WA Inc

WA Inc is a shorthand, journalistic term which refers to the subject matter of the WA Inc royal commission and to a period between 1983 and 1991 in Western Australia when a succession of state governments colluded in major business dealings with private businessmen including Alan Bond and Laurie Connell. The outcome was a disastrous loss of public money, estimated at a minimum of $600 million and the insolvency of several large corporations. Bond and Connell were major contributors to the party in government, the Australian Labor Party and its fund-raising structure, the Curtin Foundation. The premier for most of that time was Brian Burke. His successor Peter Dowding was also responsible for certain major transactions, including the rescue of Rothwells. In 1991, political scientist Patrick O'Brien identified the four Labor leaders most associated with WA Inc deals as premier Dowding, deputy premier David Parker, minister for industrial development Julian Grill and attorney-general Joe Berinson—known collectively as "the gang of four" [O'Brien P. "The Origins and Development of WA's Executive State", page 132 in "The Executive State —WA Inc & The Constitution", (Perth 1991). ]

Corporate failures

As 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 so-called '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 $150M government guarantee. Connell had previously been the adviser to the 1983 government purchase of Northern Mining from Bond Corporation at 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.

*Petrochemical plant. This was 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 Kwinana but otherwise the proposal did not proceed beyond designs and stood as a basis for extravagant 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.

*Bell Group, Robert Holmes à Court's flagship company, encountered a cash crisis and Bond Corporation and the government, through the State Government Superannuation Board (GESB) acquired major stakes in the business, allowing Holmes á Court to walk away with $350M.

*Bond Corporation—see Alan Bond.

Losses incurred by the government

The 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 $600M has been reported. ^{[http://www.smh.com.au/news/opinion/a-role-in-the-fall-of-a-labor-mate-conveniently-omitted-from-theeulogies/2005/07/19/1121538972499.html]}

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:

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The royal commission

On 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 [Lawrence B., "WA Inc: Why Didn't We Hear The Alarm Bells?" (link below)] headed by the premier's brother, barrister Bevan Lawrence, Professor Emeritus Martyn Webb and prominent political scientist Professor Patrick (Paddy) O'Brien whose book "The Burke Ambush" [O'Brien, P (ed.) "The Burke Ambush: Corporatism and Society in WA" Apollo Press, Nedlands 1986)] had been the first substantial exposé of Burke's pro-corporate government.

The commission of three was headed by Geoffrey Kennedy and joined by Sir Ronald Wilson and 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".

After approximately 21 months of enquiries and hearings, the commission's report stated in part::"The commission has found conduct and practices on the part of certain persons involved in government in the period 1983 to 1989 such as to place our government system at risk. Unfortunately, some of that conduct and some of those practices were peculiar to Western Australia"

:"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 [merchant bank] in October 1987 was principally that of Mr Burke as premier. His 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, and from his desire to preserve [Labor's] standing [with] the business community from which it had secured much financial support"

:"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. We have observed that the size of the donations was quite extraordinary. In his approaches the premier was direct to the point at times of being forceful. He nominated the amounts he expected. They were far in excess of amounts previously donated in campaign fund-raising in this state"

Burke and his predecessor and Liberal counterpart 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.

The 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 his deputy premier, David Parker ($1.92 million).

References

External links

* [http://www.slp.wa.gov.au/publications/publications.nsf/inquiries+and+commissions?openpage W.A. Government Commissions of Inquiry] links to the WA Inc Royal Commission reports (PDF's)
*cite web | title=A role in the fall of a Labor mate conveniently omitted from the eulogies (Alan Ramsey) | work=Sydney Morning Herald | url=http://www.smh.com.au/news/opinion/a-role-in-the-fall-of-a-labor-mate-conveniently-omitted-from-theeulogies/2005/07/19/1121538972499.html | accessdate=November 30 | accessyear=2005
*cite web | title=W.A. Inc.: Why Didn't We Hear The Alarm Bells? (Bevan Lawrence) | work=Samuel Griffith Society | url=http://www.samuelgriffith.org.au/papers/html/volume3/v3chap3.htm | accessdate=November 30 | accessyear=2005
* [http://www.ketupa.net/bond.htm Bond, Bell and Holmes à Court] —Ketupa.net media profile
* [http://www.parliament.wa.gov.au/hansard/hans35.nsf/e74a35733c5bdf6b482566d3001d37a5/fb33efb692f412aec8257364002f7033?OpenDocument Hon Norman Moore, Royal commission review—remarks in Legislative Council]