"Why would we leave?" ... Moses Obeid. Photo: Dean Sewell
"They've looked down our throats and up our arses and they haven't found anything," was Moses Obeid's angry reaction on being told that his family's reputation would damage a coal deal and that the other investors wanted them out.
Mining magnate Travers Duncan told the Independent Commission Against Corruption on Monday that in 2010, when he was informed the family of controversial Labor MP Eddie Obeid had a 25 per cent shareholding in Cascade Coal, he wanted them out.
The commission is inquiring into whether Cascade Coal was corruptly awarded a coal exploration licence in 2009 by the then NSW mining minister Ian Macdonald.
Ian Macdonald. Photo: Simon Alekna
The Obeid family and their associates bought up key farms in the Mount Penny area in advance of Mr Macdonald announcing that the area would be part of a coal tender.
They also managed to negotiate a 25 per cent stake in the winning bidder Cascade Coal.
Mr Duncan, who the commission has revealed dined regularly with Mr Macdonald throughout 2009, was one of a group of seven prominent businessmen who invested in Cascade Coal. Mr Duncan, 80, has denied receiving confidential government information from Mr Macdonald in relation to the tender.
Travers Duncan ... wanted the Obeids out of coal deal. Photo: Michele Mossop
The commission has heard that Mr Duncan was "quite surprised" when he found that a third party had a 25 per cent stake in Cascade in 2009. He said that he was informed by either investment banker Richard Poole or fellow mining magnate John McGuigan, both of whom were major investors in Cascade Coal.
However, Mr Duncan has claimed that it was not until early 2010 that he learned that the Obeids had the 25 per cent. "You've got to fix it," Mr Duncan said he told Mr Poole.
"I don't wish to repeat the language," said Mr Duncan of Eddie Obeid's son Moses's expressed reluctance to leave the deal.
"Why would we go? This is going to be a fortune," Mr Obeid is alleged to have said about the amount of coal that lay under their farms at Mount Penny.
Mr Duncan said he told them they should go then and there or they would be left with nothing. "I will out-spend you and you [your shareholding] will be diluted," he threatened Moses Obeid.
In February 2010, Mr Poole's investment bank Arthur Phillip prepared a document called Project Phoenix which was aimed at finding a way for White Energy, a public company which had five of the seven Cascade investors on its board, to buy Cascade. Part of that document referred to the "Sanitisation of Cascade" which was a code for getting rid of the Obeids in preparation for the sale.
The proposed $500 million sale later collapsed after the Australian Stock Exchange made inquiries about the identity of some of the Cascade shareholders and a mysterious $28 million payment which has now been revealed to have been part of the Obeids' buyout.
Mr Duncan will be followed in the witness box by fellow millionaire Brian Flannery. Mr Duncan and Mr Flannery made more than $500 million each in 2009 when they sold their mining company Felix Resources to a Chinese conglomerate.
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