Sensational documents recovered from the computer server at an investment bank by corruption investigators reveal that the Obeid family's involvement in a mining venture was deliberately removed from draft documents, an inquiry has heard.
"Jimmy, what are you thinking, you can't say this," said investment banker Richard Poole in an email to his underling James McGuigan in August, 2009.
The Independent Commission Against Corruption has heard that Mr Poole, who runs boutique investment bank Arthur Phillip, was referring to a draft agreement drawn up between Cascade Coal and entities associated with the family of controversial former NSW Upper House MP Eddie Obeid.
This agreement revealed the Obeid family was to get 25 per cent of Cascade Coal, which had just won a government tender presided over by Mr Obeid's colleague Ian Macdonald, then minister for mining.
The inquiry is examining whether Mr Macdonald provided inside information to the Obeids to allow them to profit to the tune of $100 million by taking stakes in the mining companies which were awarded coal exploration licences in 2009.
James McGuigan, the son of well-known mining entrepreneur and former Baker & McKenzie law partner John McGuigan, has admitted giving false evidence at a private ICAC hearing in July.
On that occasion, it was put to Mr McGuigan that he knew he was dealing with the Obeids when they sought a 25 per cent stake in Cascade Coal, a company controlled by his father and his boss, Mr Poole. "Yes," answered Mr McGuigan.
However, Mr McGuigan claimed today he was flustered at the time he gave evidence at the private hearing and he did not know about the Obeids' involvement until later.
He denied the suggestion put to him by Commissioner David Ipp that he had changed his evidence because he now realised that it was "prejudicial" to him.
The inquiry was also told that Mr McGuigan's father obtained top secret ministerial briefing notes in November, 2008, which related to a government tender process.
Mr McGuigan senior also attended a meeting with Mr Obeid's son Moses as well as Mr Macdonald's close friend Greg Jones in May 2009. At that time the government was still considering the tenders.
Cascade Coal subsequently won the exploration licence for Mount Penny, near Mudgee.
Mr Jones has since been revealed as secretly owning a 12.5 per cent shareholding of Cascade Coal. Mr McGuigan, Mr Poole, John Atkinson, Travers Duncan, Brian Flannery and John Kinghorn were other investors.
In 2010, White Energy, a public company on which many of the Cascade owners were directors, entered into an agreement to buy Cascade for $500 million.
The day before this offer was made public, a swag of high-profile business figures including, Neville Crichton, Ron Brierly, Robert Pitterino and Denis O'Neil bought into Cascade for $28 million. Their investment was made through Lost Ark Nominees, a company controlled by stockbroker Brent Potts.
Their $28 million investment was used to buy the Obeid family out of Cascade Coal. There is no evidence that any of the Lost Ark investors were aware of the Obeids' involvement.
James McGuigan, who is now working as a "project co-ordinator" for Cascade Coal, agreed that it would have been very damaging if it was publicly known that the Obeid family part-owned a company which won a government tender run by Mr Obeid's close colleague Ian Macdonald.
The inquiry continues with Mr Duncan to follow James McGuigan in the witness box.