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THE family of Labor kingmaker Eddie Obeid struck an agreement just before the last election to take a secret one-third share in a water company pushing for a billion-dollar privatisation deal with the then state Labor government.
The explosive revelation came during heated questioning of Mr Obeid's son Moses at a corruption inquiry on Friday.
Moses Obeid initially denied ever seeing a document titled ''Heads of Agreement - Australian Water'', which was dated November 2010. But the document, which would deliver to an Obeid family trust a third of the company for $3 million, was signed by him, his brothers Paul and Eddie jnr, and their close associate Nick Di Girolamo, the head of Australian Water Holdings, who has close ties to the Liberal Party.
Last January the O'Farrell government signed a 25-year agreement with the company - without going to tender - giving it the right to roll out all of the $500 million worth of water infrastructure still needed in the north-west growth centre.
A Herald investigation has revealed that by the time the secret Obeid deal was signed, Eddie Obeid had extensively lobbied his colleagues to assist the company, which wanted the government to agree to sell it all of Sydney Water's operations in the north-west. It has also confirmed that prior to the 2011 election the former planning minister Tony Kelly rewrote a top-level cabinet minute to support the company's proposal even though it had been rejected by senior bureaucrats.
A government source familiar with the privatisation proposal described it as ''a complete and utter rort … the size of that work would have been billions''.
Had that proposal proceeded, the Obeids might have been sitting on a windfall as big as the coal deals now being investigated by the Independent Commission Against Corruption.
The inquiry has heard that the Obeid family still has a 9.3 per cent interest in a coal resource at Mount Penny for which they have already received $30 million. Should a mining licence be granted, the mine could be worth up to $1 billion.
It was suggested to Moses Obeid at Friday's hearing that the family's share in the mine could deliver a further $50 million to $100 million to the Obeids. ''I hope it's worth more,'' he said.
Before Moses Obeid was shown the Australian Water document, he was asked why a telephone intercept had recorded him in 2011 telling an associate that his brother Paul was going to be ''at Australian Water tomorrow''. Asked whether the Obeids had ever held any interest in the company, Moses replied: ''Not that I know of.'' After a short break, he was shown page seven of the document which contained his signature.
Moses Obeid told the commission the agreement might have been ''superseded'' by a $3 million loan to Mr Di Girolamo, with shares in the company used to secure this loan.
In December, Mr Di Girolamo said: ''The Obeids have no pecuniary interest or any interest in my shares in Australian Water.''
Accounts tendered at ICAC show the Obeids have a $3.4 million investment in Australian Water but Mr Di Girolamo said the money was a personal loan from Eddie Obeid jnr.
A Herald investigation last year unearthed the Obeids' extensive links to the company, including that Eddie Obeid and his son Eddie jnr had brokered a deal that installed the former Labor treasurer Michael Costa as the company's chairman.
Both Mr Kelly and Mr Costa hung up on the Herald twice.
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