Vitriol and money-making: Secret diary of former minister Ian Macdonald revealed

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This was published 6 years ago

Vitriol and money-making: Secret diary of former minister Ian Macdonald revealed

By Kate McClymont

"TOUGH TIMES DON'T LAST TOUGH PEOPLE DO" is the inscription on the first page of the black, imitation-leather journal.

Unfortunately, the man who penned these motivational words is the former hardman of the Labor Left, Ian Macdonald, who is currently in Cooma jail serving a seven-year stretch for corruption.

The journal, which has been provided to the Herald, is peppered with bursts of vitriol such as "Greenies are for target practice" and that the corruption watchdog singled him out for "public humiliation."

But predominantly the journal records a dizzying array of money-making schemes Macdonald had on the boil before he was jailed in June for misconduct while in public office.

Pages of Ian Macdonald's diary have been revealed.

Pages of Ian Macdonald's diary have been revealed. Credit: AAP

A jury found the 68-year-old former mining and agriculture minister had gifted a lucrative coal mine to a union mate, John Maitland, who was also jailed.

Macdonald's trial was repeatedly delayed after he claimed he had no money for legal representation. But his journal suggests otherwise.

On July 6, 2015, he was granted an adjournment in his case. His journal records this event as "no funding – delay two months".

The following week he and his wife enjoyed a ski trip to Perisher. In winter 2008 Macdonald had enjoyed free hospitality at the luxury Perisher ski lodge owned by his mate Eddie Obeid. Macdonald lived up to his nickname Sir Lunchalot by leaving the Obeids to pick up the $800 tab for his restaurant bills.

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The inscription on the first page of Ian Macdonald's diary.

The inscription on the first page of Ian Macdonald's diary.

In September 2015, Macdonald's application for legal aid was rejected owing to his lifestyle, his discretionary spending, overseas travel for his wife and his ownership of luxury cars. The opening page of his journal, which Macdonald kept from March 2014 until September 2016, records the following: "Keep all cars – set aside $26k for Range Rover, 24k for Hilux/Subaru."

Macdonald sought a further adjournment to allow him to appeal the refusal of legal aid.

John Maitland after he was sentenced by the Supreme Court to a maximum of six years in prison in June.

John Maitland after he was sentenced by the Supreme Court to a maximum of six years in prison in June.Credit: Wolter Peeters

In April 2016, Macdonald again sought an adjournment in his case while he made another application for legal aid, claiming he had no money and substantial debts.

Justice Christine Adamson remained sceptical about his claims.

Ian Macdonald's diary is peppered with vitriol.

Ian Macdonald's diary is peppered with vitriol.

"I am not satisfied that Mr Macdonald is indigent, largely because I am not persuaded that he has been forthcoming with details of his financial circumstances," said the judge.

Macdonald, she said, had repeatedly refused "to have his true financial position revealed or investigated" and had declined to supply the court with the documents he had given to the Legal Aid Commission to show he had no assets.

Former Labor minister John Della Bosca is another person to feature regularly in Ian Macdonald's journal.

Former Labor minister John Della Bosca is another person to feature regularly in Ian Macdonald's journal.Credit: James Brickwood

Meanwhile his journal shows the indefatigable deal-maker was busy with a multitude of Chinese export schemes, local real estate deals, mining plays and the like, for which he was to be paid a broker's fee.

His carefully notated deals ranged from the potential export of bull's pizzles (penises) to a "steady market" in sheep offal "except kidneys".

Ian Macdonald's diary makes many references to former chief of staff Tony Hewson.

Ian Macdonald's diary makes many references to former chief of staff Tony Hewson.Credit: Rob Homer

There were also multi-milliondollar real estate deals in Arncliffe and Liverpool, which Macdonald was pursuing on behalf of Chinese investors.

Using his contacts in China, Macdonald was assiduously trying to advance the business interests of Sydney-based Professor Tom Borody, the pioneer of faecal microbiota transplantation or pooh transplants.

One of those from whom Macdonald sought advice on exporting oranges was former Labor backbencher Tony Catanzariti. Nicknamed "Tony Cat", the Griffith citrus grower hosted a meeting at his city pad in Pyrmont to discuss with Macdonald the perils of "Fuller's rose weevil".

According to the journal, Macdonald also sought help from another Griffith orchardist, Pat Sergi, from Joe's Citrus, a company started by his father Joe (Giuseppe) who was in a fruit business with crime boss Bob Trimbole.

James Tong, who publishes the Chinese Domain in partnership with Fairfax and is chairman of the Australian Chinese Primary Industry Council, is a frequent entry in Macdonald's journal.

Over the years Mr Tong, who came to Australia 20 years ago, has used his political connections to assist Chinese investors navigate local regulatory requirements.

Another person to feature regularly is former Labor minister John Della Bosca, who provided a reference at Macdonald's recent sentencing hearing. Although they were on opposite sides of the Labor Party, their closeness prompted then Premier Bob Carr to dub Macdonald "Della's pet crocodile".

Several pages are devoted to improving Macdonald's success at the race track with a note to investigate an algorithm to rank "firmers" (shortening of the odds) in horse racing.

Excerpts from Ian Macdonald's diary.

Excerpts from Ian Macdonald's diary.

Throughout the journals are references to resources and mines. One page of his journal, dated May 2014, Macdonald wrote: "start looking for new mines (coal)." Further down the same page Macdonald has dot-pointed "mining resources", "investment facilitation" and "commodity trading" plus a note: "Invoice $4k."

Frequent references are made to Macdonald's former chief of staff Tony Hewson. The ICAC's final report into Macdonald's granting of the Mount Penny coal exploration licence to the family of his now-jailed colleague Eddie Obeid, recorded the following:

"Mr Hewson, who, himself, was an unimpressive witness, had previously worked for Mr Macdonald, and had moved from the minister's office directly into work as a lobbyist for White Energy."

Mining newcomer Cascade Coal had been granted the licence to explore for coal over the Obeids' property near Mudgee. The Obeids acquired a quarter stake in Cascade for which they were paid $30 million (with another $30 million to come). Five of the seven Cascade investors were on the board of the publicly listed White Energy. Each stood to gain about $60 million after White Energy offered to buy Cascade for half a billion dollars.

An excerpt from Ian Macdonald's diary.

An excerpt from Ian Macdonald's diary.

One of the investors in Cascade was Brian Flannery, who provided a character reference for Macdonald at his recent criminal trial. Mr Flannery bought $640,000 worth of shares in Cascade in September 2010. Eight weeks later, the Australian Stock Exchange was informed that White Energy, of which Mr Flannery was managing director, was planning to buy Cascade Coal for $500 million. The deal fell over.

The name and phone number of another White Energy director John McGuigan is recorded in the journal under the words "constitutional challenge".

On October 6, Eddie, his son Moses and Macdonald will be arraigned over the award of the licence to Cascade Coal. Their trial is expected to take place next year.

Macdonald's journals also reveal he had a business relationship with the Chinese investors who had purchased his property near Mount Canobolas in Orange in 2014.

This excerpt shows how the company of Ian Macdonald's referee (Brian Flannery) got 70 acres of government land for $1.00.Image supplied

This excerpt shows how the company of Ian Macdonald's referee (Brian Flannery) got 70 acres of government land for $1.00.Image supplied

His journal shows he was working on a mission statement for their website. "Orange Towac Valley P.L is a company dedicated to exporting quality safe food to Asia.

"Our mission is to deliver from the gardens, orchards and farms of the world's safest biosecure agricultural producer – Australia."

The company has recently received approval to erect two large greenhouses and 24 car parks which locals complain is bigger than the local Bunnings.

Macdonald also raged at the Independent Commission Against Corruption, which found him corrupt in three separate inquiries. Among these written outbursts on ICAC was one which read: "Stalin would have been proud of the 21str century Vyshinsky" – a reference to the legal mastermind behind Soviet dictator Joseph Stalin's great purge of dissenters.

Macdonald's desire to use Greenies "for target practice" appeared at the end of one of his most intriguing entries, an agreement detailing the financial arrangements between Macdonald and his friend and business partner John Gerathy.

Ian Macdonald is led to the prison truck after sentencing.

Ian Macdonald is led to the prison truck after sentencing. Credit: Wolter Peeters

Mr Gerathy had been appointed to the Homebush Motor Racing Advisory Board and the Wine Council by Macdonald while he was minister for state development.

The month after Macdonald quit parliament in June 2010 over allegations that he had rorted his travel expenses, Mr Gerathy and Mr Macdonald had set up in business together.

Their company Resource Image was trying to foster trade in the wine, equipment, resources and bio-medics sectors.

Mr Gerathy was paying Macdonald between $15,000 and $25,000 per month after he resigned from politics. The payments, totalling $450,000, only stopped in May 2012 when Mr Gerathy was served by ICAC with a notice to produce his financial dealings with Macdonald.

Handwritten notes of Mr Gerathy, which were tendered at the inquiry into the granting of the Mount Penny coal licence, indicated that the Obeids, codenamed "The Irish" by Mr Gerathy, were to receive $60 million from the coal deal and that Macdonald was to receive $4 million from his friend Greg Jones' $60 million cut of the same deal.

Mr Gerathy appeared briefly before the ICAC in November 2012 when it was revealed that, in contravention of ICAC's orders, as soon as Macdonald had given evidence at a private sitting of the commission some weeks earlier, he immediately rang Mr Gerathy to tell him what ICAC was investigating.

The inquiry heard that Mr Gerathy moved immediately to retrieve a file crucial to the ICAC investigation from his former law firm. Mr Gerathy was informed he would be recalled at a later stage to give further evidence. However, he was admitted to a mental health facility and was too ill to give evidence when he was recalled in March 2013.

According to Macdonald's journal, in March 2013 just the ICAC inquiry into their actions was winding, the pair signed a written agreement about the money Macdonald owed his friend.

Now, in May 2014, Macdonald was drawing up a further agreement.

He noted in his journal that "external events [ICAC hearings] prevented the conclusion of major business proposals/contracts with SK, Daewoo and Whitehaven, and lesser business opportunities in new technology, real estate and agricultural trade."

Former Labor Minister Tony Kelly and John Gerathy arrive at the ICAC inquiry in 2011.

Former Labor Minister Tony Kelly and John Gerathy arrive at the ICAC inquiry in 2011. Credit: Nick Moir

In 2008, while mining minister, Macdonald had approved a mining lease for Whitehaven which allowed for an open cut coal mine, north of Gunnedah.

A corruption inquiry also heard that Whitehaven ended up with the Obeids secretly owning a 7.5 per cent stake in a mining project at Ferndale in the Hunter Valley. No wrongdoing was suggested against Whitehaven which had taken over the company which held the coal exploration licence.

The Gerathy agreement noted that when Macdonald paid $67,500 to Mr Gerathy, the latter would remove a caveat from his farm in Orange. In May 2014 Gerathy had placed a caveat on the property to protect an unregistered mortgage of $150,000. It was removed two months later and Macdonald sold the property for $900,000.

The May 2014 agreement proposed that any commission earned by their consultancy company Resource Image would be spilt 50/50. The agreement would cease two years after the execution of this agreement, or to an agreed sum on $150,000, whichever comes first.

Fairfax Media sought comment from a Federal opposition frontbencher as to his entry, which reads: Anthony Albanese – "friend" "debt" .

But not everyone mentioned in Macdonald's journal was a willing participant in Macdonald's carousel of Chinese deals.

In June 2015, former senior agriculture bureaucrat George Davey and Mike Logan, then CEO of Dairy Connect, had been asked by businessman Richard Thomas to advise on exporting dairy products to China.

Mr Logan told Fairfax Media that he and Mr Harvey were horrified to find that Macdonald was already at the meeting at level 29 of Chifley Tower in Sydney's CBD.

"We couldn't get out of there quickly enough," said Mr Logan. Once they were outside, Mr Harvey looked at his friend and said of the Macdonald ambush, "F--- me!"

The journal shows that at the time of the meeting Macdonald was trying to introduce prospective Chinese purchasers to buy Mr Thomas' winery at Orange. He was to receive a 4 per cent commission on any sale.

Mr Thomas did not respond to Fairfax Media's inquiries.

At the back of the journal were a number of loose pages including prep notes on the evils of ICAC, which Macdonald used in his December 2015 interview on 2GB with radio shock jock Alan Jones, who was another character referee for the now jailed former minister. At the bottom of one of the last pages, Macdonald scrawled and underlined a single word: "innocent".

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