Excluded: John Kinghorn, not to be a part of Mr O'Neil's legal action. Photo: Nic Walker
Sydney property developer Denis O'Neil has had a temporary setback in his legal action against a group of wealthy business figures recently found to be corrupt by the Independent Commission Against Corruption.
Justice Peter Jacobson has ruled that John Kinghorn, the founder of RAMS Home Loans, should not be part of Mr O'Neil's action. But the Federal Court judge granted leave for Mr O'Neil's company Addenbrooke to re-plead its case in relation to Mr Kinghorn.
Addenbrooke is suing Cascade Coal and five of its current and former directors. Those being sued include Travers Duncan, John McGuigan, John Atkinson, Richard Poole and Mr Kinghorn.
Temporary setback: Denis O'Neil. Photo: Robert Pearce
Last month ICAC found that the five men had not only acted corruptly but the corruption watchdog asked the Director of Public Prosecutions to consider whether the five should face criminal charges.
Cascade Coal won a corrupt government tender for a coal exploration licence in 2009. The family of former ALP powerbroker Eddie Obeid negotiated a 25 per cent stake in Cascade in return for access to his family land holdings at Mount Penny, near Mudgee, which happened to be where resources minister Ian Macdonald had granted an exploration licence.
Mr O'Neil and a friend, car dealer Neville Crichton, invested $13 million in Cascade in late 2010. Days later the Australian Stock Exchange was informed that a publicly-listed company, White Energy, planned to buy Cascade for $500 million.
The ICAC inquiry heard that several White Energy directors, including Mr McGuigan, Mr Duncan and Mr Kinghorn, failed to tell fellow board members, or the ASX, that the Obeids had been paid $30 million to leave Cascade.
Mr O'Neil claims that he had no idea his money was used to pay out the Obeids. In a defence filed in the Federal Court, Mr McGuigan said that Mr O'Neil was told sometime between September and November 2010 that his money would be used towards buying out the Obeids' stake.
Mr Duncan has also filed documents claiming that Mr O'Neil knew about the Obeids, as has Mr Poole, from boutique investment bank Arthur Phillip.
Mr Poole has said that Mr O'Neil was tipped into the deal by his mate Greg Jones, who Mr Poole claims told him about the Obeids.
Mr Jones kept his own investment in Cascade a secret due to his friendship with former minister Mr Macdonald, the corruption commission heard.
In an intercepted call played to the inquiry, Mr Jones was heard saying to Mr McGuigan, ''Yeah, you think I'm really feeling terrific about having invited all those guys in through old acts of mateship?''
ICAC heard the proposed sale of Cascade to White Energy, which would have made Mr Jones and the other Cascade investors up to $60 million each, did not go ahead because of rumours of the Obeids' involvement.
Because of the damning ICAC inquiry, it is unlikely the government will permit Cascade to mine at Mount Penny.