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Coal scandal engulfs Australia

Australia is in the midst of a major corruption scandal involving the suspicious awards of coal exploration licenses that may have benefited a government official and his family by $100 million.

At the center of the allegations are the recently suspended Labour MP, Eddie Obeid and his two sons, Moses and Paul, Cascade Coal, and former mining minister, Ian Macdonald. Macdonald allegedly helped the Obeids win the bid by providing them with insider information, changing the mining maps and preventing larger mining companies from even taking part in the bidding process.

The bidding process itself was allegedly stage managed, with the Obeids working in collusion with Cascade Coal executives and their banker, Gardner Brook, to engineer an outcome that would benefit all parties. Eddie Obeid and his family allegedly received $30 million from the corrupt coal deals and stood to earn an additional $70 million.

A former lawyer for the Obeid family has blamed a “clever forger” for the fraud. He said the forger signed documents that made it look like the family was disguising its interests.

Investigations into Eddie Obeid’s involvement in the coal corruption scandal have revealed far more about the former MP than was previously known. Of particular interest are the businesses allegedly owned by the Obeid family, such as Equitexx Pty Ltd and the Kayletti Discretionary Trust, all of which were registered under frontmen so the real owners remained hidden.

Eddie Obeid’s government position gave him access to privileged information that could have been used to persuade fellow ministers to do what benefited his companies. And removing the family name from all company documents would have diverted media attention and speculation.

The full extent of the Obeids’ influence on Australia’s public tenders isn’t yet known.


Melanie Lansakara is a researcher for the FCPA Blog members area.

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