New South Wales Crime Commission investigators face a maze of family trusts, loans to family members and possible offshore bank accounts in an attempt to recover the $ 30 million the former NSW labor power broker Eddie Obeid received following a corrupt deal involving a coal exploration license at Parlong.
After public outrage that the NSW government had ruled out trying to prosecute the $ 30 million, State Crime Commissioner Michael Barnes on Friday urged the agency to review his previous investigation into whether she could confiscate any of the Obeid family’s assets as proceeds of crime.
“Unacceptable and scandalous” is how NSW Premier Dominic Perrottet described the Crime Commission decision to leave the prosecution of the ill-gotten gains of the Obeids to the Australian tax office.
“It does not pass the sniffle test,” said Opposition Leader Chris Minns.
Eddie Obeid, 78, his son Moses Obeid, 52, and former NSW Minister of Mines Ian Macdonald were sentenced to heavy prison terms last Thursday after justice Elizabeth Fullerton discovered that the three had conspired to have Macdonald willfully commit misconduct in public service.
All three have indicated that they will appeal.
But the location of the $ 30 million – half of the $ 60 million the mining company, Cascade Coal agreed to pay under the deal – remains an unfinished business.
So what do we know about where the money goes?
As part of the initial investigation by the Independent Commission against Corruption (Icac) in 2013, forensic investigators attempted to answer this question.
Shortly after signing the deal with Cascade Coal at the end of 2010, the Obeid family embarked on a spending spree, buying properties, cars and pursuing a subdivision of prime coastal land that she already owned on the north coast of New South Wales.
Grant Lockley, senior forensic accountant at Icac, testified that millions of dollars were paid to Eddie Obeid, his wife and others as a result of the deal, through family trusts.
He told the inquest that Eddie Obeid received $ 1.5 million from the suspicious coal deal.
From October 2010 to June 2011, $ 29,459,860 was donated via an Obeid shell company to Obeid Family Trust No 2.
Two months later, Eddie Obeid used the coal company’s derivative funds to purchase a $ 286,817 Mercedes S500, Lockley said.
There is no indication that members of the Obeid family, other than Eddie and Moses, had reason to suspect the money was the product of a corrupt deal.
He also used part of the funds to pay off his $ 1.12 million vacation unit in Port Macquarie.
The family has long been interested in the prime coastal lands near Port Macquarie, known as Rainbow Beach.
After the coal mine deal, the family finally got planning approval for their huge Bonny Hills subdivision, known as Rainbow Beach.
While Obeid Sr. was in jail between 2016 and 2018 after being convicted of misconduct in the performance of public office in another case, the family businesses that own the land advanced the subdivision of 702 lots and won millions of lots by selling.
Part of the problem for Icac and later the ATO and the NSW Crime Commission was finding enough documentation to track the flow of money through the Obeid trusts.
To recover the proceeds of crime, the Crime Commission must be able to tie the funds to the criminal enterprise and it is far from straightforward when the same trusts are used to mix contaminated money with legitimate funds. .
For example, the Obeids homestead Cherrydale Park, which was at the heart of the coal mine plan, was purchased before the plot hatched for $ 3.65 million. The family still owns it, but it may not fall under the definition of proceeds of crime.
Then there is the sheer complexity of the Obeid Empire. The Icac investigation learned that the Obeids had used more than 20 trusts to structure their financial affairs. Often, family members did not know that they were the trustees of particular trusts or even the beneficiaries.
Instead of making distributions to the beneficiaries of the trust, payments to family members were often made in the form of loans, with little or no documentation.
Testifying before Icac, the longtime accountant of the Obeid family, Sid Sassine conceded to assistant lawyer, Geoffrey Watson SC, that he regularly found “anomalies” in the Obeids’ financial accounts.
The fact that some entities involved in transactions relating to Bylong were not actually in Obeid’s name adds to the difficulties in tracing the money.
Sassine denied being a leader of the family, but admitted that his role as an accountant was to hide the Obeid name from the public because the Obeid name was sometimes seen as a barrier to new business ventures.
âMy role there is to hide, yes, to hide the name Obeid from the general public, to avoid the obstacle that they always had,â he said.
The difficulties in penetrating the finances of the Obeid family were encountered by others as well as by Icac.
In 2012 known as “smartpoles”.
But in 2014, the council settled, rather than struggling to incur more costs as it sought to recoup the damage. Streetscape Projects had been put into liquidation and the board found itself trying to chase funds through the maze of trusts.
After the Icac hearings, the ATO also attempted to unravel the Obeid Empire and pursue the taxes owed.
Icac learned that the family had paid $ 4.6 million in taxes on the $ 25 million “pure profit” related to the Bylong Valley, but the ATO continued to be interested in the trust structure of the Bylong Valley. ‘Obeid.
In 2014, a number of members of the Obeid family, including the matriarch of the Judith family, were hit with a $ 9 million tax bill as a result of an audit of the Obeid family trusts for the years 2007 to 2012.
The protracted battle has raged in court ever since, but was postponed last week while all appeals relating to the Bylong mining plot are heard.
Eddie and Moses Obeid have yet to pay the roughly $ 5 million in costs they owe to parties they have unsuccessfully sued in the Icac investigation. The Obeids lost their case against Commissioner, Judge David Ipp, Watson, and investigators Grant Lockley and Paul Grainger in 2016. They were unsuccessful on appeal and were denied the right to appeal to the High Court in 2018.
The role of the NSW Crime Commission is to prosecute proceeds of crime under the Criminal Assets Recovery Act 1990.
The philosophy behind the Crime Commission and similar bodies is that depriving criminals of their capital will help degrade their criminal enterprise. Information from surveys is also passed on to other agencies.
Most of his references are from NSW Police, but other agencies, such as AFP and Icac, also ask him to know where the corporate money has gone.
On its website, the committee estimates that about one in six referrals results in confiscation proceedings, with many cases being left out due to difficulties in recovering funds or the amounts not considered worth pursuing.
The proceedings, which are civil and not criminal, sometimes reach the court, but most are settled with the criminal required to sign a statutory recognizance and hand over the property. This has attracted criticism in the past because it is a government agency that deals with criminals in private.
Stung by critics over the Obeid case, the Crime Commission issued a rare statement on its activities last week.
âBetween 2013 and 2015, the NSW Crime Commission conducted extensive forensic financial investigations in an attempt to identify property that could be seized and confiscated as proceeds of crime,â Barnes said.
âWe liaised with ICAC officials and were kept abreast of that agency’s investigations into Obeid and others. We informed a QC with extensive experience in the field â.
âThe view of lead counsel at the time was that there was no reasonable prospect of recovering the proceeds of any Criminal Asset Recovery Act orders that might be made. For this reason, the cost of pursuing such orders could not be justified, the statement said.
Barnes said the commission would take another look at what material it had. But it is quite possible that the criminal commission will encounter the same difficulties as the last time.