Obeid's empire

Obeid's empire

He’s the powerbroker building a business empire from the back bench. Now ICAC has lifted the lid on Eddie Obeid’s private dealings as a public official. Kate McClymont and Linton Besser report.

Eddie Obeid's business philosophy is as stark as it is simple. ''I've got five sons and four daughters, so I was always on the lookout to make a buck,'' he once said.

It was April 1999, and Obeid was in an expansive mood, having just been elevated to the ministry of Bob Carr. Despite wielding unrivalled political power, for the previous eight years Mr Obeid had to content himself with a backbench role, which he felt was not in keeping with his status.

Then premier Carr, having kept him out for as long as possible, finally caved in. ''It makes sense to have him inside the tent rather than out, where he's tended to play the troublemaker,'' a key supporter of Carr's said at the time.

This week the extraordinary influence of Obeid came under the spotlight as the Independent Commission Against Corruption kicked off one of the most sensational inquiries the nation has seen.

Born in Matrit, Lebanon, Obeid, 69, is alleged to have subverted a government coal mining tender by using inside information provided to him by the then mining minister Ian Macdonald. The Obeid family stood to make a colossal windfall of $100 million.

The commissioner, David Ipp, QC, interrupted the inquiry's first witness, the former premier Morris Iemma, to ask the question that has troubled ordinary citizens of NSW for many years.


''As someone entirely ignorant of these processes really, I don't understand what it is that gives Mr [Joe] Tripodi and Mr Obeid the right to come and try and influence you,'' he said. ''Can you explain that? I mean, [he] was a backbencher, wasn't he?''

But Obeid was no ordinary backbencher. He was, even in the words of the former premier, a ''factional leader'', a powerbroker who could command the votes of the dominant bloc inside the Labor parliamentary caucus. ''The strength of numbers,'' Iemma offered humbly.

''Where did they get the numbers from?'' Ipp asked.

''Through retirement of MPs and candidates replacing those MPs that were either friends or sympathetic to their view of the world, and those MPs then getting elected and formally joining the right and informally joining the Terrigals, and then organising within the caucus,'' Iemma said.

As new MPs came into caucus, and as they saw the power and influence of the Terrigals increase, so they joined too. It became a self-fulfilling prophecy.

''I guess, commissioner, you get with the strength and some of them went along for the ride.''

Iemma acknowledged that the factions could also influence which candidates would be preselected for certain seats. He even said he always made sure he maintained ''control'' over the branches within his seat so that ''if things went pear-shaped in Macquarie Street, nobody could take retribution against me … in my preselection''.

Labor ministers have previously told Fairfax that Tripodi and Obeid threatened their ministries, and even their seats, for perceived disloyalty to the backroom numbers men.

But Iemma did not offer to the ICAC his views on the waves of branch-stacking and dirty tricks that has allowed the Right faction to cement its control of the ALP in this state.

In the 1990s, for example, a campaign of recruitment by the Right swept through the Illawarra and south-west Sydney. Almost 8000 people joined the NSW Labor Party between February and December 1996, which was roughly equivalent to 30 per cent of the overall party membership. Many of these were really pseudo-members, who signed meeting rolls that were delivered to their homes and whose party fees were paid for by head office or factional heavyweights. Routinely, there were accusations of ballot-rigging.

But Iemma, and his successor, Nathan Rees, did confirm this week that as time went on, it was deemed necessary to join the Terrigals in order to gain a cabinet portfolio. Indeed, Rees told the ICAC that after being removed in a putsch, his replacement, Kristina Keneally told the party room that he would be offered a ministry. But then he received a call from someone he described as a ''delegate''.

''Over the weekend I was called by a delegate who revised that [offer],'' he said. The delegate was Eric Roozendaal - one of Obeid's chief lieutenants.

Obeid's brief stint in what was know as the ''Sods and Cods'' portfolio (Minerals and Fisheries) made some of his colleagues very nervous as his reputation as a wheeler and dealer was widely known.

In 1988, before he came to Parliament, Obeid was have known to have vigorously lobbied Carr, then the environment minister, over his development in the ski fields at Perisher Valley.

And in the very week he joined the upper house, he had bought a house in Clovelly on Wednesday and on Thursday he had sold it to the Housing Department for a $300,000 profit.

Within hours of his appointment to the ministry, mischief makers within his own side of politics were distributing a dirt file. The Obeid Dossier, as it was called, featured on its cover a caricature of Obeid as a cigar-chomping, limo-driving tycoon.

Earlier that year the humble backbencher had bought Passy, one of the grandest mansions in Hunters Hill. Built in 1850 as the residence for the French consul and set on 4200 square metres, the house was bought by the Obeids in January, 1999 for $2.9 million. It is now valued at more than $10 million.

On the eve of this week's corruption inquiry, with its sensational revelation that Obeid had received $30 million from a rigged government tender and stood to make $70 million more, Obeid was on the front foot, claiming his lavish lifestyle was because ''I had plenty of money before I came into politics''.

This is not strictly true. Obeid's colourful business career has been a roller-coaster of boom-and-bust, with a handful of fires thrown in for good measure.

In 1992, the year after he became an MP, the ANZ Bank wrote off nearly $3.2 million in bad debts owed by him and his companies. When Obeid became the minister for mineral resources and fisheries, he appointed an ANZ bank executive to the NSW Coal Compensation Board and the Advisory Council on Aquaculture.

Even though the ANZ had written off millions, two years later, in 1994, Obeid was again sailing close to the wind. His $5.2 million Bankstown development - a function centre, known as the Bellevue, and several shops - had not been a success and Bankstown Council started proceedings in the Supreme Court to wind up Obeid's company over unpaid rates.

Obeid's partner was Wally Wehbe, of whom a Federal Court judge had previously remarked that it was open for him to conclude that ''Mr Wehbe is dishonest or otherwise not of good character''.

But luck came their way, when the National Australia Bank wrote off $2.5 million worth of Obeid's business debts.

The bank had been pressuring Obeid and Wehbe to reduce debt. The pair sold the car park on their development site for $1.1 million. Strangely, bank documents showed that the address of the purchasing company was ''care of'' E. Obeid at Hunters Hill.

In September that year, another company, Dakmint, approached the NAB offering to buy out Mr Obeid's company's debt for a little more than $2.1 million. In accepting Dakmint's offer, the NAB wrote off $2.5 million. Bank documents later obtained by Fairfax Media showed that Dakmint's phone number was Obeid's direct line at Parliament House.

One of Dakmint's directors was Anwar Harb who, at the time, was the editor of the Obeid family's newspaper, El Telegraph.

El Telegraph has also had mixed fortunes. In July 1983, fire destroyed the offices and typesetters of Media Press and the newspaper in Garners Avenue, Marrickville.

Bad luck was to follow him, too, to his newspaper's new premises in Marrickville Road.

In 1992 fire again severely damaged the El Telegraph office.

Fires have also struck the Obeids domestically. Neighbours reported the Obeids' Concord house was twice damaged by fire.

Then there was Offset Alpine. Obeid has said that in 1992, when Kerry Packer's Australian Consolidated Press was offloading assets, he was offered the firm's printing plant, Offset Alpine.

After mentioning the deal to his good friend, the then Federal Labor minister Graham Richardson, Richardson put him in touch with his good mate Rene Rivkin. The stockbroker came up with the money and Obeid requested a $2 million option which would give him 25 per cent of the company.

But Obeid, at the time a member of Parliament, was having financial problems and, in the end, couldn't come up with the $2 million, although his son Paul joined the board of Offset Alpine.

''Paul went on the board to protect our option, but he wasn't interested in working at the place and I wasn't financial enough to find $2 million. FAI took our shares and Paul eventually left as a director,'' Obeid has previously told Fairfax Media. ''If I had [invested] I would be the luckiest bloke alive.''

What Obeid was referring to was the fact those who did buy shares in the company made an absolute motza when, on Christmas Day 1993, the company's printing plant was destroyed in a fire. The plant was worth only $4 million, but the company had recently taken out insurance cover for the printing plant's replacement cost of $53 million. News of the company's inadvertent windfall set the share price through the roof.

Years later the Australian Financial Review revealed that a $26 million payout from shares in Offset Alpine went into Swiss bank accounts owned by by Rivkin, Richardson and the businessman Trevor Kennedy.

Lesser known is the revelation that in 1994, the year after the Offset fire, Richardson transferred $1 million from his Swiss bank account to the Beirut bank account of Dennis Jamil Lattous (or Lattouf), who is believed to be a Sydneysider.

In 1994, Obeid found himself in business with Paul Keating's controversial piggery partner, Al Constantinidis, for whom Obeid went guarantor on a million-dollar loan.

The complexity of Obeid's business interests, which are unravelling before the present ICAC inquiry, was revealed as early as 1994. Obeid, who was seeking a $3 million loan, told Macquarie Bank he had $13.475 million worth of assets.

The bank noted: ''[Mr Obeid's] financial position is complex, with investments in his various companies and projects being difficult to analyse due to the cross ownership with third parties.''

The bank held that a truer reflection of his net worth was probably closer to $2.5 million.

For many years, adorning the walls in Mr Obeid's parliamentary office, in smart wooden frames, were copies of every correction or apology he had extracted from media organisations.

The legal stoushes which he has instigated, defended or been a party to are as legendary as they are plentiful. He won a $150,000 payout from the Herald over a 2002 report claiming the then Bulldogs Rugby League Club president Gary McIntyre allegedly said Mr Obeid had solicited a $1 million bribe for the ALP to ease the passage of the proposed Oasis development. He also successfully sued the ABC over the same matter. Obeid sued ABC radio over a 1992 report that, his lawyer claimed in court, implied Obeid was ''guilty of tax avoidance'' or ''was reasonably suspected by the Australian Taxation Office of tax avoidance''.

The litigation with the Tax Office related to a superannuation fund of a former Obeid company, Media Press Pty Ltd. It was settled in the Administrative Appeals Tribunal in 1994, in what a former Liberal senator told Parliament was a ''remarkable'' settlement.

He also sued his cousin Sayed Obeid and a former business partner Joe Khoury, claiming that they were behind the allegations. At the time a front-page report in Obeid's El Telegraph said: ''The Member of the Legislative Council of the NSW Parliament, Professor Edward Obeid, has expressed astonishment and sorrow for the stance of Mr Sayed Obeid and colleague Joseph Khoury towards the investigation of the tax bureau.''

Some years later Obeid withdrew his defamation action against the ABC, his cousin and former business partner.

In May this year Fairfax reporters Kate McClymont and Linton Besser tried to interview Obeid at the family's headquarters in Birkenhead Point. The following day Obeid fired off a threatening legal letter in response to a set of questions the reporters had left for him.

The questions included the following:

Did you have any prior knowledge that the Department of Mineral Resources would be calling for expressions of interest before you purchased Cherrydale in Bylong?

Did you organise for anyone else to buy property in that same area?

Did you have any discussion with minister Ian Macdonald or anyone within his department about the coal exploration licences in these areas at any time?

At any time have you or any of your family members had any interest - either directly or held beneficially on your behalf - in Cascade Coal, Voope, Desert Sands Holdings, Loyal Coal or White Energy?

Obeid declined to answer what he described as ''insulting'' and ''ill-founded'' questions.

''Ms McClymont and the Herald have conducted a long-running vendetta against Mr Obeid and members of the Obeid family. We have been instructed to take appropriate steps to bring those matters to a head and to prevent future harassment of Mr Obeid and the Obeid family by the Herald and its reporters,'' the missive said.


The letter was penned by a partner at Colin Biggers & Paisley, the very same law firm which has been revealed at the ICAC this week to have been involved in setting up the necessary legal structures for the Obeid family to disguise their proposed ill-gotten gains by subverting a government tender.

Do you know more? investigations@smh.com.au

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