Obeids, Cascade accused of cartel corruption

Claims made by the ACCC allege cartel conduct between Moses and Paul Obeid, sons of disgraced former MP Eddie Obeid, and three executives from prospective miner Cascade Coal.

The commission has alleged the Obeids, through their business Loyal Coal, lodged a winning bid with the government for a pair of mining tenements, before agreeing to pull out of the running so rival Cascade could swoop in and take the licences at a discount rate.

In return, Cascade would give a 25% interest in its operations on one of the tenements, Mount Penny, to another of the Obeids’ businesses, Buffalo Resources, the ACCC has claimed.

“Loyal subsequently withdrew its bid, and Cascade won the tender for the Mount Penny and Glendon Brook coal release areas,” the commission alleged.

The Mount Penny tenement, directly under the Obeids’ Bylong Valley farm, was created by Eddie Obeid’s former colleague, former resources minister Ian Macdonald, who allegedly gave the Obeid family confidential coal reserve and bidding information relating to the tenement, according to the findings of a 2013 ICAC investigation.

In addition to the above claims, the ACCC has alleged that in 2010, Buffalo transferred its 25% of the Mount Penny rights to another business associate with the Obeids, Southeast Investments.

Southeast Investments later sold that interest back to CMG, an entity controlled by Richard Poole, one of the three Cascade executives accused by the commission, the ACCC has claimed.

“As a result of the sale, Southeast Investments accepted benefits valued by the parties at $60m, including approximately $30m in cash payments, which was distributed to beneficiaries of the Obeid Family Trust No. 2, including Paul and Moses Obeid and their immediate families,” the ACCC alleged.

ACCC chairman Rod Sims said the commission was taking the case very seriously.

“This case involves serious allegations of cartel conduct,” Sims observed.

“Stopping cartel conduct is an ACCC enforcement priority as it causes harm to both consumers and to the competitive process.”

It’s thought that through their alleged conduct, the parties involved lowered the sale value of the tenements, essentially cheating the state out of millions of dollars.

“There is also a real public interest in ensuring that competitive public tender processes are not undermined by bid rigging or other cartel conduct,”  Sims explained.

“Ultimately it is taxpayers who are affected by any undermining of public tender processes.”

The ACCC is seeking declarations, penalties and costs, as well as orders disqualifying the individual respondents from managing corporations.

The commission said it had brought the case to the Federal Court on Monday, with a directions hearing scheduled for 9.30am on June 18.