting the inquiry, Geoffrey Watson, SC, why she didn't refer the matter to the ICAC, Mrs Keneally said it was a "fair question" but it could also be asked of her predecessor Nathan Rees and her successor, Liberal Premier Barry O'Farrell.

She said she was unaware at the time who had authored the cabinet minute, who owned AWH and that the company made large donations to the Liberal Party.

"This was a bad minute. This was bad public policy," she said.

Dr Schott, the former chief executive of Sydney Water, opposed AWH's plans for a PPP.

The inquiry has heard AWH secretly charged Sydney Water for millions of dollars in administration costs under an existing contract, including for limousines and political donations.