WA Inc
Encyclopedia
WA Inc was a political scandal
in Western Australia. In the 1980s, the state government
, which was led for much of the period by premier
Brian Burke
, engaged in business dealings with several prominent businessmen, including Alan Bond
, Laurie Connell
and Warren Anderson
. These dealings resulted in a loss of public money, estimated at a minimum of $600 million and the insolvency of several large corporations.
Bond and Connell were major contributors to the party in government, the Australian Labor Party
and its remarkable fundraising structure, the John Curtin Foundation
. A royal commission
(the Royal Commission into Commercial Activities of Government and Other Matters) was established in 1990 by Labor premier Carmen Lawrence
to examine the dealings.
In 1991, political scientist Paddy O'Brien
identified the members of the government most associated with WA Inc deals as premier Burke and his successor Peter Dowding
, deputy premier David Parker
, industrial development minister Julian Grill
and attorney-general Joe Berinson
.
A proposed petrochemical
plant
was to be built as a joint venture between Laurie Connell and Dallas Dempster, both being businessmen with close government connections. $100,000 was outlaid as a deposit on a block of land at Kwinana
but otherwise the proposal did not proceed beyond designs and stood as a basis for extravagant fund-raising, loans, collateral transactions, development of proposed plant, management fees to Bond Corporation and, eventually, was sold for $400 million —$175 million being provided by a government agency, WA Government Holdings.
In 1991, barrister Bevan Lawrence published what he regarded as a conservative itemisation of the government's actual losses. The figures are summarised as follows:
, the then Labor premier, announced her government's intention to hold a royal commission
to "inquire into certain matters". This decision followed more than a year of strong public advocacy by the activist group, People for Fair and Open Government headed by the premier's brother, barrister Bevan Lawrence, Professor Emeritus Martyn Webb and prominent political scientist Paddy O'Brien
. O'Brien edited The Burke Ambush, subtitled Corporatism and Society in Western Australia, which was the first substantial exposé of Burke's pro-corporate government—a collection of articles by himself and other Western Australian writers, including Hal Colebatch
, Robert Bennett, Joseph Poprzeczny, John Hyde
, Paul Nichols, Michael McKinley, Anthony Dale and Tom Herzfeld.
The commission of three was headed by Geoffrey Kennedy and joined by Sir Ronald Wilson
and Peter Brinsden, with a brief "To inquire into and report" whether there had been "corruption, illegal conduct, improper conduct, or bribery" on the part of any person or corporation in the "affairs, investment decisions and business dealings of the Government of Western Australia or its agencies".
In an earlier finding, the commission had summarised:
Report Volume II
Report Volume III
Report Volume IV
Report Volume V
Report Volume VI
Burke and his predecessor, the Liberal
premier Ray O'Connor
ultimately served prison sentences as a result of convictions which arose from findings of the commission. The premier immediately after Burke, Peter Dowding
, and public servant Len Brush were both found to have acted improperly.
Political scandal
A political scandal is a kind of political corruption that is exposed and becomes a scandal, in which politicians or government officials are accused of engaging in various illegal, corrupt, or unethical practices...
in Western Australia. In the 1980s, the state government
Government of Western Australia
The formation of the Government of Western Australia is prescribed in its Constitution, which dates from 1890, although it has been amended many times since then...
, which was led for much of the period by premier
Premier of Western Australia
The Premier of Western Australia is the head of the executive government in the Australian State of Western Australia. The Premier has similar functions in Western Australia to those performed by the Prime Minister of Australia at the national level, subject to the different Constitutions...
Brian Burke
Brian Burke
Brian Thomas Burke was Labor premier of Western Australia from 25 February 1983 until his resignation on 25 February 1988...
, engaged in business dealings with several prominent businessmen, including Alan Bond
Alan Bond (businessman)
Alan Bond is an Australian businessman noted for his criminal convictions and high-profile business dealings, including what was at the time the biggest corporate collapse in Australian history. Bond was born in the Hammersmith district of London, England, and emigrated to Australia with his...
, Laurie Connell
Laurie Connell
Laurie Connell was a Western Australian business entrepreneur. He was well known for his dealings with the Government of Western Australia and his close relationship with the then Premier of Western Australia, Brian Burke, during the WA Inc period in the mid to late 1980s as chairman of the...
and Warren Anderson
Warren Anderson (businessman)
Warren Perry Anderson is an Australian businessman and speculative investor whose net worth in 1990 was estimated by the BRW magazine at $190 million, though the following year he was reported to have debts of $500 million. He has been a principal in major developments in Perth, Darwin and Melbourne...
. These dealings resulted in a loss of public money, estimated at a minimum of $600 million and the insolvency of several large corporations.
Bond and Connell were major contributors to the party in government, the Australian Labor Party
Australian Labor Party
The Australian Labor Party is an Australian political party. It has been the governing party of the Commonwealth of Australia since the 2007 federal election. Julia Gillard is the party's federal parliamentary leader and Prime Minister of Australia...
and its remarkable fundraising structure, the John Curtin Foundation
John Curtin Foundation
Formed in Perth, Western Australia in October 1984, the John Curtin Foundation was a fundraising organisation for the Australian Labor Party which attracted the sponsorship of a powerful group of wealthy businessmen, placing them in a privileged circle with direct access to both the Australian...
. A royal commission
Royal Commission
In Commonwealth realms and other monarchies a Royal Commission is a major ad-hoc formal public inquiry into a defined issue. They have been held in various countries such as the United Kingdom, Australia, Canada, New Zealand, and Saudi Arabia...
(the Royal Commission into Commercial Activities of Government and Other Matters) was established in 1990 by Labor premier Carmen Lawrence
Carmen Lawrence
Carmen Mary Lawrence is a retired Australian politician; a former Premier of Western Australia and the first woman to become Premier of a State of the Commonwealth of Australia....
to examine the dealings.
In 1991, political scientist Paddy O'Brien
Patrick O'Brien (political scientist)
Patrick John O’Brien , was an Australian political scientist and author, teaching in the political science department of the University of Western Australia from 1969 until his death.He was a vocal critic of WA Inc corruption and the Australian Labor Party in Western Australia in the 1980s, was...
identified the members of the government most associated with WA Inc deals as premier Burke and his successor Peter Dowding
Peter Dowding
Peter McCallum Dowding SC was the 24th Premier of Western Australia, serving from 25 February 1988 until his resignation on 12 February 1990 after an internal party dispute....
, deputy premier David Parker
David Parker (Australian politician)
David Charles Parker was an Australian politician from Western Australia, serving as a minister in the Burke Ministry , then as Deputy Premier in the Dowding Ministry...
, industrial development minister Julian Grill
Julian Grill
Julian Fletcher Grill is a former member of the Australian Labor Party and Member of the Parliament of Western Australia as the Member for Eyre....
and attorney-general Joe Berinson
Joe Berinson
Joseph Max "Joe" Berinson is a former Labor member of the Australian House of Representatives from the 1969 election until his defeat by Ross McLean at the 1975 election, representing the division of Perth, Western Australia...
.
Corporate failures
As an outcome of questionable business practices, precipitated by the 1987 stock market crash, several major businesses based in Perth found themselves in difficulties and ultimately went into bankruptcy. These included:- Rothwells. Described as a merchant bank owned by Connell, but more accurately known in business circles as a 'lender of last resortLender of last resortA lender of last resort is an institution willing to extend credit when no one else will. The term refers especially to a reserve financial institution, most often the central bank of a country, intended to avoid bankruptcy of banks or other institutions deemed systemically important or 'too big to...
', Rothwells had built up a stable of businesses it had acquired during the 1980s through aggressive takeovers. In October 1987, investors made a run on the bank and it had to close its doors. Burke, on behalf of the government, provided a $150 million government guarantee. Connell had previously been the adviser to the 1983 government purchase of Northern Mining from Bond Corporation for between $7 and $12 million over value but, as Burke knew at the time and concealed from parliament, Connell was also acting for Bond Corporation.
- Bell Group, Robert Holmes à CourtRobert Holmes à CourtMichael Robert Hamilton Holmes à Court was an entrepreneur who became Australia's first businessman worth over a billion dollars before dying suddenly of a heart attack in 1990.Holmes à Court was one of the world's most feared corporate raiders through the 1980s, having built his empire...
's flagship company, encountered a cash crisis and Bond Corporation and the government, through the state Government Employees Superannuation Board (GESB), acquired major stakes in the business, allowing Holmes à Court to walk away with $350 million.
- Bond Corporation—see Alan BondAlan Bond (businessman)Alan Bond is an Australian businessman noted for his criminal convictions and high-profile business dealings, including what was at the time the biggest corporate collapse in Australian history. Bond was born in the Hammersmith district of London, England, and emigrated to Australia with his...
.
A proposed petrochemical
Petrochemical
Petrochemicals are chemical products derived from petroleum. Some chemical compounds made from petroleum are also obtained from other fossil fuels, such as coal or natural gas, or renewable sources such as corn or sugar cane....
plant
Chemical plant
A chemical plant is an industrial process plant that manufactures chemicals, usually on a large scale. The general objective of a chemical plant is to create new material wealth via the chemical or biological transformation and or separation of materials. Chemical plants use special equipment,...
was to be built as a joint venture between Laurie Connell and Dallas Dempster, both being businessmen with close government connections. $100,000 was outlaid as a deposit on a block of land at Kwinana
Kwinana
Kwinana may refer to:*Town of Kwinana, a Local Government Area in Western Australia*Kwinana Beach, Western Australia, a suburb in Western Australia*Kwinana Freeway, a major road in Western Australia...
but otherwise the proposal did not proceed beyond designs and stood as a basis for extravagant fund-raising, loans, collateral transactions, development of proposed plant, management fees to Bond Corporation and, eventually, was sold for $400 million —$175 million being provided by a government agency, WA Government Holdings.
Losses incurred by the government
The government had lent large sums of money, offered financial guarantees and acquired assets at inflated prices. Because of the connections between many of the deals and cross-ownership of businesses involved, it is difficult to say precisely where the government's fault started and ended. A minimum loss to the state of $600M has been reported.http://www.smh.com.au/news/opinion/a-role-in-the-fall-of-a-labor-mate-conveniently-omitted-from-theeulogies/2005/07/19/1121538972499.htmlIn 1991, barrister Bevan Lawrence published what he regarded as a conservative itemisation of the government's actual losses. The figures are summarised as follows:
| Rothwells and Petrochemicals Plant | $408 million |
| Purchase of Bell Group shares from Robert Holmes à Court | $155 million |
| Unlisted bonds purchased from Holmes à Court, later assessed as having no value | $140 million |
| Westralia Square (Perth Technical College site redevelopment) | $74 million |
| Central Park property redevelopment | $100 million |
| Grand total | $877 million |
The royal commission
On 19 November 1990, Carmen LawrenceCarmen Lawrence
Carmen Mary Lawrence is a retired Australian politician; a former Premier of Western Australia and the first woman to become Premier of a State of the Commonwealth of Australia....
, the then Labor premier, announced her government's intention to hold a royal commission
Royal Commission
In Commonwealth realms and other monarchies a Royal Commission is a major ad-hoc formal public inquiry into a defined issue. They have been held in various countries such as the United Kingdom, Australia, Canada, New Zealand, and Saudi Arabia...
to "inquire into certain matters". This decision followed more than a year of strong public advocacy by the activist group, People for Fair and Open Government headed by the premier's brother, barrister Bevan Lawrence, Professor Emeritus Martyn Webb and prominent political scientist Paddy O'Brien
Patrick O'Brien (political scientist)
Patrick John O’Brien , was an Australian political scientist and author, teaching in the political science department of the University of Western Australia from 1969 until his death.He was a vocal critic of WA Inc corruption and the Australian Labor Party in Western Australia in the 1980s, was...
. O'Brien edited The Burke Ambush, subtitled Corporatism and Society in Western Australia, which was the first substantial exposé of Burke's pro-corporate government—a collection of articles by himself and other Western Australian writers, including Hal Colebatch
Hal Gibson Pateshall Colebatch
Hal Gibson Pateshall Colebatch , also known as Hal G. P. Colebatch and Hal Colebatch is an Australian author, poet, lecturer, journalist, editor, and lawyer.-Personal history:...
, Robert Bennett, Joseph Poprzeczny, John Hyde
John Hyde (Australian federal politician)
John Martin Hyde is a former Australian politician. He was elected as the member for the Division of Moore in Western Australia for the Liberal Party....
, Paul Nichols, Michael McKinley, Anthony Dale and Tom Herzfeld.
The commission of three was headed by Geoffrey Kennedy and joined by Sir Ronald Wilson
Ronald Wilson
Sir Ronald Darling Wilson, AC, KBE, CMG, QC was a distinguished Australian lawyer, judge and social activist serving on the High Court of Australia between 1979 and 1989 and as the President of the Human Rights and Equal Opportunity Commission between 1990 and 1997.Wilson is probably best known as...
and Peter Brinsden, with a brief "To inquire into and report" whether there had been "corruption, illegal conduct, improper conduct, or bribery" on the part of any person or corporation in the "affairs, investment decisions and business dealings of the Government of Western Australia or its agencies".
Main findings
After approximately 21 months of enquiries and hearings, the commission's final report began:1.1.1 The Commission has found conduct and practices on the part of certain persons involved in government in the period from 1983 to 1989 which were such as to place our governmental system at risk. Unfortunately, some of that conduct and some
of those practices were peculiar to Western Australia; but there is no reason to believe that many of the fundamental questions raised by our inquiry were unique to this period or to this State. On the contrary, as detailed studies in other States and overseas clearly demonstrate, they have been raised elsewhere as a consequence of events similar to those which we have experienced.
1.1.2 Some ministers elevated personal or party advantage over their constitutional obligation to act in the public interest. The decision to lend Government support to the rescue of Rothwells in October 1987 was principally that of Mr Burke as Premier. Mr Burke's motives in supporting the rescue were not related solely to proper governmental concerns. They derived in part from his well-established relationship with Mr Connell, the chairman and major shareholder of Rothwells, and from his desire to preserve the standing of the Australian Labor Party in the eyes of those sections of the business community from which it had secured much financial support.
1.1.3 Subsequently, Mr Dowding, as Premier, presided over a disastrous series of decisions designed to support Rothwells when it was or should have been clear to him and to those ministers closely involved that Rothwells was no longer a viable
financial institution. This culminated in the decision to involve the Government, through WAGH, in the Kwinana petrochemical project as a means of removing the Government's contingent liability for certain of the debts of Rothwells. Electoral advantage was preferred to the public interest.
1.1.4 Personal associations and the manner in which electoral contributions were obtained could only create the public perception that favour could be bought, that favour would be done.
In an earlier finding, the commission had summarised:
[The Government was not entitled] to risk the public resources of the State without its actions being subjected to critical scrutiny and review. Effective accountability was a casualty of its entrepreneurial zeal. Influence in the conduct of this State's public affairs was captured by a small group of self-interested businessmen.
Summary of main issues
Report Volume I- The natural gasNatural gasNatural gas is a naturally occurring gas mixture consisting primarily of methane, typically with 0–20% higher hydrocarbons . It is found associated with other hydrocarbon fuel, in coal beds, as methane clathrates, and is an important fuel source and a major feedstock for fertilizers.Most natural...
sales agreements entered into by the State Energy Commission of Western AustraliaState Energy Commission of Western AustraliaThe State Energy Commission of Western Australia was an Australian energy provider. It was established on 1 January 1975 as an amalgamation of the State Electricity Commission of Western Australia plus the Fuel and Power Commission.On 1 January 1995 it was split up into separate gas and...
for the purchase of natural gas from the North West Shelf Joint Venturers - The contracts relating to the Dampier to Perth natural gas pipelineDampier to Bunbury Natural Gas PipelineThe Dampier to Bunbury Natural Gas Pipeline is the longest natural gas pipeline in Australia. It is 660mm in diameter, which also makes it one of Australia's largest in terms of transmission capacity...
project - Financial assistance by Government to Bunbury Foods Limited
- Government Employees Superannuation Board (formerly the Superannuation Board) involvement in the Halls Head development
Report Volume II
- Government Employees Superannuation Board (formerly the Superannuation Board) involvement in the FremantleFremantleFreemantle is a suburb of Southampton in England.Fremantle or Freemantle may also refer to:- Places :* Fremantle, the port city to the capital Perth, Western Australia...
Anchorage development - The acquisition of Northern Mining Corporation NL in 1983
- The Burswood Island Casino
- The sale of the MidlandMidland, Western AustraliaMidland is a suburb in the Perth, Western Australia metropolitan area, as well as the regional centre for the City of Swan local government area that covers the Swan Valley and parts of the Darling Scarp to the east. It is situated at the intersection of Great Eastern Highway and Great Northern...
Abattoir site in 1986
Report Volume III
- Purchase of the Fremantle Gas and Coke Company by the State Energy Commission of Western AustraliaState Energy Commission of Western AustraliaThe State Energy Commission of Western Australia was an Australian energy provider. It was established on 1 January 1975 as an amalgamation of the State Electricity Commission of Western Australia plus the Fuel and Power Commission.On 1 January 1995 it was split up into separate gas and...
in 1986 - Swan Building Society
- Teachers' Credit Society
Report Volume IV
- The rescue of Rothwells Limited; the immediate aftermath of the rescue and continuing liquidity problems
- SGIC's acquisition of shares in BHP Limited
- Rothwells from mid November 1987 to early April 1988
- SGIC's acquisition of shares in the Bell Group Limited and subsequent NCSC investigations
- The Kwinana petrochemical project to the signing of the memorandum of understanding
Report Volume V
- The Kwinana petrochemical project to the settlement on 17 October 1988
- Events from the PICL settlements to the liquidation of Rothwells
- Conclusions on Rothwells-related matters
- Central City property transactions entered into from 1984 onwards by the Western Australian Development Corporation, the Government Employees Superannuation Board (formerly the Superannuation Board) and the State Government Insurance Commission]
Report Volume VI
- Allegations of bribery with respect to planning decisions in the City of Stirling for Observation City
- Other allegations arising from the trial of Robert Mark Smith and Robert Paul Martin held in the District Court of Western Australia before His Honour Judge Keall and a jury in October 1990, including those with respect to surveillance activities
- The adequacy of the police investigation of the matters referred to in chapters 23 and 24
- Political donations
- Conclusion
Costs and outcomes
The royal commission cost $30 million, including $12.5 million in witness costs. Of the latter, $3.6 million funded Burke's own legal fees ($1.71 million) and those of David Parker ($1.92 million).Burke and his predecessor, the Liberal
Liberal Party of Australia
The Liberal Party of Australia is an Australian political party.Founded a year after the 1943 federal election to replace the United Australia Party, the centre-right Liberal Party typically competes with the centre-left Australian Labor Party for political office...
premier Ray O'Connor
Ray O'Connor
Raymond James "Ray" O'Connor was the 22nd Premier of Western Australia.-Pre-political life:He was born in Perth and attended schools in towns of Narrogin and York, and St Patrick's Boys' School in Perth...
ultimately served prison sentences as a result of convictions which arose from findings of the commission. The premier immediately after Burke, Peter Dowding
Peter Dowding
Peter McCallum Dowding SC was the 24th Premier of Western Australia, serving from 25 February 1988 until his resignation on 12 February 1990 after an internal party dispute....
, and public servant Len Brush were both found to have acted improperly.
External links
- W.A. Government Commissions of Inquiry links to the WA Inc Royal Commission reports (PDF's)
- Bond, Bell and Holmes à Court: Chronology at Ketupa.net, media industry reference
- Alan Bond at Ketupa.net
- Holmes a Court and Bell at Ketupa.net