Jodi McKay’s moment of truth at ICAC – The Australian

THE Newcastle Knights fans are making their way to the stadium for the last game of a glum year, a season in which the embattled businessman Nathan Tinkler forfeited ownership of the team.

Former state MP Jodi McKay, 45, has been chatty and relaxed on the drive up from Sydney but now, stopped at a set of lights near Hunter Stadium as flag-waving fans saunter past, her arms are crossed, her lips are pursed and she’s retreated into herself. She has been back to Newcastle only half a dozen times since she fled the city in 2011. “I just don’t feel comfortable here anymore,” she says. “I just felt so humiliated. It felt like I was run out of town. People who I trusted turned against me.” This place had been her home for 25 years.

Newcastle, and the sprawling Central Coast to its south, has been the backdrop to an extraordinary political melodrama being played out in the NSW Independent Commission Against Corruption hearings into campaign financing. Unlike so many of her parliamentary colleagues, McKay came out with her reputation enhanced. For this, she has paid a heavy price.

There has been blood on both sides of politics. Barry O’Farrell was forced to resign as premier. Eight members of his Liberal government have quit the party and are sitting on the cross benches, awaiting political sentencing. Two more were so humiliated that they resigned from the parliament. And then the pustular core that ­controlled the former Labor government was exposed with the sensational allegations that two senior members, the then treasurer Eric Roozendaal and the former finance minister Joe Tripodi, conspired with Tinkler and his company to unseat their own colleague, McKay.

“It is a window into how corrupt certain ­sections of the Labor Party had become,” says Greg Combet, the former federal Labor minister who represented a Newcastle electorate. “That her own colleagues would conspire to defeat Jodi McKay, a competent cabinet colleague, in an election, in favour of the Libs, in order to grant favours to a property developer, is just extraordinary.” Former Labor premier Kristina Keneally describes it as the ultimate act of political betrayal. The hearings have been a study into just how cheaply some politicians can be bought. It has also been an intimate examination of character.

In the contest for Newcastle at the 2011 NSW election were two star recruits: McKay, a newsreader and journalist for the local television station, and her Liberal opponent, former RAAF officer Tim Owen. Owen, tall and handsome, with a stunning Danish wife, was once a warrior – he’d served with distinction as the deputy commander of Australian forces in Iraq and Afghanistan. All soldiers want to know how they’ll react in the heat of battle. Will they hold their ground and fight to protect their mates? Or will they wilt? For politicians, that moment of truth comes when self-interest comes face to face with what is right and in the best interests of the people they are elected to represent.

Jodi McKay stood firm. Tim Owen wilted. She lost her seat. He took it from her. Now the tables have turned. McKay is making a political comeback. She’s been vindicated. Owen’s life is in tatters. His marriage is under strain and his career prospects are bleak. He’s been completely humiliated and faces the possibility of criminal charges. As Keneally remarks to me, “Rarely, in politics, do you get to see justice served so fully.”

Jodi McKay moved to Newcastle at the age of 18 from Gloucester, a pretty town at the foothills of the Barrington Tops, two hours north of Newcastle. Straight out of Gloucester High, she scored a job in the library at Newcastle’s NBN TV and within months was offered a cadetship on the proviso she’d work with a voice coach to iron out the Gloucester twang. McKay was ­dedicated and ambitious, the station’s veteran news director Jim Sullivan recalls, and she had a steady moral compass. She went on to have a successful career, winning an award for her exposure of a former Lake Macquarie mayor, Doug Carley, for child sex offences.

McKay left TV after 15 years to work in ­public relations; she’d reported on the city for years and, in business, she saw first-hand how Newcastle was being held back, as she saw it, by old left-wing values. “There was a culture in Newcastle of just saying ‘no’ to everything,” she says. Following the closure of the BHP steelworks, Newcastle, with its beautiful harbour, stunning beaches, historic old city and first-class university, had the chance to become a vibrant modern city, a counterpoint in a state dominated by Sydney. She felt frustrated at the rate of progress and the wasted opportunities. It wasn’t long before Liberal and Labor numbers men were approaching her. Her friends advised her against politics altogether. She went with Labor.

The problem in Newcastle, Combet says, is that the Labor party branches which control preselection are old and blue-collar. “But the city is now white-collar,” he says. “It has changed but the Labor Party hasn’t changed with it.”

McKay was parachuted into the electorate in 2007 when the then premier, Morris Iemma, intervened to ensure her preselection. The old rank and file members hated her for it. She replaced the sitting member Bryce Gaudry, who’d been in Parliament 16 years without much troubling the scorer. Angered at being disendorsed, he ran against McKay as an independent. The former Lord Mayor of Newcastle, John Tate, who had also been courted to run for Labor, decided he too would run as an independent. It was like Christmas at the Rineharts.

McKay scraped home in 2007 but it left her battered and bruised. At one of her branches, in the old dockside suburb of Carrington, all 40 members resigned, led by Wran-era stalwart Arthur Wade, who said nobody wanted “that girl”. Wade had been a member of the branch for 72 years. Suddenly McKay, this popular country kid who’d become a star on the local TV station, was despised. “The day I was endorsed I remember sitting at home listening to talkback radio and all these old Labor people were phoning in; everyone had an opinion of me and none of it was good. It was horrible.

“I did the only thing I could,” she says, as we drive past the little church hall in Carrington where the Labor branch used to meet. “I worked incredibly hard to be the best local member I could. I was working insane hours as a minister, but in those four years I never missed a single branch meeting when I was in town. Sometimes I’d turn up and they wouldn’t even talk to me. But it was a matter of respect. I wanted to show them that I didn’t devalue the contribution they had made to the Labor Party.”

McKay and the current NSW Premier Mike Baird started in parliament together and, despite being on opposite sides, became friends. “We made a commitment to each other that we would do what we could to try and clean up ­politics in NSW,” she says. “It started with behaviour in the chamber, trying to make it a more civil place. It was representative of what was going on more broadly.”

Over time McKay managed to win the grudging respect of the old Labor branch members. In 2011, old Arthur Wade was outside the polling booths at Carrington handing out ­voting cards for her. They had a cup of tea on that day and Wade conceded “that girl” had done OK. But by this stage, she had enemies more powerful than Arthur Wade ever was.

Within 18 months of being elected McKay was promoted to Minister for Tourism and Minister for the Hunter. Former premier Nathan Rees, who elevated her to cabinet, says she was impressive from the outset. “She was thoughtful, she was clever, she picked up a brief quickly and she had a humility about her, which is rare in politics,” Rees says. “She was a good minister.” It was her Hunter portfolio that put her on a collision course with Nathan Tinkler – then an omnipresent figure in the Hunter ­Valley who owned coal mines, a horse stud and the A-League soccer club Newcastle Jets. He was also in negotiations to buy the city’s beloved rugby league club, the Newcastle Knights.

Since the closure of the BHP steelworks in 1999 a massive 100ha industrial site, with a deep-water port, has sat vacant on Newcastle Harbour at Mayfield. It was split into two and the part fronting the port, 37ha, was owned by the Newcastle Port Corporation, which had long planned to build a container terminal that would diversify its reliance on coal exports.

Newcastle is one of the world’s busiest coal ports and the existing coal-loading facilities are all located on Kooragang Island, on the other side of the harbour from Mayfield. The port corporation was in the final stages of negotiating with Anglo Ports to build a $750 million container facility at Mayfield. All that was needed was ministerial approval – the signature of the NSW Treasurer, Eric Roozendaal.

But Tinkler had other ideas. A company he had bought into, Buildev, had won a tender to develop the 62ha site behind the planned ­container terminal. Tinkler wanted to build a coal-loading terminal, despite its close proximity to houses at Mayfield and despite the fact he didn’t have the necessary approvals or a lease on the land fronting the port. “What was in this for Buildev? Well, literally, hundreds of millions of dollars,” said Geoffrey Watson, counsel assisting the Independent Commission Against Corruption (ICAC).

If Tinkler could scuttle the container proposal and get his coal-loader approved, the value of his land would skyrocket. Tinkler was a major shareholder in the Maules Creek project in northern NSW, the largest coal mine under construction in Australia. If he also had access to a coal loader, he’d turn coal into gold.

There were several things that stood between Tinkler and a shipload of cash. One of them was Jodi McKay. McKay had been embarrassed when she discovered that Buildev had donated to her 2007 electoral campaign through the state executive. Since that campaign, donations from developers had been made illegal in NSW so McKay took steps to ensure she wouldn’t be compromised again. For probity, she declined to meet with Buildev executives and directed them to meet with the board of Newcastle Ports.

Early in 2011, someone from Buildev called to say Tinkler would like to ­discuss the Newcastle Knights. He was in the process of buying the club, a move McKay supported, and she agreed to meet him over this issue. She walked along the foreshore to meet Tinkler at the Buildev office to talk footy. “Towards the end of the discussion,” she tells me, “he started talking about how hard it was going to be for me to win the election.” It was an odd segue. Tinkler then offered to donate money to her campaign. McKay couldn’t quite believe what she was hearing; it was implicit, she believes, that if she took the money she’d have to support Tinkler’s coal terminal. It was, ICAC heard, a bribe.

This was McKay’s moment of truth. She knew her opponent, Tim Owen, had been spending big on his campaign. You couldn’t go anywhere in Newcastle without seeing Owen’s face; he seemed to have an endless supply of cash. She could only raise a paltry $8000 and had to put in more than $20,000 of her own money. She badly needed the money to remain in the race. It was there for the taking. “You can’t donate,” McKay says she told Tinkler. “You are a developer.” She says Tinkler replied: “I have hundreds of employees. I can get around the rules that way.” The meeting ended soon after.

McKay was desperate to get the container terminal signed off so she could announce it before the election. It had been in the planning for years and all they needed was Roozendaal’s signature. But Roozendaal was stalling; he would not return her calls. Finally, she got him on the phone. When she asked what was happening, he lowered his voice. “Haven’t you spoken to Tinkler?” She shouted down the phone: “I will not be a part of what you are doing.”

Within hours of that call confidential treasury documents that seemingly undermined the viability of the container terminal, and which were hugely embarrassing to McKay, were leaked to the Newcastle Herald. Suddenly, an issue that should have been a positive for her campaign became a negative.

Tinkler’s strategy was two-fold. First, he had to stop Labor approving the rival container ­terminal. He then had to butter up the conservatives, who were certain to win, to get his coal deal approved. ICAC heard that his company secretly and illegally donated tens of thousands of dollars to conservative candidates. And then, just to be sure that McKay was done for, it is alleged he illegally donated money to fund third party “dirty tricks” campaigns to unseat McKay.

One of the campaigns was being run by a close associate of Joe Tripodi named Anne Wills, who was then working for Buildev. In a text message to her Buildev boss, Wills said of McKay that she would “put the bitch in my freezer”. Buildev flew Tripodi, then a backbencher, to Newcastle on the company helicopter for a strategy meeting. Notes of the meeting say Tripodi was going to “get Eric [Roozendaal] to stop” the rival terminal going ahead. It was an extraordinary revelation. Wills admitted Tripodi was hatching a deal to work for Buildev after the election. Tripodi was asked in the Commission if he felt any loyalty to McKay. “No, none at all,” he replied coldly.

Wills produced thousands of anonymous ­flyers titled “Stop Jodi’s trucks” which were ­distributed in McKay’s electorate in the weeks before the election. The flyers falsely claimed that 1000 trucks a day would trundle past their houses because of McKay’s support for a container terminal. It was a disaster for her campaign. “I had to go and doorknock, again, every single one of those houses,” she tells me. “There were all these forces acting against me but I didn’t know exactly who they were.”

At a public debate at Newcastle City Hall in March 2011, just weeks before the election, McKay was pitted against the Opposition’s Hunter spokesman, Mike Gallacher, who would go on to be Police Minister. McKay recalls she was tired and ­flustered. “I did really badly,” she says. At times during the debate she sounded paranoid about the forces out to get her.

What the audience didn’t know, and McKay suspected, was that Buildev had donated money to Gallacher. As he left City Hall, Gallacher’s phoned beeped with a message. It was from a Buildev executive: “Love your work.” The same executive then texted Tinkler asking for another $50,000 to get rid of Jodi McKay. “Generosity starting to get tested,” replied Tinkler, “but yeah whatever it takes.”

According to the ICAC evidence, Tinkler effectively had both sides on his payroll. In evidence to the commission he denied ever offering McKay a bribe, but said he had donated $50,000 to a group called the Newcastle Alliance Group “to get rid of her”.

At the election on March 26, 2011, McKay lost to Owen by 47.4 per cent to 52.6 per cent, a margin of around 1800 votes. It will never be known if she would have won without the illegal donations to her opponents and the dirty tricks, but there’s no doubt the election was tainted. (Gallacher has since resigned following ICAC allegations that he was part of a corrupt scheme to raise illegal political donations.)

Through it all McKay knew there were forces acting against her but she had no idea of the extent of it, or who was behind it. She reported her suspicions to police and ICAC in 2011 – the conversations with Tinkler and Roozendaal, the “Stop Jodi’s trucks” campaign – but was told by ICAC it would not investigate.

“ICAC actually sent all this stuff back to me and I just put it in the bin and thought, ‘You’re never going to find out what happened and therefore you won’t be able to go back to ­Newcastle.’ It was very, very messy. I knew something was wrong but I didn’t know what. There were all these strange things, but I didn’t know how they were linked.” Friends thought she had lost the plot and was on the verge of a breakdown. She tried to get on with her life but for more than a year nobody would give her a job.

And then, in May this year, she was called to ICAC hearings – the investigation had begun looking at illegal donations on the Central Coast and spread north to Newcastle. An ICAC lawyer asked: “If I told you we’ve got pretty good information that there were three people behind this [orchestrated campaign against you], the Tinkler Group, Miss Anne Wills and Mr Joe Tripodi, what would you say in response?” For a moment she couldn’t say ­anything. She began sobbing in the witness box. “I remember putting my hands up to my face,” McKay says, “and thinking, ‘Oh my God, I am crying in ICAC’. And then thinking, ‘I finally know what is going on’.”

Then came an overwhelming sense of relief, and by the time Tinkler’s barrister started to cross-­examine her she’d composed herself. “I don’t sell myself,” she said forcefully. “I never have and I never will. I also don’t pander to influential powerful people.”

So why did McKay do the right thing when so many of her political colleagues didn’t? Her husband, Stephen Fenn, describes her as being “belligerently scrupulous”. “There is a strong moral fibre in Jodi,” he says. “She will do the right thing regardless of the consequences.”

McKay says her years as a journalist taught her many things. “You don’t take things at face value, you learn to question things,” she says. “Besides, I really feel strongly about those sorts of things, about ethics and values. They matter. It got to the point where I knew I was going to lose but there was no way I was going to bend.”

Dr Simon Longstaff, from the St James ­Ethics Centre in Sydney, says the fact McKay had thought and talked about ethical issues before she was presented with an ethical dilemma may have helped her deal with it when it came. “If you talk to most people who have done something wrong, and then find out it has been a terrible mistake, they are usually full of remorse. You ask them if they see now that what they did was wrong and they say with complete honesty, ‘Yes we can’.

“When you ask, ‘Why didn’t you see it back then?’ the most common response is, ‘Oh everybody was doing it. That was just the way things were done.’ It is a failure to have thought at all about what was happening – and using some kind of conventional wisdom to justify it – that gets people into trouble.”

In the ICAC hearings, Tim Owen was found to have taken tens of thousands of dollars worth of illegal donations from Tinkler’s company, Buildev, and also from the former Lord Mayor of Newcastle, Jeff McCloy. McCloy is one of Newcastle’s richest men and one of its most prominent developers.

At the ICAC hearings in August, Owen ­initially denied he had taken $10,000 cash from McCloy. He admitted he and McCloy met in Hunter Street, Newcastle, and that when he got into McCloy’s Bentley the developer handed him an envelope of money. “He just handed over a thin envelope,” Owen told the Commission. “What, no foreplay?” quipped ICAC counsel Geoffrey Watson. Owen said he didn’t count the money and later decided to give it back. “I went back to his house and basically dropped an envelope back in his letterbox.” He said he put a little note on it that said, “No thanks.”

He must have known how implausible this sounded the moment the words left his mouth. It was a lie. The next day, Owen was ambushed by McCloy’s barrister. Owen was forced to admit he kept the $10,000. The two had met secretly before the ICAC hearings to discuss what they’d say – an offence in itself. McCloy’s barrister put it to Owen that he couldn’t tell the truth because he’d sworn to his wife he hadn’t taken the money. The barrister put to Owen that he said to McCloy: “My wife will divorce me. I’ve sworn on a stack of bibles that I didn’t receive any money.” Owen denied this.

I track down Tim Owen in Denmark, where he is lying low with his wife’s family in the wake of his ICAC humiliation. I’m hoping for ­something reflective. I am disappointed; he’s still making excuses. “I feel completely devastated,” he says. “I was naive and politically ­inexperienced… I have never lied about anything like that before in my life… The vast majority of things that occurred I really was not aware of.” He tells me that while he knew McCloy “built houses” he didn’t really know he was a developer. “I didn’t know Jeff [McCloy] from Adam, I don’t think I had ever met him formally at that time.” Really, you got into his Bentley, he handed you $10,000 in cash, and this didn’t arouse some curiosity about who he was?

While he twists and turns and avoids responsibility, his wife, Charlotte, is emphatic. She told the Newcastle Herald she was “absolutely disgusted with Tim and what has happened.” Owen admits this has placed a great strain on his marriage and the relationship with the rest of his family. “I have two grown boys,” he says. “They look at their dad and they sort of say, ‘We knew you as a different person to this’.”

Jodi McKay’s husband tells me she may have lost her seat but “she can always look herself in the mirror and say, ‘I did the right thing’.”

I am surprised to learn she is considering a political comeback. She has been approached to run in the inner west Sydney seat of Strathfield. But why go back to the bear pit, I ask as we head back down the freeway to Sydney, after all that has happened?

“Government is the only place where you can actually make real change,” she says. “You can sit on the sidelines and complain about everything that is wrong or you can try and get in there and fight for the things you believe in. You can’t change things from the outside.” There is “no way” she would be parachuted in again, she tells me. “I just will not do that because if I go in through the National Executive I’d just be perpetuating what has always been wrong with the party.”

However, that is precisely what happens when, weeks after our interview, Opposition Leader John Robertson writes to the National Executive to ensure she is the endorsed candidate. She may be a politician with proven ­integrity, but she is still a politician.

Owen’s reputation may never recover. In his maiden political interview he said: “I am straightforward and I am honest.” The ICAC Commissioner – and possibly a judge – is yet to rule on his honesty. ICAC will deliver its ­findings on Owen, Tinkler, Roozendaal and Tripodi when it hands down its report early next year.

And what of that 100ha of prime industrial land, with a deep-water port on the banks of Newcastle Harbour? It sits empty, just as it has since the steelworks closed 15 years ago.

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