Colin Biggers & Paisley has spent plenty of time getting acquainted with the ICAC ... Law firm by appointment to the Obeids ... Former managing partner Nick Di Girolamo is the hottest potato around town ... Transcript heaven
Colin Biggers & Paisley's contact man - Nick Di Girolamo
Since Nick Di Girolamo and his old law shop Colin Biggers & Paisley are on everyone's lips, we thought it might be fascinating to go through the ICAC transcripts for Operation Credo to see just what questions have been fired at the firm's partners and former managing partner and how they coped under interrogation.
The Obeids came to the firm (now re-christened as CBP Lawyers) through its managing partner; Nick and young Eddie Obeid Jnr having been at school together at St Pats, Strathfield.
ICAC is seeking to establish links between the Obeids and Australian Water Holdings, previously known as Rouse Hill Infrastructure Consortium, and the extent of any political influence peddling and manipulation to benefit AWH.
March 20
Partner Greg Skehan, appeared before the commission. He was a director of Australian Water Holding between March 2009 and January 2013.
Counsel Assisting Geoffrey Watson SC had questions about legal work Skehan performed in 2007, when Edward Obeid Jnr and Nick Di Girolamo were seeking to pool their assets.
Skehan was pressed on when he knew the Obeids had an interest in AWH and what attracted him to invest in the company ...
Q: How did you understand that Mr Di Girolamo and Mr Obeid were involved in business together? We know that they were friends?
A: I don't recall the exact detail, Mr Watson, it was - - -
Q: Well in any event - - -?
A: If it wasn't on the notes I, I can't remember back in 2007.
Q: And I'm not laying a trap for you it's just I was hoping you might recall, it's just that it had been apparently positively asserted to you that they had been in business together and apparently they accepted that contention?
A: Yes.
Q: And then - - -?
A: 'Cause I would have dreamt it up.
Q: You wouldn't have invented it?
A: No.
Q: And it'd be the two of them desire mutually to support one another in their interests and then in (c) Mr Di Girolamo is the owner of 50 per cent of the shares and, in the two companies - - -?
A: Yes.
Q: And Mr Eddie Obeid Junior is the owner of one-fifth of the Milland Unit Trust?
A: Yes.
Q: In (e) they recognise that each other's interests are speculative. Do you see that?
A: Yes.
Q: These are all things that you've been told to incorporate in the document?
A: Yes.
Q: You had no reason to think that they were pulling your leg?
A: No.
Q: This was a serious document?
A: Well they'd obviously thought about it 'cause they - it wasn't my idea.
Q: No. And it had gone through various versions so that if you've made any muck ups they could have told you?
A: Yes.
Q: And so it goes on (f) and (g) you can see there's a discussion about exchanging assets. And I won't go into the detail for fearing of driving everybody mad with boredom but the real affect of this was that they were exchanging pools of assets. Mr Eddie Obeid Junior had a, what was a potentially valuable investment in the Milland Trust, Mr Di Girolamo had what as potentially a valuable interest in those two water companies and they were going to give each other 50/50 of each?
A: Yes. They ended up mutual owners of each.
Q: Now at page 3025 as I pointed out Mr Obeid Junior must have come into your offices and got you to witness him executing it?
A: Yes.
[snip]
Q: What do you know about Eddie Obeid Junior or one of the entities associated with him or his family owning shares in Australian Water Holding? Do you know anything about that?
A: No, I don't know anything about them owning shares in Australian Water Holdings.
Q: You know that that's right at the heart of the inquiry - - -?
A: Yes.
Q: --- and, but did for example either of them ever take it up with you that, that's Di Girolamo or Eddie Junior the fact that Eddie Junior or the Obeid Family owned shares in Australian Water Holdings?
A: No, to the contrary.
Q: Now what about this, what do you know about a personal loan from Eddie Junior to Nick Di Girolamo?
A: Only what Nick advised the board of the directors of AWH.
Q: And that was very late in the day wasn't it?
A: Correct.
Q: That was something that Mr Di Girolamo raised after the Sydney Morning Herald had first published question marks over the deal?
A: Correct.
Q: So until that time this is an issue was a sleeper for you at least as a member of the board?
A: Yes. And at first - - -
Q: I shouldn't say a sleeper, it wasn't even that. You had no idea that there was any suggestion around that the Obeid family owned shares in Australian Water Holdings and you had no idea of this personal loan. Is that right?
A: Until the prior inquiry where the name appeared in ledgers
[snip]
Q: It's about February 10 2007?
A: Correct.
Q: --- that after discussions with Mr Di Girolamo you were attracted to loan money to the company Australian Water Pty Limited- - -?
A: Correct.
Q: --- on the basis you'd become a so-called convertible note holder- - -?
A: Down the track.
Q: Down the track, which would enable you to convert your loan into equity in the other company, Australian Water Holdings Pty Limited?
A: No.
Q: Sorry. Explain where I've got it wrong?
A: The converting note agreement had a split loan, so in my case the $199,999 was lent to Australian Water Pty Limited and $1 was lent to Australian Water Holdings. Either way, my understanding of the converting note agreement was on conversion I would get that amount of shares in Australian Water and a dollar's worth in Australian Water Holdings.
Q: So what attracted you to this investment?
A: I suppose a couple of things.
Um, (a) it was Nick and I'd known him for a long long time and I had some respect for his ability um, when I approached it I probably looked at the downside, in other words things like PPPs and that sort of stuff are always inherently risky, right, there's no guarantee those sort of things are going to happen, but what I was attracted to what was the core business that it had and it had been successfully delivering water infrastructure for 18 years. So that if – it still had a core, a solid core business to it.
Q: Well, that's not exactly right. The company Australian Water Pty Limited was a $2 shelf company, wasn't it, with no- - -?
A: Correct, yeah, that's true, it was new.
Q: So you were attracted to Australian Water Holdings' history with the Sydney Water Corporation of course?
A: Yes.
[snip]
Q: I'm really drawn back to this idea, you were actually investing in the other minor company which had no business at all really at the time you invested?
A: No, but as I recall, Mr Watson, the, the, the ah, IM or the converting note agreement, the plan was that all the business would devolve into Australian Water.
Q: So that was the general plan?
A: Yes.
Q: Was that a term and condition of the convertible note holders' agreement?
A: I can't remember whether it was a term and condition of the note agreement or it was in the information memorandum.
Q: Right. But some way or another it was communicated to you that eventually Australian Water Pty Limited would swallow the whole of the business?
A: Yes.
* * *
Ever Ready Eddie Jnr
March 20
Watson also questioned Skehan about a mystery lunch that was hosted by CBP for Labor politicians, courtesy of Nick Di Girolamo.
Q: You've got a meeting happening and it's all about Nick Di Girolamo, the CEO of Australian Water?
A: Yes.
Q: And he's coming along because of, you'll see in the last paragraph before the list of names, because of his close relationship with the Obeid interests and the Treasurer?
A: Yes.
Q: And the people who are coming to this are Mr Costa, that's Michael Costa, Mark Arbib, Eddie Obeid Senior and Junior, Robert L, down the bottom is Mr Di Girolamo and Mr Rippon?
A: Yes.
Q: And I see if you go to page 2828 it's a private lunch and it seems as though it's being held at Colin Biggers?
A: Correct.
Q: Now, where was Colin Biggers making its attachment to figures in the Australian Labor Party, powerful figures in the Australian Labor Party?
A: Via Nick.
Q: And that's, that's the source of it?
A: Yes.
Q: Look, everything I've ever heard in this inquiry about Nick is that he was connected with the Liberal Party rather than the Labor Party?
A: Yes.
Q: Well, how could it be that Nick could organise such an event for Colin Biggers & Paisley?
A: Because as I said in the note to Ron, he was quite close to the Obeid family, he'd been to school with the sons, he knew them very well, he was friends with Edward Obeid Junior, um, he was able to do it.
[snip]
Q: The point is that some strong connection had been made between your firm and these Labor figures, is that right?
A: No.
Q: I see so - - -?
A: We didn't have any connection with them. It's been put together by - - -
Q: I must be going mad. Have a look at page 2828 it says "Colin Biggers & Paisley"?
A: Yes.
Q: It looks like an invitation with being, its being jointly issued by Colin Biggers & Paisley and the Australian Labor Party for a private lunch with Michael Costa and Eddie Obeid?
A: Correct.
Q: And you still say there was what, no connection between Colin Biggers & Paisley and the Australian Labor Party?
A: No, the connection was via Nick.
Q: But Nick was no longer at Colin Biggers & Paisley?
A: Well, he'd only just left, this is two months after he'd left. I don't even know whether he hadn't organised this before he went.
[snip]
Q: This is an email which I, I, I don't know, I'm just going to put two and two together and say it's got something to do with Australian Water Pty Limited because it's headed "Australian Water Pty Limited". It does seem as though - - -?
A: Oh, that, that - I don't think that can be correct, that's, that's got to be - so in 2007 when I'm a mere investor, I'm not a director, so I'm having access to the email account of - I don't think that's correct, I think that's - - -
Q: Have a look at 2826, this is an email headed "Rouse Hill Infrastructure, Australian Water Pty Limited"?
A: Yes.
Q: Do you see that?
A: Yes, I do. And I don't believe the CBP email system would have allowed for that. I, I - - -
Q: So this might have been printed off somebody else's system do you think?
A: I don't know but I don't think it's printed off - - -
Q: Anyway, that's just a complete mystery to you how a lunch which you seem to have organised has got Colin Biggers and the Australian Labor Party as the joint inviters?
* * *
April 16
Nick Di Girolamo, CEO of Australian Water Holdings, is in the box.
Bruce Oslington QC, counsel for the government agency, Sydney Water, which was being milked by Australian Water Holdings, was trying to establish why Rouse Hill Infrastructure Consortium (the predecessor entity to AWH) described itself a not-for-profit company.
It got interesting ...
Q: And I think you agreed with me the other day that a common way or not an unusual way in which private companies running a business choose to take their profit is rather than take it by way of dividends out of profit of the company that which would otherwise be recorded on the profit is added to the directors' salary?
A: I accept that proposition that you put to me Mr Oslington.
Q: And that essentially based upon the answer I've just taken you to was the position with RHIC, wasn't it?
A: Yes.
Q: So it would be quite untrue to say if that position existed that RHIC was a not for profit company, wouldn't it?
A: No, that would not be untrue.
Q: Because you see - - -?
A: Because you can't have both, you can't have, I've accepted your proposition Mr Oslington, but you can't have both, you can't be saying well, either the company makes a profit and you set wages at a particular level or alternatively the wages or the salaries include a profit element.
Q: So you claim do you, even though there's this unique profit element in the director's salary it is still correct to call the company a not for profit company, is that what you're saying?
A: I'm saying that's how the company traded.
Q: Are you saying it is correct in those circumstances to describe the company as a not for profit company?
A: Yes.
Q: That's just being tricky and deceptive isn't it Mr Di Girolamo?
A: I reject that.
Q: I can take you to it if you like but, in the submissions prepared by Mr Lockhart on instructions from Allens before Mr Easton on a number of occasions in those written submissions it was asserted that RHIC was a not for profit company, do you recall that?
A: Yes.
Q: And you carefully looked at and reviewed those submissions and knew that submission was made?
A: I don't cavil with the submission.
Q: And you didn't say anything in those submissions or didn't cause anything to be included in those submissions to disclose that in fact the profits were distributed to the shareholders, did you?
A: Those accounts don't show profits being distributed to the shareholders.
Q: No, but you've just agreed that the uniqueness of RHIC was that what otherwise would have been profit of the company was distributed to or paid to the shareholders by way of salary, haven't you?
A: I was accepting your general proposition in that regard.
Q: No, you weren't, you agreed that in relation to RHIC what otherwise would have been profit of RHIC was in fact added to the shareholders' salaries?
A: I'm struggling with the bit added, the salaries had been set.
Q: It was included, all right, included?
A: The salaries had been set, Mr Oslington.
Q: Included in the shareholders' salaries?
A: I'll accept that proposition, yes.
Q: So what otherwise would have been profit of RHIC was included in the shareholders' salaries. You accept that?
A:Yes.
Q: And you said that that didn't then disqualify RHIC as being described as a not-for-profit company, didn't you?
A: I said that.
Q: But in fact the profit, the profits or earnings of RHIC were distributed to the shareholders at RHIC within their salary, weren't they?
MR ALEXIS: Commissioner, can I object? We've had this I think at least four times and it's been accepted. I'm not sure why we need it a fifth time.
MR OSLINGTON: This is another interruption. I've got a limited time.
MR ALEXIS: I do have my eye on the time, Commissioner.
MR OSLINGTON: Now, will you answer my question or have you, or have you forgotten it?---
A: Well, I- - -
THE COMMISSIONER: Well, go on, Mr Oslington, ask it again. We have to keep it moving.
MR OSLINGTON: In fact the profits or earnings of RHIC were distributed to the shareholders through their salary, weren't they?
A: Yes.
Q: So it would be false to state that it is incorrect to suggest that profit or earnings are made or distributed to the shareholders or executive directors of AW, wouldn't it? AW meaning AWH?
A: I've lost the question.
Q: It would be false to assert this quote, and I'm quoting from the submission, "It is also incorrect to suggest that profit or earnings are made or distributed to the shareholders or executive directors of AW," meaning AWH?
A: I don't accept that.
* * *
St Patricks College, Strathfield. Where it all the fun started
April 16
Then it was the turn of Andrew Kostopoulos, counsel for a number of disaffected AWH shareholders. He took an agriculturally sweeping approach to his grilling of Di Girolamo. Interestingly, broadcaster Alan Jones gets a guernsey ...
MR KOSTOPOULOS: Now if you had all this gaggle of lobbyists in the Liberal Party - - -?
A: I wouldn't refer to them as gaggle, I don't mean to interrupt you but - - -
Q: Well I am?
A: Okay.
Q: You can reject that?
A: I reject that.
Q: Thank you. The Liberal Party sympathisers were now lobbyists, Mr Nick Di Girolamo, you had them all on the payroll, correct?
A: We retained lobbyists - - -
Q: You had them on the payroll, yes or no, one or the other?
A: Yes, sir.
Q: Thank you?
A: That's okay.
Q: Why did you engage yet a further Liberal Party lobbyist in the form of Mr Alan Jones? Was he on the payroll as well?
A: No, he was not.
Q: Right. Now let me take you to the last page 3933?
A: Yes.
Q: Look at the last entry?
A: Yes.
Q: Who was going to pay for lunch, you out of your pocket or AWH?
A: It could have been either.
Q: Well let, let, let's find out, I want to know today. Who paid for it?
A: We didn't have lunch, sir.
Q: Well, who were going to pay for it?
A: I don't know we didn't have lunch.
Q: Well did you have discussions with Mr Jones after this email dated the 10 September 2011?
A: I don't believe so.
Q: Now the PPP wasn't going well was it at that stage?
A: Um, I'd have to refresh my memory.
Q: Well was it or wasn't it?
A: No, no, you're correct.
Q: Wasn't going well was it?
A: No, in relation - - -
Q: So you tried the Labor Party, you tried the Liberal Party, you tried some 20 media outlets and you weren't getting anywhere, is that what happened?
A: No, I don't accept that, sir.
Q: Let me put this to you, I want to suggest to you that by going to Mr Jones you displayed a shallow and manipulative individual style having failed to get your way you tried a cunning interplay between Labor and Liberal Governments and oppositions to approve the PPP and when that failed as an act of desperation you contacted your old mate mentor and confidant Mr Alan Jones, is that correct or not?
A: No, and I don't think Mr Jones was my mentor or confidant either.
Q: Well what was he?
A: He was someone that I knew and obviously was a media - - -
Q: Look must I suffer, Mr Di Girolamo, let's go to the document again, 3932?
A: Yes, sir.
Q: Look at what you attached for goodness sakes private secret business to Mr Alan Jones involving my clients' money and shareholders and directors of AWH. Who told you to do that?
A: I was the CEO at the time, sir.
Q: So you took it upon yourself, is that right?
A: I did.
Q: That is an act of treachery, Mr Di Girolamo, to your, to not only the shareholders but the directors to breach that confidence.
MR ALEXIS: Well I object to the question and - - -
MR KOSTOPOULOS: Well I press it.
THE COMMISSIONER: Well it was a statement more than a question. Do you - - -
MR KOSTOPOULOS: No, I've asked, Commissioner, and I press it.
That was an act of treachery wasn't it?
A: I don't accept that.
Q: Let me ask you this, Mr Di Girolamo, let's assume Alan Jones in his wisdom decided to give it to Hadley to Singleton and perhaps even to Gai Waterhouse. What would you have said about that?
A: Um, I'm just not sure how to answer that, Mr Kostopoulos.
THE COMMISSIONER: I think the point is, Mr Di Girolamo, that there is nothing in the email itself which enjoins Mr Jones to any confidentiality in relation to the information that's contained within it. Is that so?---I think the second paragraph "I refer to I need to raise another matter with you in a highly confidential basis", Commissioner.And so you expected Mr Jones to keep that, that - - -?
A: Yes, Commissioner.
--- information following that paragraph confidential?
A: Yes.
All right. Thank you.
MR KOSTOPOULOS: Let me just test that for a moment, Commissioner, thank you. Mr Nick Di Girolamo, when you were negotiating with others to invest in the company didn't you ask them to sign non confidentiality clauses like all good lawyers do? --- Confidentiality agreements - - -
A: Yeah.
Q: Why didn't you do that with Mr Jones?
A: Obviously I didn't think it was necessary.
Q: That was bad lawyering wasn't it?
A: I don't accept that, sir.
Q: Well it was bad CEO-ing wasn't it?
A: I don't accept that either, sir.
Q: Mr Nick Di Girolamo, when applying your professional skills this is the last topic and I'll leave you alone. Do you understand that?
A: Yes, sir.
Q: Thank you. When you were applying your professional skills acquired in the law and your leadership skills as a managing partner of Colin Biggers & Paisley did you then transmute and apply those skills as the CEO of Australian Water then Australian Water Holdings Pty Limited from 2006 to 2013? I'm sorry, transcript reporters, but my voice is running out and I have to do this as efficiently as possible, when at the last date I mentioned to you you resigned as a director of AWH? You follow the question without my commentary?
A: I just missed that last bit, sir.
Q: Righto, let me do it again. Did you apply your skills when you were at - - - ?
A: Yes, I did apply my skills.
Q: Are you sure about that?
A: Yes.
Q: Righto. When you were at Colin Biggers & Paisley was the partnership of Colin Biggers & Paisley a corporation with the meaning of the Corporation Act when you left it as a managing partner of Colin Biggers & Paisley in 2006?
A: It was a partnership.
Q: But as a partner in a partnership you applied the same skill set as a director of a company?
A: I would accept that, sir.
A: Yeah.
Q: Same trust?
A: Yes, sir.
Q: Same duty of fidelity?
A: Yes.
Q: Same honesty?
A: Yes.
Q: Same integrity?
A: Yes.
Q: Mr Di Girolamo, as you sit there today – and I've seen your demeanour – you're not a very honest man, are you?
A: I don't accept that, sir.
Q: Between 2006 to 2013 did you at any time during that period seek medical assistance for any diagnosable psychiatric or psychological condition?
MR WATSON: I object to that.
MR KOSTOPOULOS: And I press it.
THE WITNESS: Commissioner, I have almost now a bit, bit too much, Commissioner, I've- - -
MR KOSTOPOULOS: I press it, Commissioner.
THE COMMISSIONER: All right. All right. Mr Kostopoulos, back off.
THE WITNESS: Come on, mate.
THE COMMISSIONER: All right. There is no suggestion from anyone that this witness suffered from any such condition. You've covered your bases in respect of your previous line of questioning and I don't think we need to go any further than that.
MR KOSTOPOULOS: Thank you, Commissioner, and I apologise unreservedly.
Can I put this to you and I'll finish, Mr Di Girolamo, because there's more important people to come before the witness box today. Can I put to you that your wanton disregard for your responsibilities and duties as a CEO and director of AWH and Australian Water Holdings and the way that you've approached your evidence today and yesterday and your demeanour is appalling?
A: I don't accept that, sir.
Q: You've shown a lack of remorse or guilt for what you've done.
MR ALEXIS: Well, I object.
THE COMMISSIONER: He doesn't accept that he's done anything wrong at this stage.
MR KOSTOPOULOS: Oh, yes, I'm sorry, I'm sorry, Commissioner, I apologise again.
From the time you resigned as a director of Australian Water Holdings in 2013 you did so as nothing more than a coward to escape the criticism of those who trusted you in AWH and in preparation of you giving evidence at ICAC?
A: I don't accept that, sir.
Q: Could I suggest to you that presently as you sit there in the box you're untruthful and you display all the hallmarks of a liar?
A: I don't accept that, sir.
Q: Can I further put to you this, that having agreed, if I could put this, that you've applied a rational business mind and no – I'll withdraw that – and the way you have operated AWH as a CEO, you've done so unethically and improperly to gorge the money invested in your company from dear and longstanding friends and family?
A: I don't accept that, sir.
* * *
November 14, 2012
The firm had been in the spotlight during the previous Jasper and Arcadia inquiries by ICAC.
In 2012, handwritten notes from Christopher Rumore, a senior partner at CBP, revealed the Obeids intended to capitalise on insider information on government coal tenders in the Bylong valley.
The Obeids were looking to buy up property before the tender was issued and concealed their involvement by instructing Mr Rumore and his fellow CBP partner, Greg Skeham, to purchase shelf-companies and hold shares on trust for an undisclosed beneficiary.
Counsel assisting ICAC, Geoffrey Watson, SC, questioned Rumore in November last year:
Q: And this is, as it were, an update report that you gave by email to the Obeid boys and also to Gregory Skehan. And in paragraph 1 you'll see that two companies have been ordered and you'll see that Greg Skehan would be the sole director and shareholder of a company which would enter the option for shares in Monaro Coal Australia. Do you see that?
A: Yes.
Q: Now, it's just that, Mr Rumore, I'm laying down some pretty important dates and facts and all you were doing was acting on instructions and repeating in your notes things which you were told directly by the Obeids?
A: That's correct.
Q: And then also acting on instructions as in that kind of instance?
A: Yes.
Q: Now, if you go to page 946 . . . you'll see that there there's an email which is indicating that something has been secured. If you turn over to 947 we can see a Certificate of Incorporation of Voope Pty Limited?
A: Yes.
Q: That was the Gregory Skehan company?
A: Yes.
Q: And if you turn over there's the Certificate of Incorporation of Geble Pty Limited. That was the Chris Rumore company?
A: Yes.
Q: Now at 952 you'll see a letter from the solicitors who are acting in respect of the Coggan Creek property?
A: Yes.
Q: Now, if you just look down at the foot of the page there's a reference to your letter of 30 July, 2008, and they requested details of the identity of that person or company for which Geble was trustee?
A: Yes.
Q: Now, if you turn back you'll see that the context for that is at 945?
A: Yes.
Q: You'll see there that you've informed the solicitors acting on the sale of Coggan Creek that the purchaser was going to be Geble Pty Limited as trustee but have not nominated a beneficiary?
A: That's right.
Q: Now, if I take you forward, 953 you'll see a letter which is of similar effect from those same solicitors, the reason being that Coggan Creek was in two parcels of land. Does that, that explains that. What I wasn't to show you is at 957. In response to all of this you sent an email to Gerard, Moses and Paul Obeid attaching the letters from those solicitors and the forth item is the one I wanted to draw your attention to. The other solicitor, that's the solicitor acting on the sale of Coggan Creek, has indicated that he wants to know who the entity, the beneficiary. Do you see that?
A: Yes.
Q: Now, your words are, "We feel that giving this information should be resisted for obvious reasons." What, what were they?
A: Twofold. Firstly the Obeids didn't want the vendor to know that they were associated with the purchaser and secondly, we didn't actually know at that point in time who the purchaser would be because no trust had been formed 'cause they didn't have a signed up joint venture partner.
Q: So it was quite specific that the Obeids were trying to keep their role in all of this a secret?
A: From the vendor, yes.
THE COMMISSIONER: Or from anyone.
* * *
There has been plenty of disagreeable attention for the old firm as a result of its work for the Obeids.
And there's no gratitude from the client, either.
The firm is currently chasing the Obeid family for $750,000 in unpaid legal fees.
Thanks Nick.
Research: Kate Lilly