Utegate
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Utegate (also known as the OzCar affair) refers to a 2009 controversy in Australian federal politics, revolving around allegations made by then Federal
Leader of the Opposition The Leader of the Opposition is a title traditionally held by the leader of the largest political party not in government, typical in countries utilizing the parliamentary system form of government. The leader of the opposition is typically se ...
and
Liberal Liberal or liberalism may refer to: Politics * a supporter of liberalism ** Liberalism by country * an adherent of a Liberal Party * Liberalism (international relations) * Sexually liberal feminism * Social liberalism Arts, entertainment and m ...
leader,
Malcolm Turnbull Malcolm Bligh Turnbull (born 24 October 1954) is an Australian former politician and businessman who served as the 29th prime minister of Australia from 2015 to 2018. He held office as leader of the Liberal Party of Australia. Turnbull grad ...
, that the Prime Minister,
Kevin Rudd Kevin Michael Rudd (born 21 September 1957) is an Australian former politician and diplomat who served as the 26th prime minister of Australia from 2007 to 2010 and again from June 2013 to September 2013, holding office as the leader of the ...
, and/or the
Treasurer A treasurer is the person responsible for running the treasury of an organization. The significant core functions of a corporate treasurer include cash and liquidity management, risk management, and corporate finance. Government The treasury o ...
,
Wayne Swan Wayne Maxwell Swan (born 30 June 1954), often colloquially referred to as Swanny, is an Australian politician who is National President of the Labor Party. He was previously the Deputy Prime Minister of Australia and Deputy Leader of the Labor ...
, had acted improperly on behalf of a
Queensland ) , nickname = Sunshine State , image_map = Queensland in Australia.svg , map_caption = Location of Queensland in Australia , subdivision_type = Country , subdivision_name = Australia , established_title = Before federation , established_ ...
car dealer who was seeking financial assistance from a government agency called OzCar, and that they had misled Parliament. Central to this claim was evidence by Treasury official
Godwin Grech Godwin Grech is a former Australian Treasury official, best known for his role in the centre of the Utegate scandal in 2009. Grech grew up in Melbourne as the son of Maltese immigrants. After graduating from the University of Melbourne with a ...
before a Senate inquiry in June 2009 that a Prime Ministerial adviser had emailed him asking for preferential treatment for the dealer. When the email's text became known, the Prime Minister labelled the email a forgery, and a subsequent police investigation confirmed that the email was never sent. On 4 August 2009, Grech admitted to forging the email. The
Auditor-General A comptroller (pronounced either the same as ''controller'' or as ) is a management-level position responsible for supervising the quality of accounting and financial reporting of an organization. A financial comptroller is a senior-level executi ...
was also ordered to conduct an investigation. It found no evidence of corruption by the Prime Minister or the Treasurer or their respective offices, but did make adverse findings against Grech, and highlighted numerous administrative failings in the Treasury.


Background

In 2007 John Grant, a
Brisbane Brisbane ( ) is the capital and most populous city of the states and territories of Australia, Australian state of Queensland, and the list of cities in Australia by population, third-most populous city in Australia and Oceania, with a populati ...
businessman, donated a white 1996 Mazda Bravo
utility vehicle A utility vehicle is a vehicle, generally motorized, that is designed to carry out a specific task with more efficacy than a passenger vehicle. It sometimes refers to a small truck with low sides. Types of utility vehicles Military light u ...
(known in Australia as a "ute") to Kevin Rudd's campaign for use as a mobile electorate office during the 2007 federal election. Grant, a friend and neighbour of Rudd, is the proprietor of John Grant Motors in
Ipswich Ipswich () is a port town and borough in Suffolk, England, of which it is the county town. The town is located in East Anglia about away from the mouth of the River Orwell and the North Sea. Ipswich is both on the Great Eastern Main Line r ...
, a provincial centre southwest of Brisbane. Rudd accepted the donation and reported it on his pecuniary interests register. In February 2009, Grant made an inquiry to
Bernie Ripoll Bernard Fernand Ripoll (born 6 January 1966) is a former Australian politician. He was a Labor member of the Australian House of Representatives from 1998 to 2016, representing the Division of Oxley, Queensland. In 2013, Ripoll was made Shadow M ...
, the Labor member of the
House of Representatives House of Representatives is the name of legislative bodies in many countries and sub-national entitles. In many countries, the House of Representatives is the lower house of a bicameral legislature, with the corresponding upper house often c ...
for
Oxley Oxley may refer to: Places Australia Australian Capital Territory * Oxley, Australian Capital Territory is a suburb of Canberra, Australia Queensland *Oxley, Queensland is a suburb of Brisbane, Australia ** Oxley railway station, Brisba ...
which covers Ipswich, about possibly obtaining financial assistance for his car dealership under OzCar, a proposed government funding scheme for car dealerships that had lost access to financing as a result of the
global financial crisis Global means of or referring to a globe and may also refer to: Entertainment * ''Global'' (Paul van Dyk album), 2003 * ''Global'' (Bunji Garlin album), 2007 * ''Global'' (Humanoid album), 1989 * ''Global'' (Todd Rundgren album), 2015 * Bruno ...
. On 4 June 2009, Malcolm Turnbull alleged that Rudd's office had contacted the
Treasury A treasury is either *A government department related to finance and taxation, a finance ministry. *A place or location where treasure, such as currency or precious items are kept. These can be state or royal property, church treasure or in p ...
in order to obtain preferential treatment for Grant. Turnbull also alleged that
Wayne Swan Wayne Maxwell Swan (born 30 June 1954), often colloquially referred to as Swanny, is an Australian politician who is National President of the Labor Party. He was previously the Deputy Prime Minister of Australia and Deputy Leader of the Labor ...
had been acting on behalf of Grant. Rudd and Swan denied the allegations. Godwin Grech, the Treasury official in charge of the OzCar scheme, also gave evidence to a Senate committee hearing that day. It was later alleged in the media that Turnbull and Senator
Eric Abetz Eric Abetz (born 25 January 1958) is a former Australian politician who was a Senator for Tasmania from 1994 to 2022, representing the Liberal Party. He was the Minister for Employment and the Leader of the Government in the Senate in the Abbo ...
subsequently met with Grech.


Senate inquiry

On 15 June 2009, during
Question Time A question time in a parliament occurs when members of the parliament ask questions of government ministers (including the prime minister), which they are obliged to answer. It usually occurs daily while parliament is sitting, though it can be ca ...
in the
House of Representatives House of Representatives is the name of legislative bodies in many countries and sub-national entitles. In many countries, the House of Representatives is the lower house of a bicameral legislature, with the corresponding upper house often c ...
, Rudd denied that his office had ever contacted OzCar on behalf of Grant. Swan acknowledged that his office referred Grant to the department administering the program, but denied he had advocated on his behalf. The following day, Senator
Eric Abetz Eric Abetz (born 25 January 1958) is a former Australian politician who was a Senator for Tasmania from 1994 to 2022, representing the Liberal Party. He was the Minister for Employment and the Leader of the Government in the Senate in the Abbo ...
(
Liberal Liberal or liberalism may refer to: Politics * a supporter of liberalism ** Liberalism by country * an adherent of a Liberal Party * Liberalism (international relations) * Sexually liberal feminism * Social liberalism Arts, entertainment and m ...
,
Tasmania ) , nickname = , image_map = Tasmania in Australia.svg , map_caption = Location of Tasmania in AustraliaCoordinates: , subdivision_type = Country , subdi ...
) moved that an inquiry into the OzCar scheme be conducted by the Senate Economics Legislation Committee and that, "the Committee should hear evidence from relevant bodies and individuals, including the Department of Treasury, about the operation and management of the proposed OzCar scheme." The inquiry was not initially related to investigating alleged improper dealings, but to examine the costs of the OzCar scheme and whether the parameters of the scheme's operation had changed from its original purpose. The Senate inquiry convened on 19 June 2009. Grech testified that he had a "recollection" that a member of Rudd's staff, Dr Andrew Charlton, had sent him an email in February, asking that he provide preferential treatment concerning Ozcar to Grant. Under questioning by Abetz, Grech said: "It was certainly my understanding that the initial contact I had with respect to John Grant was from the Prime Minister's office. My recollection may well be totally false and faulty – but my recollection, big qualification – is that there was a short email from the PMO rime Minister's Officeto me which very simply alerted me to the case of John Grant. But I don't have the email." Abetz then read out the text of what he said was an email, which purported to ask for preferential treatment for Grant. Grech also stated he arranged for Ford Credit to talk to Grant, in response to prompting from the Treasurer's office. A Ford Credit executive also appeared before the inquiry, and stated that Grech provided him with Grant's mobile phone number during a meeting in February 2009. The day after this meeting Ford Credit contacted Grant by phone and was not provided with phone numbers of any other dealers, and stated that Grant was the only dealer "substantially discussed". It was also stated that Ford Credit would not normally look after
Kia Kia Corporation, commonly known as Kia (, ; formerly known as Kyungsung Precision Industry and Kia Motors Corporation), is a South Korean multinational automobile manufacturer headquartered in Seoul, South Korea. It is South Korea's second lar ...
dealers such as Grant.


Corruption allegations

After the hearing on 19 June, Turnbull accused Rudd of corrupt conduct and lying to Parliament, since Rudd had previously denied in Parliament doing any favours for Grant. Turnbull stated, "The Prime Minister and the Treasurer have used their offices and taxpayers' resources to seek advantage for one of their mates and then lied about it to the Parliament". The text of the email mentioned by Grech was widely published in Australian newspapers on 20 June 2009. Also on 20 June, Charlton denied ever having sent Grech an email about Grant. Rudd instructed the Auditor-General, Ian McPhee, to investigate the allegations, as well as instructing the
Australian Federal Police The Australian Federal Police (AFP) is the national and principal federal law enforcement agency of the Australian Government with the unique role of investigating crime and protecting the national security of the Commonwealth of Australia. Th ...
to launch an investigation. Rudd repeated his denial of intervening on behalf of Grant and insisted the email mentioned by Grech did not exist. Rudd also demanded Turnbull's resignation, accusing him of using falsified evidence. Swan stated that although he had passed Grant's details on to Treasury, he had done the same for numerous other car dealerships, and that Grant did not receive special treatment.


Discovery of email

On 22 June, the majority of Question Time in the House of Representatives was devoted to the "OzCar affair." At the same time,
Australian Federal Police The Australian Federal Police (AFP) is the national and principal federal law enforcement agency of the Australian Government with the unique role of investigating crime and protecting the national security of the Commonwealth of Australia. Th ...
raided Grech's home and found the original email. Forensic examination revealed the email was a forgery, and that it had originated within the Treasury Department and not the Prime Minister's office. Grech, in his response to the Auditor-General's report, indicated that he had been advised by a senior Treasury officer that an IT system failure in Treasury had meant that searches for emails received by Treasury on 19 February 2009 were not likely to be successful. Previous searches for emails about OzCar conducted by Treasury also failed to discover the fake email created by Mr Grech, or any record of the fake email being sent to Mr Grech's home account. It remained unclear whether Grech was under suspicion of forging the email himself, or whether he had been the innocent victim of a forgery "scam" designed to incriminate Rudd. Rudd repeated his demand that Turnbull apologise and resign, a demand which Turnbull resisted. On the evening of 22 June, Swan released 22 emails, intended to demonstrate that the treatment received by Grant was not substantially different from the treatment received by other car dealers. On 23 June, Turnbull admitted that there was no substance to his allegations against Rudd, but insisted he (Turnbull) had conducted himself in an appropriate manner. Turnbull also maintained that the allegations against Swan had yet to be resolved. On 4 August 2009, Grech admitted that he had forged the email. He claimed that he believed a real email with similar content had been sent from Prime Minister Rudd's office, however conceded that this had not actually been found.


Political impact

The week after the events in Parliament, several opinion polls appeared simultaneously, all showing a drop in Turnbull's approval rating, and a rise in Rudd's approval rating. According to
Newspoll Newspoll is an Australian opinion polling brand, published by ''The Australian'' and administered by international market research and data analytics group, YouGov. Newspoll has a long tradition of predicting Australian Federal Election resul ...
, published in ''
The Australian ''The Australian'', with its Saturday edition, ''The Weekend Australian'', is a broadsheet newspaper published by News Corp Australia since 14 July 1964.Bruns, Axel. "3.1. The active audience: Transforming journalism from gatekeeping to gatew ...
'', Turnbull's approval rating suffered the single biggest fall in the survey's 25-year history, while Rudd's preferred rating increased from 57 to 65 per cent. A Galaxy poll in
News Limited News Corp Australia is an Australian media conglomerate and wholly owned subsidiary of the American News Corp. One of Australia's largest media conglomerates, News Corp Australia employs more than 8,000 staff nationwide and approximately 3,0 ...
newspapers also showed Turnbull's support falling. Commentators attributed these poll results to the OzCar affair. "Malcolm Turnbull's darkest hours as Opposition Leader is upon him with a new poll showing his standing has been dealt a hammer blow by the OzCar affair," wrote Phillip Coorey, chief political correspondent of the ''
Sydney Morning Herald ''The Sydney Morning Herald'' (''SMH'') is a daily compact newspaper published in Sydney, New South Wales, Australia, and owned by Nine. Founded in 1831 as the ''Sydney Herald'', the ''Herald'' is the oldest continuously published newspaper i ...
''. "The Coalition and Malcolm Turnbull have received a devastating blow from the OzCar affair," said
Michelle Grattan Michelle Grattan (born 30 June 1944) is an Australian journalist who was the first woman to become editor of an Australian metropolitan daily newspaper. Specialising in political journalism, she has written for and edited many significant Austr ...
in ''
The Age ''The Age'' is a daily newspaper in Melbourne, Australia, that has been published since 1854. Owned and published by Nine Entertainment, ''The Age'' primarily serves Victoria (Australia), Victoria, but copies also sell in Tasmania, the Austral ...
''. The polls also asked specific questions about the OzCar affair. According to Newspoll, voters, by a ratio of two to one, did not believe that Grant had received preferential treatment. 52 per cent said they did not believe Turnbull's claims, while only 24 per cent said they thought they were true. Newspoll also showed a large drop in the number of voters who thought Turnbull trustworthy, and an increase in those who thought him arrogant.


Adverse findings in auditor-general's report

The auditor-general cleared the Prime Minister and Treasurer of any wrongdoing, but made a range of adverse findings about Godwin Grech and Treasury.


Godwin Grech

In relation to Godwin Grech, the auditor-general found that his inquiry into the implementation of the OzCar scheme "raised serious questions as to whether the code of conduct has been breached by Mr Grech." Allegations made in the report against Grech included improper use of confidential information, inappropriate email communications and interactions, and preferential treatment to one applicant based on Grech's belief that they were a supporter of and donor to the Liberal Party.


Treasury

In relation to Treasury, the auditor-general found that: * it did not develop any contingency arrangements for how to address the identified wholesale car finance market failure if there was a substantial delay in OzCar * it did not maintain accurate records * certain representations by dealers were treated differently from other dealers * during the procurement processes used for OzCar, Treasury did not record the circumstances that led to the decision to direct source of certain supplies * it did not make records about as to how the parties that were direct-sourced were identified as being the only party to be approached * it agreed to various engagements before it had obtained a quote or estimate from the contractor and this seriously weakened the Commonwealth’s negotiating position and provided little comfort that the Commonwealth was receiving value for money in agreeing to the contractual arrangements * once a quote or estimate was obtained, Treasury did not document the basis on which it was satisfied that the engagement terms represented value for money * it gave insufficient priority to documenting the engagement terms, resulting in extended delays in contracts being prepared and signed, and * it did not promote accountability and transparency for these procurements, with only one of the procurements published on AusTender.


Aftermath

A Senate committee, which reported in November 2009, cleared Grech of charges of contempt, but its report contained the text of hundreds of emails between Grech and third parties, and suggested Grech had been critical in briefing Steve Lewis of the ''
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'' about the allegations, and had extensive communication with Liberal Party figures including Turnbull himself. Turnbull's leadership ratings in the opinion polls never recovered from the affair, and on 1 December 2009, he was defeated in a party-room ballot by
Tony Abbott Anthony John Abbott (; born 4 November 1957) is a former Australian politician who served as the 28th prime minister of Australia from 2013 to 2015. He held office as the leader of the Liberal Party of Australia. Abbott was born in Londo ...
as leader of the Liberal Party.


See also

*
List of Australian political controversies This is a list of major political controversies in Australia: Pre-federation Federal controversies Barton government Deakin government Hughes government Bruce–Page government Scullin government Lyons government Menzies government ...
*
List of scandals with "-gate" suffix This is a list of scandals or controversies whose names include a ''-gate'' suffix, by analogy with the Watergate scandal, as well as other incidents to which the suffix has (often facetiously) been applied. This list also includes controversi ...


References

{{reflist, 30em


External links


OzCar Car Dealership Financing Guarantee and Trust Arrangements

Representations to the Department of the Treasury in Relation to Motor Dealer Financing Assistance
(Auditor-General's report on the OzCar affair), 4 August 2009 2009 in Australia Political controversies in Australia