School friends of Eddie Obeid jnr and Nick Di Girolamo have lost millions of dollars in their respective investments in Australian Water Holdings, the company at the centre of a corruption inquiry.
The Independent Commission Against Corruption is investigating allegations that former Labor powerbroker Eddie Obeid snr, misused his political position in an attempt to gain lucrative government contracts that would have reaped up to $60 million for his family.
Tony Karam, who attended St Patrick's College at Strathfield, said he was having breakfast with his former classmate Eddie Obeid jnr in early 2007 when the prospect of investing in water infrastructure company AWH was first raised.
Mr Obeid informed him that their friend from school, Mr Girolamo, was running AWH. At a later meeting Mr Karam was told the company could be worth as much as $200 million if a public private partnership with Sydney Water eventuated.
Mr Karam, a successful businessman, invested $500,000.
When asked by Greg O'Mahoney, junior counsel assisting, if he was a “savvy investor”, Mr Karam retorted: “Well, I'm not if I am here, am I?”
After the Obeid family's $3 million investment in AWH was raised at a previous ICAC inquiry into the Obeids' involvement in a corrupt coal deal, Mr Karam said he and fellow investors became nervous.
They requested a meeting with Mr Di Girolamo and other AWH executives.
At that meeting, Mr Di Girolamo promised that none of the investors – who included the Navarra family who run reception centres, another St Patrick's classmate Rod de Aboitiz and AWH employee Carlo LoGuidice – would lose out and that they could have his own shares.
Mr Karam was later shocked to discover that Mr Di Girolamo had sold his 60 per cent shareholding in AWH for a mere $400,000.
“To say I was irritated, that would be an understatement,” Mr Karam told the inquiry.
Later he and Mr De Aboitiz, who had invested $1 million through a family trust, compared information that they had received from Mr Di Girolamo.
They discovered they had been given different financial forecasts.
The two men are suing current and former directors of AWH including Senator Arthur Sinodinos, Mr Di Girolamo, lawyer Greg Skehan and former NSW treasurer Michael Costa over their investments.
Also involved in the Federal Court lawsuit against AWH are Mr Di Girolamo's brother-in-law, Danny Koutsogiannis, and the Navarra family.
Despite being issued last August with a notice to produce all relevant documents, Mr Macgregor-Fraser found key documents in his garage on Monday and gave them to his lawyer on Wednesday.
Correction: The original version of this story incorrectly had the acronym AWU instead of AWH in the headline.