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ICAC to investigate threat to witness

A THREAT has been made against a witness set to give evidence at an explosive inquiry into allegations of corruption involving two former Labor ministers.

The Independent Commission Against Corruption is examining an allegation that the former mining minister Ian Macdonald supplied inside information to the Labor powerbroker Eddie Obeid about the granting of certain coal licences. The inquiry has heard the Obeids used that information to make a windfall profit of $30 million, with a further $70 million in the pipeline.

''The commission has been informed that implied threats have been issued to one of its witnesses,'' the commissioner, David Ipp, said when the inquiry resumed on Wednesday morning.

The commissioner said attempts had been made to see the witness without his lawyer being present.

Threatening or bribing witnesses can be punishable by a five-year jail term, the commissioner said. In other evidence, the former deputy director of Mr Macdonald's department told the inquiry the former minister had told him to ''shut up'' at a meeting with the mining industry and had later shunted him to the Food Authority when he began challenging his decisions over the tendering process for 11 new coal exploration licences.

Alan Coutts said when the head of the Department of Primary Industries, Richard Sheldrake, delivered the news of his demotion, ''I think I responded rather badly.''


''You can tell Macca to stick his job et cetera, et cetera,'' Mr Coutts told his boss.

Mr Coutts said he was alarmed at Mr Macdonald's rush to get the areas out to tender without proper exploration being done. ''We did not know enough to be confident'' about the amount of coal.

This meant the government could miss out on selling the licences for millions more. ''Potentially someone would pick up a resource for quite a low cost and then suddenly find they've got a bonanza,'' he said.

Mr Coutts also said having been told by Mr Macdonald that the tender was by invitation only to small and medium miners, he was taken aback when he wanted to re-open the tender for his friend Travers Duncan.

Mr Duncan, whose nickname is ''Mr Coal,'' and his partner Brian Flannery, had just sold their company, Felix Resources, to the Chinese for $3.5 billion.

Mr Coutts said this multi-billion dollar sale did not put Mr Duncan in the category of a small miner. ''I thought Travers had had his go,'' he said.

The commission has heard that Mr Duncan and Mr Flannery set up a private company, Cascade Coal, which won the Mount Penny tender, where the Obeids had bought three farms.

The circumstances of Cascade winning the Mount Penny tender was ''a corrupt transaction'', Geoffrey Watson, SC, the counsel assisting the commission, said on Wednesday.

The inquiry continues.