Birthday wine costs NSW leader his job

NSW Premier, Barry O'Farrell. Photo / Getty Images

Thank-you note scuttles O'Farrell's denial of receiving expensive gift.

The widening scandal over the allegedly corrupt dealings of a company touting for big contracts with the state-owned Sydney Water Corporation has claimed another senior Liberal head.

New South Wales Premier Barry O'Farrell resigned yesterday after falsely denying to a corruption investigation that he had received a A$3000 ($3270) bottle of Penfolds Grange wine from Nick Di Girolamo, then chief executive of Australian Water Holdings (AWH). Di Girolamo was also a prominent Liberal Party fundraiser.

O'Farrell follows Labor's Morris Iemma, Nathan Rees and Kristina Keneally as leaders with only short stints in the top job in the past decade.

His sudden resignation followed the earlier embroiling of federal Assistant Treasurer Arthur Sindinos, forced to step aside when the NSW Independent Commission Against Corruption probed his role in a company linked to the corrupt former state Labor powerbroker, Eddie Obeid.

Obeid was at the centre of several scandals involving senior state Labor figures, but the AWH investigation has spilled over the political fence through a series of senior Liberals named or questioned by the commission.

The allegations have hit Prime Minister Tony Abbott's conservative Government, now slipping behind the Opposition in the polls as the scandal joins a list of other woes. Yesterday Abbott, describing O'Farrell as a friend for 20 years, said he admired the now-former Premier for "an act of integrity, an act of honour ... the like of which we have rarely seen".

"Obviously, as we now know, he innocently, inadvertently misled ICAC and he has taken the utterly honourable step of resigning as Premier."

For O'Farrell there was no other option. He was shown to have misled the commission under oath during an investigation into allegations that people connected with AWH obtained financial gains through "adversely affecting" the official functions of Sydney Water. Investigators allege AWH corruptly overcharged Sydney Water for expenses to fund huge salaries and expensive perks, and channelled taxpayers' money to Liberal fundraisers. A second investigation involves allegations that MPs and other officials corruptly solicited, received and concealed payments from AWH in return for favours.

Counsel assisting the ICAC, Geoffrey Watson, SC, alleged Di Girolamo was trying to "butter up" O'Farrell by presenting him with a bottle of Grange dated May 24, 1959, O'Farrell's birthday. In evidence to the commission on Tuesday, O'Farrell rejected Di Girolamo's claim of sending the wine to congratulate him on his election victory, saying he could not remember the present and had not received the wine. The gift was not included on his declaration of pecuniary interests.

But telephone recordings show a brief call to Di Girolamo the evening of the gift which Di Girolamo said was a thank-you call, and courier records listed the delivery to O'Farrell's home. Yesterday the commission was shown a note to Di Girolamo from O'Farrell, thanking him for "the wonderful wine". On the witness stand, O'Farrell said: "I read the note and accept it is my handwriting, but I still have no recollection about receiving the wine."

Soon afterwards O'Farrell read a statement to the media and declined to take questions. "I still can't recall the receipt of a gift of a bottle of 1959 Grange. But I do accept there is a thank-you note signed by me and as someone who believes in accountability, in responsibility, I accept the consequences of my actions. The evidence I gave to the Independent Commission Against Corruption yesterday was to the best of my knowledge. I believe it to be truthful ... In no way did I seek to mislead, wilfully or otherwise, the ICAC."

Sindinos will remain on the back benches until the ICAC announces its findings.