Premier Mike Baird says police minister Mike Gallacher had to resign after he was caught up in a corruption inquiry into cash-for-favours.
In a development that sent shockwaves through the Baird government, the Independent Commission Against Corruption heard on Friday that Mr Gallacher was intimately involved in setting up a scheme for Buildev to pay tens of thousands of dollars in illegal donations to a Liberal Party slush fund.
Mr Baird said in a statement that he had accepted Mr Gallacher’s resignation from the ministry and made it clear that Mr Gallacher could not just stand aside temporarily.
"I make no judgment regarding those allegations. However, it could take considerable time for them to be resolved, and this would constitute an unacceptable distraction for my government.
"We need to be completely focused on delivering results for the community."
Mike Gallacher said on Friday afternoon he was unsure of the exact nature of the allegation against him and the first he had learnt of it was when he stepped off the parade ground at the Goulburn police academy following an attestation ceremony on Friday morning.
‘‘I have spent my entire professional life fighting corruption and crime. I am disappointed that this allegation has been made and the manner in which it came to be made but it will be dealt with through the processes of ICAC."
The inquiry was shown on Friday June 2010 emails in which Buildev executives Darren Williams and David Sharpe discussed which company should be used to funnel the illegal donations into the slush fund, a ‘‘sham business’’ called Eightbyfive set up by a staffer to former Liberal minister Chris Hartcher.
‘‘Which entity will I give Mike Gallacher?’’ Mr Williams asked Mr Sharpe.
Mr Sharpe replied: ‘‘Ask Nathan as I think it’s best to come through Patnack [Patinack Farm, Mr Tinkler’s horse racing business] get right away from property minning [sic] infrastructure.’’
Property developers have been banned from making political donations since December 2009.
The inquiry heard that Mr Tinkler’s Buildev had plans for a coal loader at the old BHP site at Mayfield in Newcastle.
Mr Williams admitted that he had a close relationship with Mr Gallacher and that Mr Hartcher would be useful to Buildev’s plans because ‘‘he was in government’’.
Counsel assisting the inquiry, Geoffrey Watson, SC, accused Buildev’s Mr Williams of lying during a tense morning in the ICAC witness box.
‘‘You know that you can go to jail for giving false evidence,’’ threatened Mr Watson. ‘‘This is your big chance, Mr Williams, to give this an innocent complexion.’’
When Mr Williams said he ‘‘honestly’’ could not recall the contents of an email about the Eightbyfive scheme, Mr Watson suggested that the ICAC had information which might help him.
He then sensationally put to Mr Williams: ‘‘The truth is you had a close, long-standing personal connection with the [then] shadow minister, Mike Gallacher, it was through him that the two of you hatched a corrupt scheme to make donations to the Liberal Party using theEightbyfive business, correct?’’
‘‘No,’’ Mr Williams said.
‘‘By the end of this you are going to regret giving that answer,’’ Mr Watson said.
Mr Watson said the shocking new evidence had come to light at midday on Thursday and an adjournment might be required because the ‘‘serious matters’’ warranted further investigation.
‘‘We don’t go off half-cocked. We don’t put something as serious to you as this without knowing plenty of stuff,’’ he told Mr Williams.
Operation Spicer, the inquiry into Liberal Party slush funds, started public hearings on Monday and had been slated to run for up to four weeks.
The inquiry has previously heard Mr Hartcher did favours ‘‘repeatedly’’ for Buildev, which paid $66,000 into the Eightbyfive slush fund.
At a press conference on Friday afternoon, Mr Baird again promised to wipe out corruption in NSW.
‘‘I will take every single action required to clean up politics in NSW. I don’t care what the political badge is," Mr Baird said in Canberra, where he was attending a COAG meeting.
Mr Baird would not go into the details of the conversation he had with Mr Gallacher ahead of the minister’s resignation but he said there was no option except for the minister to resign.
‘‘ICAC is doing its job,’’ Mr Baird said. ‘‘The actions that we’ve seen ... in the past few months and years, all of those actions cannot happen again in NSW. And that’s my job. My job here is to fix it and I give an assurance to everyone in NSW that’s exactly what I will do.’’
Speaking at the NSW Parliament on Friday afternoon, Mr Gallacher said he was of the opinion he could not remain as police minister ‘‘whilst such a serious allegation has been made against me’’.
‘‘I note the allegation was made for the first time today,’’ he said.
‘‘In order to allow the government and parliamentary team not to be distracted by these events, particularly in the upper house, I have made the decision to resign my position as minister."
He declined to answer questions about what he knew of the alleged slush fund, Eightbyfive, at the centre of the ICAC inquiry as he had been called to give evidence.
with Saffron Howden