Nuts on the quarter-mast

John McGuigan and John Atkinson, former Baker Boys, in the frame at ICAC ... What was it that got these two top-notch lawyers into strife? ... Found by ICAC to be "corrupt" with Corporations Act and Crimes Act charges recommended ... "The shortest distance to a pot of money" proves to be a littered with potholes 

McGuigan (right): ICAC found some of his evidence unreliable

Baker & McKenzie must be incandescent with dismay to discover that its former global grand fromage, John McGuigan, along with another ex-partner and top-dog in Hong Kong, John Atkinson, have been slotted by ICAC as "corrupt". 

Anyone acquainted with the affairs of Macquarie Street has known for yonks that Eddie Obeid and Ian Macdonald have been long-standing rorters. The lizard eyes and the swivel lips give the game away. 

But, some of Sydney's most noble and best looking tycoons in the same basket? Travers Duncan, John Kinghorn, Richard Poole, McGuigan and Atkinson. 

Surely not? 

What did the sleek and luxuriously tailored lawyer McGuigan do to find himself in the stocks? 

Commissioner David Ipp discovered that he and Atkinson, as shareholders in Cascade Coal, which got its paws on the Mount Penny coal exploration licence, intended to hide information from the NSW government and relevant officials that the Obeids had a beneficial interest in the enterprise. 

McGuigan was also a director and shareholder of White Energy, which was planning to acquire Cascade Coal. Atkinson was CEO of White. 

The acquisition required shareholder approval and an independent director, Graham Cubbin, was appointed to investigate if the deal was squeaky clean. 

McGuigan was caught on phone intercepts describing the takeover of Cascade Coal as "the shortest distance to a pot of money". 

When Cubbin started asking questions about rumours that the Obeids were somehow involved, McGuigan was furious. According to the intercept McGuigan told Greg Jones, another Cascade investor: 

"This prick Cubbin … he's going to have his nuts on the f***ing quarter-mast." 

McGuigan stood to make about $60 million from the takeover of Cascade Coal and to ensure that happened the truth about the Obeids had to be hidden from the government and the shareholders. 

ICAC found that he did this with the assistance of Richard Poole, a wheeler-dealer whose investment company Arthur Phillip Pty Ltd played a role in the subterfuge. 

Anthony Levi was the divisional director of corporate finance at Arthur Phillip. Among other things, McGuigan arranged it so that Levi did not have to answer direct questions from Cubbin about the Obeids' involvement in the Mt Penny tenement. 

He authorised Poole to hide the Obeid's interest through a couple of trust companies. 

The PoolesThe bank account of Poole's wife Amanda was used to siphon money to the Obeids and she had no explanation as to why at one stage she had over $7 million sloshing around in her account. 

As a director of White Energy, the Ippster said McGuigan was intentionally dishonest or failed to discharge his duties in good faith in order to protect his own interests. 

There was evidence that he could have run foul of s.184(1) of the Corporations Act (failure to exercise powers and duties of a director in good faith) and s.192E(1)(b) of the Crimes Act (fraud).  

The non-disclosure and cover-up amounted to corrupt conduct. 

Atkinson was also found to have been a party to hiding the truth about the tenement from government officials and shareholders and there was a recommendation that he too should be tried for the same Corporations Act and the Crimes Act offences. 

It raises the questions that in the event of government officials in charge of mining licences knowing of the Obeids' involvement, would they have still granted the licences; and if that information was known to the White Energy shareholders would they have necessarily voted down the takeover of Cascade Coal for $500 million. 

Let's experience a slice of transcript where senior counsel assisting Geoffrey Watson presses McGuigan about the obstructions faced by White Energy's independent board director: 

Watson: This conversation is about discontent with the White Energy end not making the decision. Isn't that right? 

McGuigan: I do apologise for the colourful language. 

Watson: Don't worry about that.

McGuigan: But yes, its evidencing significant frustration. 

Watson: What is outrageous about the independent board seeking advice from Deloittes? 

McGuigan: No, there's nothing outrageous about that. 

Watson: Well, why did you say it was? 

McGuigan: Well, there was a, there was a process that was going on and on and taking many many twists and turns and that was causing frustration from a timing viewpoint. But, but to your question, Mr Watson, that is exactly what the independent board should do and what Deloittes were appointed to do. 

Watson: All right. But see what you were trying to do is just take the shortest route to the biggest pot of money. Isn't that right? 

McGuigan: No, I, I, I, I, I either wanted to get this deal done or not and move on and as I've said to you before, I did not see this transaction as a route to a pot of money. 

Watson: All right. Well, that's funny because listen to this tape. 

[Audio recording played where McGuigan talks about the Cascade takeover as "the shortest distance to a pot of money".] 

Commissioner Ipp said this of McGuigan credibility: 

"John McGuigan is a very experienced lawyer and obviously has a very keen business mind. However, the commission had difficulty assessing the credibility of McGuigan's evidence - large parts of it were honest and complete versions of what had occurred. There were occasions however, where Mr McGuigan seemed reluctant to tell the full story if he perceived their was a downside. 

In the end, the commission resolved to treat John McGuigan's evidence with care and would prefer to rely upon other, disinterested, evidence, were such evidence to be available." 

And this character ran a huge global law shop.  

He and Atkinson are still in business together with an outfit called Hunter Bay Partners Pty Ltd.