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Background Briefing Context Notes On Parties Implicated In The Schapelle Corby Affair VOLUME 1A [Ellison/Moore-Wilton/Macquarie] ACCOMPANIES: VOLUMES 1B, 2, 3A,3B, 4 AND 5
Business As Usual The Expendable Project www.expendable.tv
CONTENTS 1. Introduction 1.1. Context: Sydney Airport 1.2. Context: Christopher Ellison
2. Christopher Martin Ellison 3. Macquarie Bank 3.1. Political Investment 3.2. The M2 Hills Motorway Scandal 3.3. The Schapelle Corby Scandal
4. The Invisible Hand
[Introduction]
1. INTRODUCTION Many of the acts and deeds perpetrated by ministers during the Schapelle Corby affair are extremely disturbing. Although unreported, they are self-documented throughout the many cables, items of correspondence, and other internal materials, which have been published on the website of The Expendable Project. Whilst the direct activities of these individuals are of prime concern, wider context, intent, and motive are also of significant importance, as is the role of influencers and beneficiaries. These include both individuals and corporations. Examination of these aspects reveals issues which are of considerable concern in their own right, and offers insight into behavioural patterns and character. It also sheds light upon acute and fundamental questions relating to the wider operation of the political establishment. This volume considers political and commercial developments with respect to Sydney Airport, the position of its owner, Macquarie Bank, and the long term conduct of one of the most central figures, Christopher Ellison.
1.1
CONTEXT: SYDNEY AIRPORT
Just two years prior to Schapelle Corby‟s fateful trip, of 8th October 2004, the airport had been the subject of a hugely controversial privatisation, when it was sold to Macquarie Bank. It is noteworthy that the issues of concern not only related to security, but to the personnel involved. The CEO of the new Sydney Airport Corporation Ltd (SACL) was to be Max MooreWilton, long term friend of Prime Minister John Howard, and indeed, former head of his department in Canberra. This provoked a series of vigorous complaints, including allegations of a conflict of interest and nepotism. Typical were the following: ANTHONY ALBANESE MP: “We've then had privatisation of Sydney airport and now we have the Prime Minister's chief political appointment now being appointed to run Sydney airport.” (Media: 19th December 2002) TANYA PLIBERSEK MP: “The government's recent acceptance of the master plan proposed by Sydney Airport Corporation Ltd shows that when Macquarie Airports bought Sydney (Kingsford Smith) Airport they were buying a very special after-care service as well. They were not just buying a very good value for money asset; they seem also to have bought a guarantee of ever-increasing profits. The Howard government will smooth the way.” (Hansard: 30th March 2004) Expendable.TV
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[Introduction]
SENATOR FAULKNER: “I want to ask you a specific question: whether, in fulfilling any of his roles and functions as secretary of the Department of the Prime Minister and Cabinet, Mr Moore-Wilton at any time had involved himself in the Sydney airport sale strategy.” “He would have been present at cabinet when the matter was discussed, wouldn‟t he?” (Senate Estimates: 27th May 2003) JOHN MURPHY MP: “What a lot of humbug and cant by the Prime Minister. This just reflects the lies and deception of the Howard government in looking after the interests of its mates at Macquarie Bank.” (Hansard: 30th March 2004) Even the media were reporting negatively on this situation (ref: ABC): LINDA MOTTRAM: Claims of a political ploy and conflict of interest are dogging Max Moore-Wilton, the man who's just stepped down as head of the Prime Minister's department. Mr Moore-Wilton has quickly found a new job. Early in the new year, he'll become the CEO and Executive Chairman of the Sydney Airports Corporation, privatised only six months ago in a decision by the Federal Government when Mr Moore-Wilton was still in the service of the PM and the Cabinet. HAMISH FITZSIMMONS: The Australian Greens are demanding there be a cooling off period between MPs and senior public servants leaving their positions and entering the private sector. Lee Rhiannon is a Greens member of the New South Wales Upper House and their transport spokesperson. LEE RHIANNON: Mr. Max Moore-Wilton should not be able to go from being secretary of the PM's department into the Sydney Airport Corporation. This involves a conflict of interest and it's actually both major parties who need to put restrictions on MPs and senior staffers moving into the private sector when they have just retired from the public sector. HAMISH FITZSIMMONS: Do you believe that this will politicise any dealings the Government has with the Sydney Airport Corporation? LEE RHIANNON: Mr. Max-Moore Wilton, as the secretary to the PM's department, would have been privy to any decisions about the future of Sydney airport. For him now to move in, within one day, to the key position in that corporation is absolutely unacceptable. When Schapelle Corby was arrested in October 2004, the status of Sydney Airport was still a very charged and sensitive political issue.
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[Introduction]
1.2
CONTEXT: CHRISTOPHER ELLISON
Christopher Martin Ellison was the Australian Minister for Justice and Customs between January 2001 and March 2007. He was therefore in a pivotal position during, and following, Schapelle Corby‟s trial in Bali, and was at the heart of many of the disturbing activities perpetrated from Canberra. His responsibilities embraced not only border protection and customs, spanning all of Australia‟s airports, but a number of integrity and crime detection functions. The AFP Commissioner, Michael Keelty, reported directly to him.
Source: Wikipedia
Examination of Ellison‟s political history reveals that this was, by no means, the first issue over which his conduct had been seriously questioned. He was, for example, at the heart of the Reith Telecard affair. The following extracts illustrate the frustration of the SMH‟s Chief of Staff, Margo Kingston, in dealing with him:
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[Introduction]
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[Introduction]
As the minister responsible for the airports and the AFP, Christopher Ellison was in the front line. He regularly had to defend Sydney Airport in particular, on a variety of matters. One such instance was a major security breach, in September 2003, in which sensitive data was stolen. The pattern of his responses and conduct, illustrated above, was repeated. The journalist frustrated in this example was Barrie Cassidy of the ABC:
Ellison was also in the firing line on other matters within his portfolio, such as integrity and anti-corruption governance, which placed him in the spotlight in June 2004. By now, the template for his behaviour was well established:
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[Introduction]
There is no doubt that, politically, Ellison was under significant pressure, with questions being asked, both about his character, and his suitability for office. Also, in the background, were the Kessing reports, which revealed the full picture of airport corruption in all its glory. These were submitted by Allan Kessing at the end of 2003, and revealed a situation which could hardly have been more serious. The Schapelle Corby affair embodied all these issues. It threatened to engulf Ellison, Max Moore-Wilton, and others. Ellison will have been well aware of the implications, particularly for himself, should Schapelle Corby have been acquitted, and should focus have switched to the corruption and criminality which was subsequently shown to have been endemic at Sydney Airport. Whilst the examples referred to above clearly caused consternation amongst journalists, evidence would eventually emerge to raise questions of an even more serious and disturbing nature regarding his conduct.
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[Christopher Ellison]
2. CHRISTOPHER MARTIN ELLISON From September 2011, The Expendable Project began to publish a huge catalogue of cables, reports, minutes, correspondence, transcripts and briefing notes, which had been obtained from both the government and the AFP. A significant number of these documented the activities of Christopher Ellison, and related to Sydney Airport. The full body of material directly and conclusively evidenced the wilful withholding of primary evidence, the misleading of parliament, repeated perjury, and a range of other incidents of malversation. Whilst this cache of data has never been reported by the Australian media, it has been submitted, on behalf of citizens spanning 51 nations, to the United Nations. The submission overview document, which accompanied a series of evidential dossiers, referenced just some of the incidents in which Ellison played a role:
EXAMPLE 1. On 27th May 2005, Schapelle Corby was sentenced to 20 years imprisonment, after 4.2kg of marijuana was found in her boogie-board bag on arrival in Denpasar. The disturbing nature of the trial itself created a huge public outcry in her native Australia. For her appeal, her lawyer sought help directly from the Australian government. In a letter dated 5th July 2005, the CEO of Sydney Airport Corporation Ltd, Max Moore-Wilton, told Justice and Customs Minister, Christopher Ellison, that Schapelle Corby's boogie-board bag was the only one not scanned at Sydney airport on route to Bali. Ellison wrote to AFP Commissioner Keelty the following day, 6th July 2005, conveying the same information. Both men realized how important this information was to Schapelle Corby, as she stood before an Indonesian appeal court. Indeed, Ellison even referred to its evidential importance directly in his letter. Keelty subsequently confirmed in writing that Prime Minister John Howard discussed this verbally with him, on 8th July 2005. All parties were also aware that scanning of all luggage, on all flights to Indonesia, was mandatory. Furthermore, Schapelle Corby's lawyer asked directly about scanning, in faxed letters to Ellison dated 6th July and 11th July, just days after Ellison and Keelty had discussed the importance of this new evidence. Ellison's responses of 8th July and 13th July evaded the issue entirely.
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[Christopher Ellison]
Neither Schapelle Corby, nor the Bali court, was ever provided with this vital information. It was wilfully withheld. In addition, Ellison had no intention of revealing the situation to Parliament. In a prepared response for the potential question “If asked whether the Australian Government is aware that Schapelle Corby’s boogie-board bag was not screened at Sydney Airport”, Ellison had pre-prepared the following evasive text: “The Australian Government is aware of comments about the screening of Ms Corby’s boogie-board bag at Sydney airport. Screening of checked baggage at the International Terminal at Sydney Airport is carried out by SACL. I understand SACL informed Ms Corby about this issue as early as October 2004. On 12th June 2005 the Minister for Justice and Customs wrote to Ms Corby’s lawyers suggesting they approach the operators of Sydney and Brisbane Airports regarding the handling of her luggage in Australia. I understand that SACL has had continued contact with Ms Corby’s lawyers about the handling of Ms Corby’s baggage. It is important to note that the screening for flights leaving Australia is undertaken for aviation security purposes. The screening process is not intended to detect drugs”. [No politician has even acknowledged this extraordinary, and damning, sequence of correspondence, even though it is on record and readily available. The Australian media has never reported it] EXAMPLE 2. On 8th October 2004, Schapelle Corby checked her bags in normally at Brisbane airport. There was no fuss, and no excess baggage charge. Following her arrest in Bali, Schapelle Corby's lawyers asked directly about the weight of her bags, seeking to establish if there were any anomalies that might indicate an addition of between 4kg and 5kg, which was the approximate weight of the marijuana. Qantas replied on 1st December 2004, providing only the total weight of her bags. It was flagrantly economical with the truth. The weight of her bags on the Qantas system was actually 5kg overweight, which should have incurred an excess baggage charge of $175. This was exactly, and self evidently, the sort of information which Schapelle Corby’s lawyers were desperately seeking. Expendable.TV
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[Christopher Ellison]
Again, vital and critical evidence was withheld from Schapelle Corby, her lawyer, and the Bali court. Neither Qantas, nor Ellison’s department, which was co-coordinating responses, ever divulged it. [No politician has even acknowledged this astonishing revelation, even though it remains on record and can be easily substantiated. Again, the Australian media has never reported it] EXAMPLE 3. Christopher Ellison was at the heart of Schapelle Corby's desperate efforts to secure forensic testing. In a bizarre sequence of events, the Indonesian National Police were very receptive to the general suggestion that the AFP should forensically test the marijuana. Ellison was personally informed of this by AFP briefing note 3286440. Subsequently, Keelty visited his counterpart in Bali. However, according to the Indonesian police, no specific request for testing was forthcoming. This was also confirmed by a DFAT briefing note dated 21st December 2004. Further, Parliament was told directly that the AFP did not have the expertise to test the marijuana, even though it had originally offered this to assist the INP, and even though a forensic expert in Australia had offered to perform the tests (again, on record). Alarmingly, Parliament was also told that the INP had rejected the request. Both these stories were entirely false. Schapelle Corby openly pleaded for the forensic testing of her bag, and particularly, the marijuana found within. Her lawyers wrote to the Australian government, detailing a list of the specific tests required (letter dated 3rd December 2004). She directly asked the Australian consulate (consulate file note dated 4th December 2004). She asked the court repeatedly, as also recorded by DFAT file notes of February and March 2005. She pleaded with the prosecutor directly in front of the media. However, on 24th May 2006, in a letter to a constituent, whilst inexcusably defending the burning of the primary evidence by the Indonesians, Ellison stated that, “The Bali court, on its own authority, or upon application by Ms Corby, could also authorise a request for forensic assistance. No such request was made, either by the Indonesian authorities or by Ms Corby.�
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[Christopher Ellison]
Ellison was well aware that Schapelle Corby did make such a request, repeatedly. His statement was totally and utterly false. [No politician has even acknowledged this, even though his central role in the marijuana testing affair can easily be substantiated. Again, the Australian media has never reported it] EXAMPLE 4. On 23rd August 2005, Schapelle Corby's Indonesian lawyer wrote a formal letter to Ellison, Downer and Howard, stating directly that her 20-year sentence was discriminatory in nature. He cited examples of Indonesians receiving a fraction of that time, including for offences involving hundreds of kilograms of marijuana. The letter was not even acknowledged. Indeed, the Australian government continued to present the sentence as though it was wholly within normal parameters, and equally, continued to dismiss the clear and documented abuses at the trial itself. Numerous direct comments, by Foreign Minister Alexander Downer in particular, are on public record. In 2012, Indonesian human rights campaigner, Arifin Wardiyanto, undertook a significant research effort, identifying dozens of marijuana-related cases via examination of the Supreme Court database. He tabulated these and demonstrated that Schapelle Corby's sentence far exceeded that of all Indonesians, not only convicted for similar amounts, but many times greater. Her sentence was at least 4x higher per kilogram of marijuana than that imposed on any Indonesian. All this information was sent to the Australian government. It was ignored. [No politician has even acknowledged this, or any of the other discriminatory abuses perpetrated against Schapelle Corby, and the Australian media has never reported it] EXAMPLE 5. Ellison, in fact, was also at the heart of an entire series of disturbing events, all of which were extremely damaging to Schapelle Corby and her family. The three examples below were selected from many:
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[Christopher Ellison]
1) The PowderGate affair unfolded on 1st June 2005, directly after the verdict and unprecedented 20-year sentence. In a nutshell, flour was sent to the Indonesian embassy in Sydney with a note written in Bahasa which bore no reference at all to Schapelle Corby. Immediately, the government accused supporters of Schapelle Corby of a “murderous attack”, instantly dampening public anger and support for her. However, at 6:35pm on the same day, the AFP’s national manager of intelligence sent an email to Ellison. This was marked URGENT. It was very clear. It explained in simple terms that the substance was only gram bacilli, a commonly occurring bacteria. What did Ellison do, armed with the information that this was merely one of many white-powder hoaxes, which occurred in Australia each month? Nothing. The false story was allowed to roll around the world, and syndication continued across Australia for days. 2) After the original trial, two Australian QC’s were pressed upon the Corby family by the government, in time for the appeal. Whilst it was difficult to understand how two non-Indonesian speaking lawyers could actually provide practical assistance, government ministers were forceful, with the media repeatedly citing it as significant “help”, pressuring the family further. In the middle of the appeal, one of them, Mark Trowell, fatally undermined her prospects when he made a series of unsubstantiated allegations against her defence team, accusing them of seeking funds for bribes. He offered no evidence whatsoever, even though he and the Australian government must have been well aware that this was, in fact, the modus operandi in that nation. Mark Trowell, on oath, later stated that he was working for the Australian government all along. He was a Liberal Party member, and long term friend and colleague of, Ellison. 3) Schapelle Corby needed every cent of revenue from her book, “My Story”. This was intended to pay for medication, food, and for an extra-ordinary legal appeal. On 8th November 2006, the AFP began a large-scale investigation and extensive surveillance operation, reporting to the Minister of Justice and Customs, Ellison. The outcome was a politically driven ‘proceeds of crime’ case, which many consider to have subverted the judiciary itself. It was held in secret, with Schapelle Corby having no representation whatsoever. Indeed, she wasn’t even aware of it, nor was any other Corby family member. It also extended Australian legal reach beyond Australian borders. The money was duly seized. Even worse, this occurred whilst Schapelle Corby was still in legal-process in Indonesia. The signal to Jakarta, that she was considered, by Canberra, to have committed a crime, could hardly have been mistaken. Schapelle Corby remains the only person in Australian history to have had book revenue seized under ‘proceeds of crime’ legislation. Expendable.TV
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[Christopher Ellison]
These represent just a handful of examples from many, most of which are fully documented on The Expendable Project’s website. [Whilst Ellison’s conduct has been repeatedly drawn to the attention of government and politicians, including through the formal submission of a Crime Report, no comment has ever been forthcoming. The Australian media has never reported this pattern of events, the existence of the Crime Report, or the large cache of primary data published by The Expendable Project]
All of these are formally documented by a number of reports published on The Expendable Project website. The picture they paint clearly aligns with the serious allegations made against Ellison with respect to the previous recorded incidents, which occurred during his tenure as the Justice & Customs Minister. ASSOCIATES & COLLEAGUES Whilst this catalogue of conduct is alarming, it is clear that a number of other individuals were involved, or implicated. Perhaps the most prominent were Max Moore-Wilton, John Howard, and Michael Keelty, who were, for example, the other parties aware that Schapelle Corby‟s boogie-board bag was the only one not scanned at Sydney Airport. Keelty was a direct subordinate of Ellison. His own record with respect to this case is long and disturbing, and has been documented in detail. His previous political forays, and his frequent involvement in controversial, and extremely questionable incidents, is also widely documented. These have included the Haneef affair, the SIEV X scandal, and a large variety of others, all of which have brought his conduct and suitability for office into question. Note that a detailed investigation into the activities of Keelty and the AFP, Operation Passion Flower, has been commissioned by The Expendable Project, and will report in due course. John Howard and Max-Moore Wilton also had a variety of corporate interests. These included direct and indirect relationships with the owner of Sydney Airport, Macquarie Bank, whose own interests were also extremely well served by the activities referred to above.
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[Macquarie Bank]
3. MACQUARIE BANK Those advantaged by the catalogue of abuses referenced in previous sections extended well beyond the individuals in situ, with the major corporate beneficiary being Macquarie Bank.
As documented in Section 1, Macquarie Bank had acquired Sydney Airport Corporation Ltd (SACL) as the fruit of a hugely controversial privatisation. The former head of Prime Minister John Howardâ€&#x;s department, Max Moore-Wilton, had been appointed as its CEO, perhaps illustrating the tight relationship between politicians and the Macquarie Corporation. The political tensions surrounding this appointment, and other related matters, were still acute when the Schapelle Corby affair emerged. Had she been acquitted, the questions arising would have extended well beyond the issue of airport security (ref: Section 3.3). Amongst the inevitable political fallout, Macquarieâ€&#x;s investment could have spectacularly backfired, particularly if linked to other controversial episodes, such as the M2 Hills Motorway affair (ref: Section 3.2). A proverbial runaway train could easily have been set in motion. Macquarie Bank, therefore, benefited significantly from the disturbing actions of Ellison and his colleagues. The Bank's relationship with politicians, however, is as complex as it is deep-rooted.
3.1
POLITICAL INVESTMENT
To fully appreciate the influence of Macquarie Bank on the political establishment of Australia, it is necessary to examine the scale, detail and history of its investments. These embrace not only financial donations to both major political parties, but direct fiscal relationships with a significant number of influential individuals. In terms of published and visible contributions to the parties themselves, the following figures were published by the Joint Standing Committee on Electoral Matters on 8th August 2011:
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[Macquarie Bank]
Clearly, the sums are substantial. Particularly noteworthy is the dramatic increase in funding in the term 2004-2005, the period during which the Schapelle Corby affair emerged. Further detail for this fiscal year is available via the Electoral Commission:
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[Macquarie Bank]
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[Macquarie Bank]
Over $500,000 was donated, with New South Wales, the location of Sydney Airport, being the largest state beneficiary. It should be noted that this sum excludes payments to individual constituency politicians, and many other politically relevant contributions. Future Foreign Minister Bob Carr, for example, was recruited on a salary reported to be $500,000 per annum in 2005:
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[Macquarie Bank]
The perspective offered by a number of third parties, of the employment of individual politicians and others, was blunt:
http://cecaust.com.au/main.asp?sub=releases&id=2008_04_04_MacBunny.html
Regardless, it is certain that Macquarieâ€&#x;s pull on the political establishment during this period went all the way to the top:
Given the huge financial receipts from the Macquarie purse over the years, particularly during this period, the interests of the bank are unlikely to have been far from the minds of politicians and key decision makers in Canberra. The most pertinent question, of course, is what does this huge level of investment buy, in the political market place? Perhaps the M2 Hills Motorway scandal provides a good indication.
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[Macquarie Bank]
3.2 THE M2 HILLS MOTORWAY SCANDAL A public-private partnership (PPP) is a government service or private business venture, which is funded and operated through a partnership of government and one or more private sector companies. Unfortunately, such initiatives can be prone to exploitation and gross profiteering. The scale of this can be staggering. The building of a 21 kilometre toll road, in north western Sydney, to ease chronic traffic congestion, set the scene for a controversy of epic proportions. Some of the names on the scene are familiar: Max Moore-Wilton, Stan Howard (the brother of John Howard), and of course, Macquarie Bank. In this case, Moore-Wilton was on the governmentâ€&#x;s side of the coin, and John Howardâ€&#x;s brother (Stan) was with Macquarie Bank. The following extracts, from a Crikey article in 2005, describe the interplay:
The deal they brokered not only committed the New South Wales government to huge costs and ongoing fees, but locked Australian motorists into paying tolls, into private pockets, for 45 years:
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[Macquarie Bank]
Other commentators were somewhat more damning (PNN):
In the New South Wales Parliament a number of MPs were outraged, particularly at the role of Max Moore-Wilton. In explaining the horror of the deal for the taxpayer, including a hidden subsidy, Richard Jones MP referred to the deal as a fraud, and accused Moore-Wilton of direct misrepresentation under oath: Jones The Hon Richard
PARLIAMENT OF NEW SOUTH WALES
HILLS MOTORWAY GROUP The Hon. R. S. L. JONES [2.17 a.m.]: Some key documents released to Parliament by the Roads and Traffic Authority [RTA] in accordance with two previous motions debated on 21 October and 18 November have now been analysed. I can report to the House that such analysis has provided evidence already of fraud against the State in respect of the leasehold and incentive rents supposed to be paid to the RTA by the Hills Motorway Group. Rent payable to the RTA consists of an indexed base rent of nominal value of $7 million per annum and an incentive rent. The base rent does not become payable until the real after-tax internal rate of return to an equity investor holding the investment for the entire concession period reaches 12.25 per cent per annum. Prior to reaching this threshold rate of return, the sums due to the RTA for the project deed developed by Blake Dawson Waldron are deferrable and replaced by non-interest bearing promissory notes. Thereafter, all rent is to be paid in cash. The promissory note payments are subordinated to other debts of the project, and the date of redemption is the earliest of either the year at which the threshold is reached or the end of the concession period.
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[Macquarie Bank]
The incentive rent due to the RTA each year amounting to 16 per cent of surplus cash less the base rent for that year is payable in full only after all promissory notes have been paid. The base case model developed by Macquarie Equities Ltd is actually part of the project deed. In the section marked "Equity Investment Profile" on page 12, in particular for years 2026 to 2042, we find that real after-tax equity internal rate of return never reaches 12.25 per cent. Even in the final year 2042 it is still only 11.78 per cent. The RTA will therefore be holding promissory notes for base rent which will never be paid and will never receive incentive rent. The estimate of forgone revenue must be made on its present value. According to the Reserve Bank of Australia, the 10-year bond rate averaged over the last three years is 6.12 per cent per annum. If the stream of annual rents payable to the RTA is discounted at the bond rate the total loss to the State has a present value of $205 million. This hidden subsidy to the Hills Motorway Group is additional to the $236 million already disclosed by the Minister for Transport, and Minister for Roads, Carl Scully, to General Purpose Standing Committee No. 4 on 19 June 1998 - a public subsidy of $441 million for a privately owned project! What we are seeing is the result of a covert agreement between the consortium and the former Coalition Government to provide a hidden subsidy which was not agreed to by Parliament. Instead, in response to a question I raised at a meeting of Estimates Committee No. 2 on 19 October 1994 referring to grants and subsidies for the M2 set out in Budget Paper No. 3, Volume 2, page 632, Mr Maxwell Moore-Wilton, the former chief executive officer of the RTA, told the committee inter alia: . . . under the M2 proposal by the Hills Motorway Consortium, the Consortium takes all financial risks including patronage risk and usage risk in respect of that tollway over the life of the tollway. There is no continuing or operating subsidy or risk sharing by the Government with the consortium.
It is clear then that Mr Moore-Wilton, an economist, misrepresented under oath the real situation to the estimates committee. Mr Moore-Wilton now occupies a position of trust in the Federal Government as Secretary to the Department of the Prime Minister and Cabinet. In arriving at the equity returns the best case model used traffic forecasts developed by Gutteridge Haskins and Davey according to the methodology shown in appendix A of the equity information memorandum. The traffic volumes are shown to actually increase with the toll level.
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[Macquarie Bank]
This economic anomaly is needed to generate false magnitudes of toll revenue that according to the model grow exponentially over the concession period. For example, by the year 2042 the toll revenue of $526.794 million actually exceeds the contract price for the road of $435.77 million given at page 67 of the M2 prospectus. Corresponding to this extraordinary amount of toll revenue in that year, traffic volumes will reach 106,652 vehicles per day on this four-lane road. During the morning peak period each eastbound lane between Pennant Hills Road and North Ryde will be carrying 1,800 vehicles per hour. It is clear that this matter should be examined very carefully and Mr Paul Forward, Mr Nicholas James of Macquarie Bank and Ms Sonya Burchell of Blake Dawson Waldron and Minter Ellison should appear before this House and explain what has happened.
He also pressed for an investigation by the Independent Commission Against Corruption:
The affair also spilled over to the federal parliament, with similar allegations made at a Select Committee hearing, under parliamentary privilege:
Dr Goldberg —I did this work on behalf of the Department of Architectural and Design Science at the University of Sydney. The work arose from academic interest in the privatisation of road infrastructure and concern over the misuse of superannuation funds in this area. With your leave, I would like to read a short prepared statement.
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[Macquarie Bank]
To effect reform in the area of tax concessions for infrastructure projects there is a need to understand what has happened in the past. In the mid 1980s the Roads and Traffic Authority engaged Michael Perry and Associates, now the Infrastructure Development Corporation, to advise on financial arrangements. Perry modelled toll roads separately or in combination. All models were based on non-discounted cash flows from which were derived spurious internal rates of return to equity investors. Perry however did not falsify traffic forecasts in his models, but later his IDC, Infrastructure Development Corporation, worked closely with the Macquarie Bank. The RTA was encouraged to pursue this approach by Nicholas Francis Greiner, who came to power on the `we are a road-building government' platform. In 1993, after the environmental impact determination for the M2 Motorway was issued, Macquarie Bank joined forces with Gutteridge Haskins and Davey to concoct the so-called base case model. The key feature was that the traffic forecasts were derived by an interactive work back from the desired financial outcome. The exact process used is described in annexure A, part 1. The forecasts are therefore essentially fraudulent and failure to attain them in operation will be falsely attributed to `traffic risk'. But even if achieved, the M2 and similar toll roads are shown to be not financially viable. This fraud was masterminded by Nicholas William Moore and Nicholas James, two Macquarie Bank directors, and others, working under John R. Caldon. Moore, James and seven others of the Hills Motorway Group receive directors fees of $400,000 each. The stripping of $3.6 million from a group that is essentially insolvent and the taxation avoidance and bond interest associated with the scheme does show how rewarding corruption can be. I have shown in table 1 of the submission how a Macquarie Bank director paid $2 million per annum has been able to reduce his tax to 10.6 per cent of that amount and reduce his provisional tax by 75 per cent through the use of infrastructure bonds. Whereas an adult worker on average weekly earnings amounting to $38,397 per annum has to pay 25 per cent. The base case model became part of the M2 project deed, which was the document required by the Development Allowance Authority to enable certification for tax concessions. The project deed was signed by Bruce George Baird, the former Minister for Transport and Roads, and Maxwell Moore-Wilton, the former Chief Executive Officer of the RTA. Both Baird and Moore-Wilton therefore underwrote the fraud. The Chief Executive of Abigroup, John Marcus Cassidy, was the third signatory and is in an invidious position as a signatory also of the M2 Prospectus. The 1992 Development Allowance Authority Act is explicit in section 93ZA(c) as to the penalty for false or misleading information. It is the withdrawal of the certification. Why did the DAA not act? In operation, a tax avoidance scheme has been arranged to augment the inevitable deficiency in toll revenue. In other words, the taxation system props up a non-viable project in operation which should never have been certified in the first place. The raising of equity funds was facilitated by placing Peter C. Byers, Chairman of the Investment Committee of the Superannuation Scheme for Australian Universities, SSAU, and a Director of Unisuper Ltd, on the board of the Hills Motorway Ltd. Byers also received due diligence fees of $42,000 for his involvement with Transurban City Link Ltd. Byers was thus effectively bribed to commit superannuation money to these fraudulent schemes. His due diligence did not apparently extend to checking the financial models to see if the long-term internal rate of return would ever be achieved. Byers should face action by the Insurance and Superannuation Commission. It has the power to impose fines, to commence actions for restitution or to seek imprisonment of offenders. What can be done in the face of this corruption? A royal commission is needed to investigate this corruption.
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[Macquarie Bank]
This is again, perhaps, best summarized by PNN:
As this Macquarie related story drifted into history, others emerged. Similarly, many of the familiar names have re-appeared, the most recent being Max Moore-Wiltonâ€&#x;s, via a comment, as chairman of Southern Cross Austereo (SCA). Referring to the suicide of 46-year-old British nurse Jacintha Saldanha, three days after two Austereo DJs made a prank call to the hospital treating the then-pregnant Duchess of Cambridge, Moore-Wilton told a shareholder that "s**t happens". However, the most high profile case linked to Macquarie, and related individuals, is that of Schapelle Corby.
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[Macquarie Bank]
3.3 THE SCHAPELLE CORBY SCANDAL Macquarie Bankâ€&#x;s presence on the scene of controversy is frequent. As recently as 2010 the Sydney Morning Herald referred to Macquarie, in the context of political funding and infrastructure purchase, as follows:
If the M2 Hills Motorway scandal is an example of single-mindedness in pursuit of profit, which can, if unfettered, trample all other interests, the Schapelle Corby affair is undoubtedly another. The purchase of SACL, in 2002, as documented in Section 1, generated contention, opposition, and serious questions of probity. The subsequent litany of events, including security breaches, wholesale drug syndication, information leaks, breaches of safety, and the arrest of Macquarie Bank Director, Ian Robert Chalmers, made this a particularly hot potato.
Chalmers was convicted of conspiring to import cocaine, using Sydney Airport baggage handlers. The cocaine shipment in question has subsequently been shown to have been processed, in exactly the same baggage make-up area and at exactly the same time, as Schapelle Corbyâ€&#x;s boogie-board bag, on 8th October 2004. MACQUARIE & THE MEDIA As the Schapelle Corby case unfolded, the volatility of the situation increased dramatically. The sheer scale of media reporting could not have been foreseen by any of the relevant parties, from government to SACL to Macquarie Bank.
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[Macquarie Bank]
As this coverage heightened, and as it became increasingly evident to SACL and Macquarie that the situation at Sydney Airport was in danger of becoming the primary issue, and indeed, the focus of an international scandal, pressure on executives would have been of unprecedented intensity. With respect to this, if the pursuit of long-term profit in the M2 Hills Motorway case could be characterized as ruthless, it surely begs the question: what were the prospects of a single working class woman caught in the headlights, with no resources and no fiscal support at her disposal. THE INFORMATION CACHE The cache of correspondence, transcripts, cables, briefing notes and other material, is self-evident in documenting the response of the individuals charged with managing the unfolding situation, largely from within government. Although unreported by the mainstream media, the catalogue of individual abuses it reveals is nothing short of overwhelming. The wilful withholding of vital primary evidence from Schapelle Corby, her lawyers, and the Bali court, is self-documented by correspondence. This of course, was central to the outcome of the trial, and to Schapelle Corbyâ€&#x;s fate. Nor was this a single occurrence. It was repeated throughout the legal process and beyond. The misleading of parliament was frequent, as was the propagation of deceptive and fallacious information. Direct fabrications were not uncommon. Within the direct scope of responsibility of SACL (Macquarie Bank) were such fundamental issues as the missing CCTV footage (which Schapelle Corby pleaded for repeatedly) and the scanning, or lack of it, with respect to the one bag.
Awareness: The Non-Scanning Of The Boogie-Board Bag
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[Macquarie Bank]
There was no escaping the position of SACL with respect to many of the unanswered questions, the corrupt conduct being perpetrated at the airport, and not least, in the withholding of life-critical information. Whilst issues such as the 5kg difference in the weight of Schapelle Corby‟s luggage, between the check-in desk and that recorded on the Qantas system, did not fall directly within the responsibility of SACL, it is entirely possible that this, too, was known. In Christopher Ellison, whose own interests were perhaps even more acutely at risk, all this information was safe from disclosure. Ellison‟s remit was wide, and embraced most of the areas which would have been scrutinized and called to account, should Schapelle Corby have been acquitted. He withheld vital evidence retrieved from across a multitude of agencies, and was at the centre of many of the incidents which have been identified since the publication of the repository of related documentation. The information, which would have been so damaging to the interests of Macquarie, and to the individuals in situ, such as Max Moore-Wilton, was never disclosed. Schapelle Corby was not only left to her fate in terms of the withholding of this pivotal evidence, but her position was constantly undermined through a series of false statements, fabrications and hostile briefings. WIDER POLITICAL CONDUCT Alarmingly, the wider conduct of politicians and government agencies was entirely consistent with this. The list below, frequently published across social media, serves to illustrate both scope and scale: 1. Schapelle Corby's boogie-board bag was the only one not scanned at Sydney Airport: it was diverted past the scanner by baggage staff. Customs Minister Ellison withheld this life critical information, even when Schapelle Corby‟s lawyer asked directly about scanning. [Transit Report] 2. This information was also hidden from Parliament, when direct questions were asked, and critically, it was withheld from the Bali court. John Howard, and his long term colleague, Head of Sydney Airport Corporation Ltd, Max Moore-Wilton, were also aware, but remained silent. [Transit Report] 3. The AFP never investigated the reason for this missing screening data, and AFP Commissioner Keelty, who was also informed, never commented upon it. Keelty was also aware, via Operation Mocha, that the same baggage handlers were simultaneously engaging in other drug related activities. [Transit Report]
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[Macquarie Bank]
4. Schapelle Corby checked her bags in underweight, but they were subsequently found to be 5kg overweight on the Qantas system (which would have carried an excess baggage charge of $175). This clearly indicated the addition of a significant weight factor, after the bags left her hands. [Transit Report] 5. Again, neither Schapelle Corby, nor the Bali court, were ever provided with this critical information. [Supplementary Report] 6. Two weeks before the verdict, AFP Commissioner Keelty told the media that there was no evidence of airport drug syndicates using innocent passengers, when this was clearly, demonstrably, and utterly, false. The AFP had held the Kessing Reports for months, and it withheld a host of other vital support evidence, which proved the long term and systemic nature of such syndication at Sydney Airport. [Transit Report] 7. The AFP and DFAT demonstrably evaded and frustrated the forensic and DNA tests which Schapelle Corby begged for in court. [Mutual Evasion Report] 8. The AFP told Parliament that it couldn't perform marijuana pollen tests, when it had the capacity to do so, and indeed, had originally offered to perform them for the INP. It also refused the services of a forensics expert, in Australia, who had volunteered to perform them. [Mutual Evasion Report] 9. Ellison subsequently told a clearly false story about marijuana testing, in a written letter to a constituent. [Mutual Evasion Report] 10. DFAT did not invoke the MACMA treaty to obtain the sample of marijuana (for DNA testing) which Schapelle Corby begged for, when it could have done so within the provisions of the treaty itself. [Mutual Evasion Report] 11. The AFP and Qantas provided wholly contradictory stories about the missing CCTV footage, which Schapelle Corby pleaded for. No footage was ever provided, from any airport, despite over 800 cameras being in situ. [Transit Report] 12. Foreign Minister Downer, and Prime Minister Howard, publicly endorsed the original Bali trial, when they were well aware that a multitude of legal and human rights abuses had been committed throughout. [Bali Trial Report] 13. Ellison publicly endorsed the burning of the physical evidence, whilst Schapelle Corby pleaded desperately for it to be preserved and tested. [Mutual Evasion Report] 14. DFAT have, de facto, endorsed and suppressed the ongoing and documented abuses of a mentally ill Australian citizen for more than nine years. [Health Report]
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[Macquarie Bank]
15. ACLEI, when forced to examine the AFP's role in the affair, was directly and demonstrably complicit with an AFP officer, in producing a report which was an utter embarrassment to all parties. A functionary, who was at the heart of the Howard regime when the AFP abuses occurred, was allowed to rubber stamp ACLEI's complicit rubber stamp. [Whitewash Report] 16. The government pressed and forced an Australian QC, Mark Trowell, on to Schapelle Corby for her appeal. He then decimated the appeal by attacking her defence team to the media. When he subsequently admitted that he was working for the government, and not for Schapelle Corby, the government refused to comment. The precise role of Justice & Customs Minister Ellison in this affair, Trowell‟s long term friend, has never been explained. [Insider Report] 17. Downer and Howard publicly described a standard flour hoax at the Indonesian embassy as a “murderous attack”, using a “biological agent”, when there was no evidence whatsoever to suggest that it wasn‟t benign. Neither of them revealed that the note included with the flour didn't refer to Schapelle Corby at all, and was written in Bahasa, when they promptly blamed it on her supporters. [PowderGate Report] 18. Ellison did not alert any of the parties necessary to prevent the false, but supportwrecking story, from circulating around the world. Yet, he was informed of the benign nature of the flour, by email, at 6:35pm on the same day. [PowderGate Report] 19. The government seized Schapelle Corby's book royalties under „proceeds of crime‟ legislation, whilst she was still in legal process in Indonesia, sending a clear signal to Jakarta. It further brought the judiciary into disrepute, by illegally extending its jurisdiction outside Australian borders, and holding secret trials, at which Schapelle Corby was not even represented. [Political Seizure Report] 20. The government thus denied her the funds for a further appeal, and for on-going medication, despite full knowledge of the nature of the original trial, and of the vital primary evidence which had been wilfully withheld. [Political Seizure Report] 21. Dozens of breaches of the Freedom of Information Act, with respect to requests made on behalf of Schapelle Corby, have been recorded. The AFP alone has spent in the region of $1 million of taxpayer revenue in frustrating efforts to obtain further evidential information. [FOI Abuse Report] 22. The AFP suppressed a secret recording of two known criminals discussing the collection of marijuana from Sydney Airport on the same day that Schapelle Corby flew to Bali. [Candidate Sources Report]
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[Macquarie Bank]
23. The Commonwealth Ombudsman has supported the government with respect to every complaint ever lodged relating to Schapelle Corby by members of the public. The same applies to the ACMA, the OAIC, and every other quango presented to the public as a „watchdogâ€&#x;. [Quango Report] 24. Serious media abuses, with respect to this case including direct criminal matters, such as phone hacking and illegal recording, were submitted to the Finkelstein media inquiry in 2011, but were excluded. Compelling evidence of political interference with respect to the ABC, and of subsequent editorial and reporting abuses, continues to be ignored. [Media Reports] 25. The Attorney-General refused to accept a formal Crime Report, including a 450 page evidential Addendum, which documented serious breaches of the law by politicians and the AFP. [Crime Report].
Whilst this presents only a subset of the conclusively evidenced developments, the full catalogue has frequently been submitted to politicians across the political divide. To date, none have been prepared even to acknowledge the issues, let alone raise them in public. There is no doubt that a variety of different influences have played a role in inducing this conduct and indifference, including the need to manage the delicate strategic relationship with Indonesia. However, it is equally clear that: Macquarie Bank, SACL, and all the individuals involved, came through the affair relatively unscathed. Schapelle Corby endured almost a decade of internment, in a third world prison, and was diagnosed as mentally ill in 2009.
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[The Invisible Hand]
4. THE INVISIBLE HAND Whilst Justice & Customs Minister, Christopher Ellison, was a prime and central figure in many of the incidents documented by this briefing paper, a number of others were culpable for, party to, or at least aware of, the catalogue of events. This included Prime Minister, John Howard, and AFP Commissioner, Michael Keelty. The repeated withholding of vital primary evidence, the misleading of parliament, the false statements, and even the misguiding of the media; in the vast majority of cases multiple parties were involved or aware. A number had direct association with previous Macquarie related controversies or scandals. PARLIAMENTARY RESPONSE More recently, the response of parliamentarians to the material published by The Expendable Project, which largely comprises of the government‟s own documentation, has raised further concerns. Despite its gravity and legitimacy, the material has not been acknowledged or referred to at all. This in itself begs serious questions. Whilst the sensitivity of the relationship with Indonesia is certainly a factor, as is the requisite geopolitical status of Australian airports, a number of others relate to the quality of democratic representation: How much of this silence is due to prejudice, group or personal affinity with the culpable, or the fear of peer ridicule? How much is due to indifference to the impact upon the victim, to the issues of malversation identified, and to the inherent implications of both? Or, in some cases, how much of it is influenced by the interests of the invisible hand of Macquarie Bank? The answers, of course, will vary with each individual. THE WIDER IMPLICATIONS As demonstrated by this paper, the cultural impropriety and malfeasance exposed by The Expendable Project is not unique to the Schapelle Corby affair. It has manifested through a variety of other issues, and appears to be business as usual. To this day, the underlying conflicts of interest remain undisturbed. This situation perpetuates largely because the public remains unaware that it exists. The grave abuses committed from Canberra against Schapelle Corby, the de facto endorsement by Australian politicians, and the undue influence of a major corporation upon wider political developments, are all unreported. The media‟s role as the „watchdog of democracy‟ remains unfulfilled. The integrity of the Commonwealth of Australia therefore remains compromised. Equally, there appears to be little or no appetite to address this.
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Š The Hidden World Research Group
The Expendable Project www.expendable.tv