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ICAC hears of Eddie Obeid involvement in mult -

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DAVID MARK: The New South Wales Independent Commission Against Corruption today heard that the price of persistence is in the millions of dollars.

Circular Quay Restaurants, a company owned by the family of corrupt former New South Wales MP Eddie Obeid, stood to score a million dollar windfall for each of two restaurants it leased from the Government at Sydney's Circular Quay.

But that depended on getting the leases rolled over rather than going to competitive tender, and the leases were eventually rolled over, but only after a change in minister and lobbying from Eddie Obeid.

Tim Palmer was at today's ICAC meeting and joins me now.

Tim, yesterday the inquiry heard that the man fronting the Obeids' restaurant business told the inquiry that they were struggling to make money. What was the inquiry told today?

TIM PALMER: Well, it doesn't sit very well with what public servants said today. I mean, you might ask from the outset why, if the restaurants were supposedly suffering financially down at the Quay, one of the hottest of tourist sports in the country and benefiting from the Sydney Olympics, why then was there this desperate battle to have the leases continued without competition?

Well today we got the possible answer from the public servant in charge of the leases by the name of Zenon Michniewicz. He was, in the estimation of counsel-assisting ICAC, the most qualified person in the hearing room, and that expertise he used as the CEO of the Sydney Harbour Foreshore Authority. He also came across as very much a straight shooter, a man who liked to go by the book, and the books he wanted to go by here were a whole raft of government documents that made it very clear that across the government, open competitive tenders were the way to go.

He says that if the tenants - among them Eddie Obeid, although he never knew that while he was working in the job - if they could win their lobbying effort to avoid that tender process and instead get a further five years just rolled over automatically, it would amount to a $1 million benefit for each of the restaurants they owned, and the Obeids had two of them.

That put him up against the existing lessees at the time who, he said, had an attitude that they could have the restaurant leases as long as they wanted and at whatever price they thought fit.

He made clear that that sense of entitlement was completely misplaced. When he was asked what special rights of incumbency they had, he said "Absolutely none, rights of incumbency. There were absolutely none from the start. It was made abundantly clear we'd go to a public competition process".

And just to underline how much commercial interest there was if there was going to be a commercial tender, he says people used to ring up just out of nowhere the authority and ask, "How could I get a leg into this place? This looks great!"

DAVID MARK: Now, during this process, did the name Eddie Obeid come up?

TIM PALMER: It certainly did increasingly as it went on. I mean the most active tenant when it came to lobbying for this rollover of the lease was a man called Tony Imad. He was involved with the company Circular Quay Restaurants, the front company for the Obeid family, and he responded to Michniewicz's assertion that there'd be an open tender, his insistence for that, by saying "I'll be seeing Mr Obeid about this", and likewise, when Mr Michniewicz was talking to minister Carl Scully - he said was a real straight shooter and supporter of the tender process - increasingly over the years, he started to hear from Mr Scully "Oh, I'll have to run that past Eddie Obeid", or "I've had representations by Eddie Obeid".

DAVID MARK: Now the change finally came. The Obeid family company did eventually get the lease. How did that happen, because it coincided with the arrival of a new minister?

TIM PALMER: Yeah, well bear in mind first that this witness again said he never knew the Obeids were involved. In fact, he only found out about it after he'd retired. How did he find out about it? He read about it in the Sydney Morning Herald, so this whole process, years of effort, and this was hidden from him and from minister Carl Scully certainly it seems will be in the evidence.

When the change came, it wasn't particularly clear how the process happens, but Mr Michniewicz developed this distinct impression that there'd been a sudden change from communications from the minister and the minister's office and the tide had turned.

He concluded that under minister Costa there's no doubt that it would be better - the opinion was that they wanted to go to direct negotiations with the tenants, leading to a rollover of their leases, rather than to competition, and we now know that's the way things went. The lessees got their way.

Over the next evidence, we'll find out from the minister's bureaucrat exactly how that evolved.

DAVID MARK: Tim Palmer, thanks very much.