Home Public Procurement Unknown “Mount Penny” that delivered $30m to Eddie Obeid’s family

Unknown “Mount Penny” that delivered $30m to Eddie Obeid’s family


Macdonald is accused of nine acts of misconduct in public office, including directing his department to include Mt Penny in an Expression of Interest (EOI) process and then leaking to the Obeids the confidential list of tenderers.

Ian Macdonald was “adamant” a tender process go ahead despite reservations from his department.Credit:Dean Sewell

The court has heard the Obeids negotiated a payment of $30 million from the winning bidder, with the promise of another $30 million. They also negotiated to sell the three properties for more than four times their value when mining commenced.

Because of an intervening corruption inquiry, the property sale did not take place.

The court has heard that Mr Macdonald met with his colleague Eddie Obeid on May 8, 2008. The next day Macdonald, via his staff, instructed his department to ascertain how much coal there was in the Mt Penny area.

Alan Coutts, who was Deputy Director-General of the Department of Primary Industries in May 2008, told Justice Elizabeth Fullerton on Friday that he had no idea what or where Mt Penny was when the minister’s office began making inquiries.

The Obeid family purchased Cherrydale Park near Mount Penny for $3.65 million in 2007.

The Obeid family purchased Cherrydale Park near Mount Penny for $3.65 million in 2007.Credit:Brockwell Perks

Macdonald’s office was told that there were “significant coal resources” in the area but further exploration would be needed to determine how rich it was, Mr Coutts said.

On May 14 when Macdonald’s office pushed for more information on the coal reserves at Mt Penny, Mr Coutts replied in an email: “What do you mean by Mt Penny – it is not an area we recognise by that name as potential allocation area.”

Mr Coutts said he “was getting irritated” with the minister’s request as “we were wasting a lot of time running around for information we didn’t have.”

Mr Coutts said the minister rang him on Saturday, May 31, wanting him to push along the EOI process for a number of coal allocations, including Mt Penny.

The bureaucrat explained his objections to the minister, including that his department had previously had problems with smaller operators hitting financial difficulties. “It is a high cost, capital intensive industry” which meant prospective players needed to have “deep pockets,” Mr Coutts said.

However, Macdonald was “adamant” that the department go ahead, with only junior miners invited to tender, Mr Coutts said.

His evidence continues on Monday.

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