Former ICAC commissioner David Ipp rejects The Australian's criticism of the Doyles Creek Mining corruption findings ... Corrupt grant of exploration licence that robbed the state of well over $50 million ... Misplaced attack on ICAC inquiry
Former ICAC commissioner David Ipp: The point of the inquiry was not whether value had changed hands, but whether the grant of the licence was corruptIN 2010, NuCoal, a listed company, acquired the shares of Doyles Creek Mining by a reverse takeover. DCM's sole significant asset was a coal mining exploration licence that had been directly granted to it by Ian Macdonald, then minister for mining.
Later, ICAC investigated the grant and found that it had been effected by corrupt conduct on the part of Macdonald and DCM itself. That corrupt grant gave DCM a present of almost $100 million and deprived the state of millions of dollars in revenue. In 2014, parliament cancelled DCM's licence.
On Friday, December 4, an article appeared in The Australian entitled "ICAC delivers a classic Clouseau in NuCoal case".
It lampooned ICAC's investigation and according to the author, [Julian Malnic, chairman of the Sydney Mining Club], "evidence of critical importance was simply overlooked". He said, "ICAC missed the fact that no coal deposit had changed hands in the grant of the licence in 2008" and asserted, "that's an extraordinary failure" as it "means that ICAC was unaware that no value changed hands" when the licence was granted.
The author complained that no expert evidence was led, including from Dr Palese, a geologist who had dealt with NuCoal, as to whether a commercially valuable body of coal was present in the licence area. The author said:
"This raises doubts not just about the rigour of ICAC's findings but about the NSW government's justification for cancelling that licence after it had been acquired by NuCoal".
However, the article is riddled with errors and misleading statements. It makes one wonder whether the author actually read the ICAC report.
The point of ICAC's inquiry was not whether value had changed hands (as the article asserts), but whether the grant of the licence was corrupt and improperly enriched those who benefited from it.
There was a great deal of evidence as to these matters. The coal measures and seams in the general area, and their basic characteristics, were well-known. As appears from the ICAC report, Dr Palese - contrary to the article - did give evidence.
He had estimated that DCM's coal resource was 125 million tonnes. Those involved considered the licence area to have coal resources sufficient to justify a major stand-alone mine.
Macdonald: found to have corruptly deprived the state of millions of dollars
A highly experienced senior government official stated that the grant to DCM was like "being given access to Aladdin's cave" and "handing over a $100 million cheque".
The pro forma balance sheet that was part of the prospectus under which NuCoal acquired the DCM shares valued DCM (in effect, the licence) at $94 million.
In 2008, John Maitland, a director of DCM, prepared documents for Chinese investors that placed a value of $150 million on the licence area. A senior public official testified that, under a competitive tender process, the financial contribution that the successful tenderer would probably have offered the state was "north of $50 million".
Through the corrupt direct grant, the state was deprived of these funds. To suggest, in the light of this evidence, that the fact that no value changed hands was "critical", or even relevant, is ludicrous. The fact is that huge value was corruptly created.
There had been notorious public controversy from at least mid-2009 about the direct allocation of the licence. NuCoal's managing director agreed that, from the time of the reverse acquisition, investment in NuCoal took place when it was suspected publicly that the grant of the licence might have been corrupt and there was a risk that corruption might be exposed.
NuCoal acquired DCM with knowledge of these risks. The risks came home.
NuCoal tried unsuccessfully in the Supreme Court to set aside ICAC's findings, and in the High Court to reverse parliament's cancellation of the licence. In these attempts, NuCoal did not argue any of the points raised in the article.
Presumably, their lawyers recognised that the points were hopeless. If the word "Clouseau" is applicable, it must be ascribed to the bumbling attempts of the article to malign and discredit ICAC.
David Ipp