Nice Work If You Can Get It: Liberal Senator Arthur Sinodinos' $2,000 an hour former directorship

Excerpt from 17 March 2014 public hearing transcript in the matter of Operation Credo-Spicer before the NSW Independent Commission Against Corruption (ICAC):

 Counsel assisting ICAC, Geoffrey Watson SC:

I’ll now deal with Australian Water Holdings and its pursuit of its chances

with the Liberal Party. As I have said, Mr Di Girolamo is personally

strongly connected with the Liberal Party. A State election was slated for

10 March 2011 but it was apparent by 2008 that the Government would change

and the Coalition would take power. Mr Di Girolamo set out to build links

between Australian Water Holdings and the Liberal Party. In October 2008

Mr Di Girolamo organised Arthur Sinodinos, now Senator Sinodinos, to

join the board of directors at Australian Water Holdings and its subsidiary

companies. At the time Mr Sinodinos was the Treasurer of the New South

Wales branch of the Liberal Party and he was soon to become its president.

Mr Sinodinos became the fifth director of Australian Water Holdings at a

time when there were only about 10 employees. Not many companies could

sustain a ratio of one director for every two employees and Mr Sinodinos’

commitments were not onerous. There could not have been more than

100 hours during a year. For this Mr Sinodinos was paid $200,000 per year

plus bonuses. This might seem like a lot for a couple of weeks’ work,

especially when one considers that the chairman of Sydney Water, and that

is a really huge business, the chairman of Sydney Water was paid just over

$100,000 a year. And I mentioned bonuses. Mr Sinodinos was given equity

in Australian Water Holdings. He was given five per cent of its share

capital at no cost to him. In addition, he was on a bonus so that he would

receive a further 2.5 per cent of the share capital in the event that the

Government approved Australian Water Holdings’ PPP proposal.

Based upon PricewaterhouseCoopers’ valuation if the PPP came through

Mr Sinodinos would have enjoyed a 10 million or $20 million payday. It’s

presently difficult to offer observations on the conduct of Mr Sinodinos. He

has other involvements which will come under scrutiny in Operation Spicer.

It’s quite transparent that Mr Sinodinos’ true role in Australian Water

Holdings was to open lines of communication with the Liberal Party and

there will be evidence that he tried to do so….

But Australian Water Holdings retained other lobbyists, it retained the firm

of Jackson Wells and paid it plenty, it retained Tim Koelma who was very

closely associated with Chris Hartcher of a monthly retainer of more than

$7,000. In April 2007 it retained Paul Nicolaou, the Liberal Party fundraiser

on a monthly retainer of $5,000. In January 2011 it also retained the former

Liberal Party MP Michael Photios on a monthly retainer of $5,000. In

Mr Photios’ case Mr Di Girolamo proposed that should the PPP be

approved Mr Photios would receive a $1 million bonus. Here is the motion

which was placed before the board of Australian Water Holdings on that

subject, Michael Photios, I recommend we retain - I’m so sorry, this is a 

recommendation made by the CEO to the board. “I recommend we retain

Photios, six month retainer $5,000 per month with a project payment of

$1 million on financial close of PPP in Northwest Growth Centre.”

Now Commissioner, it seems, and the evidence about this is a little strange

as you’ll see in due course. It seems that that motion was not passed but

still we’ll be asking one or two questions about it. Apparently I said that,

Mr Sinodinos said that it would be working 100 hours a week. I’m so sorry

about that. It’s only 100 hours a year. That’s a pretty general allowance on

the evidence that I’ve seen.

In any event going back to the lobbyists, it seems that at a time when

Australian Water Holdings had about 10 employees it also had five

lobbyists. This is all the more striking when it is known that at that time

Australian Water Holdings was suffering a cash flow crisis so severe that it

was unable to pay it’s tax commitments as they fell due….

Following this 17 March public hearing the Liberal Party of Australia announced that it was repaying the political donations allegedly improperly received from Australian Water Holdings. 

Readers might recall that on 1 March 2013 The Sydney Morning Herald reported:

Liberal senator Arthur Sinodinos, already in strife over his involvement in a company with alleged links to embattled Labor powerbroker Eddie Obeid, last night apologised ''unreservedly'' to Federal Parliament for failing to declare interests in several other companies...

In early 2012 the NSW Coalition government awarded AWH a 25-year water infrastructure deal without any tenders. Corporate records show that Mr Sinodinos was a director of AWH from November 2008 until November 2011. On Wednesday, apparently to distance himself from AWH, the senator announced he would forgo his 5 per cent shareholding to which he was entitled following his time as chairman, worth up to $3.75 million.

These shares were held on his behalf in a ''gentleman's agreement'' by AWH boss and major shareholder Nick di Girolamo, who the Herald last year revealed was a close friend of the Obeid family.

Mr Sinodinos, who is the shadow parliamentary secretary to Mr Abbott, denied last night that he had at any time asked that the shares ''be held secretly on my behalf''...

UPDATE

The Sydney Morning Herald 19 March 2014:

According to evidence presented to the commission, Sinodinos was a director and then chairman of a company, Australian Water Holdings, which ruthlessly exploited a legal loophole to rip off NSW taxpayers to the tune of hundreds of thousands of dollars.

Allegations that Australian Water Holdings claimed "administrative expenses" from Sydney Water, with whom it had an agreement over provision of water infrastructure for land release in the city's north-west, are of a nature which would make most of us blush.

The commission has heard limousine hire, corporate boxes and countless other expenses were all cynically invoiced to Sydney Water - a taxpayer-owned corporation.

Counsel assisting the inquiry, Geoffrey Watson, SC, has outlined to the inquiry how the loophole was exploited to provide company executives, including Nick Di Girolamo and John Rippon, with million-dollar salaries.

When Sinodinos became an AWH director in October 2008 he was paid $200,000 per year, plus bonuses, for according to the commission, "a couple of weeks work". This too was allegedly funded by Sydney Water as an "administrative expense".