Connell alleged [in evidence to the Commission] that Hawke dropped a proposed gold tax after Connell and various Perth high-flyers donated $250,000 each to Labor during an infamous lunch in Brian Burke's office in 1987—a claim the former PM vigorously denied. Burke's loyalty to those who had donated their efforts (and money) to Labor was no less fervent. Taking the John Curtin Foundation axiom to the next level, Burke created the West Australian Development Corporation and installed fellow Catholic John Horgan (pictured second from left, top) on $800,000 a year, an extraordinary figure for a public servant not only then but now.—Journalist Tony Barrass, 2009.In 1991, political scientist Patrick O'Brien (political scientist), Paddy O'Brien identified the members of the government most associated with WA Inc deals as premier Burke and his successor Peter Dowding, deputy premier David Parker (Australian politician), David Parker, industrial development minister Julian Grill and attorney-general Joe Berinson.O'Brien P. ''The Origins and Development of WA's Executive State'', in ''The Executive State —WA Inc & The Constitution'', (Perth 1991).
Corporate failuresAs an outcome of questionable business practices, precipitated by the 1987 stock market crash, several major businesses based in Perth found themselves in difficulties and ultimately went into bankruptcy. These included: *Rothwells. Described as a merchant bank owned by Connell, but more accurately known in business circles as a 'lender of last resort', Rothwells had built up a stable of businesses it had acquired during the 1980s through aggressive takeovers. In October 1987, investors made a run on the bank and it had to close its doors. Burke, on behalf of the government, provided a $150 million government guarantee. Connell had previously been the adviser to the 1983 government purchase of Northern Mining from Bond Corporation for between $7 and $12 million over value but, as Burke knew at the time and concealed from parliament, Connell was also acting for Bond Corporation. *Bell Group, Robert Holmes à Court's flagship company, encountered a cash crisis and Bond Corporation and the government, through the SGIO (Western Australia), State Government Insurance Commission, acquired major stakes in the business in April 1988, allowing Holmes à Court to walk away with $350 million. Two years later, the SGIC had sold all the stocks at a loss of over $160 million. *Bond Corporation—see Alan Bond. *Parry Corporation—see Kevin Parry. A proposed petrochemical Chemical plant, plant was to be built as a joint venture between Laurie Connell and Dallas Dempster, both being businessmen with close government connections. $100,000 was outlaid as a deposit on a block of land at City of Kwinana, Kwinana but otherwise the proposal did not proceed beyond designs and stood as a basis for fund-raising, loans, collateral transactions, development of proposed plant, management fees to Bond Corporation and, eventually, was sold for $400 million —$175 million being provided by a government agency, WA Government Holdings.
Losses incurred by the governmentThe government had lent large sums of money, offered financial guarantees and acquired assets at inflated prices. Because of the connections between many of the deals and cross-ownership of businesses involved, it is difficult to say precisely where the government's fault started and ended. A minimum loss to the state of $600 million has been reported. In 1991, barrister Bevan Lawrence published what he regarded as a conservative itemisation of the government's actual losses. The figures are summarised as follows: :
The WA Inc Royal CommissionOn 19 November 1990, Carmen Lawrence, the then Labor premier, announced her government's intention to hold a royal commission to "inquire into certain matters". This decision followed more than a year of strong public advocacy by the activist group, People for Fair and Open Government headed by the premier's brother, barrister Bevan Lawrence, Professor Emeritus Martyn Webb and prominent political scientist Patrick O'Brien (political scientist), Paddy O'Brien. O'Brien edited ''The Burke Ambush'', subtitled ''Corporatism and Society in Western Australia'', which was the first substantial exposé of Burke's pro-corporate government—a collection of articles by himself and other Western Australian writers, including Hal Gibson Pateshall Colebatch, Hal Colebatch, Robert Bennett, Joseph Poprzeczny, John Hyde (Australian federal politician), John Hyde, Paul Nichols, Michael McKinley, Anthony Dale and Tom Herzfeld.O'Brien, P (ed.) ''The Burke Ambush: Corporatism and Society in WA'' Apollo Press, Nedlands 1986) The commission of three was headed by Geoffrey Kennedy and joined by Sir Ronald Wilson and Peter Brinsden (judge), Peter Brinsden, with a brief ''"To inquire into and report"'' whether there had been ''"corruption, illegal conduct, improper conduct, or bribery"'' on the part of any person or corporation in the ''"affairs, investment decisions and business dealings of the Government of Western Australia or its agencies"''.
Absence of important witnessesIn the introductory part of its report, the commission noted that it had
heard from 543 witnesses encompassing 847 appearances. [...] There were, however, some who may have been able to give valuable information to the Commission, who died before the Commission hearings commenced or after they had begun. There were others who were unwilling to assist and were beyond the reach of compulsory process.WA Inc Royal Commission Report, Contents and IntroductionThe following had died or been incapable on health grounds: Peter Beckwith (Bond Corporation), Bill Burgess (Laurie Connell#Rothwells, Rothwells), Robert Holmes à Court, Thomas Hugall (Rothwells), Bruce Kirkwood (SECWA), Andrew Mensaros (former Liberal Party of Australia (Western Australian Division), Liberal state minister), Terence McDonnell (solicitor), and Jack Walsh (Rothwells). The following declined to give evidence: Yosse Goldberg (entrepreneur), Peter Mitchell (Bond Corporation), Tony Oates (Bond Corporation), and Ms Kim Rooney (wife of David Parker (Australian politician), David Parker). Dr Shrian Oskar was serving a 6-year prison term in the UK. The witnesses whose testimony was received by the commission are listed in an appendix to the report.
19 October 1992, at State Law Publisher, Government of WA
Main findingsAfter approximately 21 months of enquiries and hearings, the commission's final report began:
1.1.1 The Commission has found conduct and practices on the part of certain persons involved in government in the period from 1983 to 1989 which were such as to place our governmental system at risk. Unfortunately, some of that conduct and some of those practices were peculiar to Western Australia; but there is no reason to believe that many of the fundamental questions raised by our inquiry were unique to this period or to this State. On the contrary, as detailed studies in other States and overseas clearly demonstrate, they have been raised elsewhere as a consequence of events similar to those which we have experienced.In an earlier finding, the commission had summarised:
1.1.2 Some ministers elevated personal or party advantage over their constitutional obligation to act in the public interest. The decision to lend Government support to the rescue of Rothwells in October 1987 was principally that of Mr Burke as Premier. Mr Burke's motives in supporting the rescue were not related solely to proper governmental concerns. They derived in part from his well-established relationship with Mr Connell, the chairman and major shareholder of Rothwells, and from his desire to preserve the standing of the Australian Labor Party in the eyes of those sections of the business community from which it had secured much financial support.
1.1.3 Subsequently, Mr Dowding, as Premier, presided over a disastrous series of decisions designed to support Rothwells when it was or should have been clear to him and to those ministers closely involved that Rothwells was no longer a viable financial institution. This culminated in the decision to involve the Government, through WAGH, in the Kwinana Petrochemical Plant, Kwinana petrochemical project as a means of removing the Government's contingent liability for certain of the debts of Rothwells. Electoral advantage was preferred to the public interest.
1.1.4 Personal associations and the manner in which electoral contributions were obtained could only create the public perception that favour could be bought, that favour would be done.WA Inc Royal Commission Report Part II (final)
12 November 1992, at State Law Publisher, Government of WA
[The Government was not entitled] to risk the public resources of the State without its actions being subjected to critical scrutiny and review. Effective accountability was a casualty of its entrepreneurial zeal. Influence in the conduct of this State's public affairs was captured by a small group of self-interested businessmen.The commission's report included a confidential appendix (not published) containing an "outline of matters to be referred to the Director of Public Prosecutions",WA Inc Royal Commission Report, Appendices
Summary of main issues;Report Volume I *Natural gas sales agreements entered into by the State Energy Commission of Western AustraliaWA Inc Royal Commission Report, Vol.I
Costs and outcomesThe royal commission cost $30 million, including $12.5 million in witness costs. Of the latter, $3.6 million funded Burke's own legal fees ($1.71 million) and those of David Parker ($1.92 million). Burke and his predecessor, the Liberal Party of Australia (Western Australian Division), Liberal premier Ray O'Connor ultimately served prison sentences as a result of convictions which arose from findings of the commission. The premier immediately after Burke, Peter Dowding, and public servant Len Brush were both found to have acted improperly.
See also* List of Australian political controversies * Western Australian Development Corporation
Notes(Page numbers cited in PDF documents are PDF pages, not necessarily corresponding to folio numbers printed on original pages.)
Further reading* * * Smark, P. and Skulley, M. ''State of Unholy Matrimony – When Govt Merged With Business'', ''Sydney Morning Herald'', 8 November 1988 * Taylor, Rober