NSW Treasurer Dominic Perrottet and his departmental heads face a grilling in budget estimates hearings on Thursday over the Newcastle container fee, just as the legal battle over the Coalition's controversial port privatisations hots up.
As the Newcastle Herald reported last week, the NSW Government is now in the sights of the federal competition regulator after it was named as a defendant alongside NSW Ports - the operator of Port Botany and Port Kembla - in a Federal Court case begun in December last year by the Australian Competition and Consumer Commission.
As important as this is - it means the State of NSW is now directly accused by the ACCC of "illegal and anti-competitive" conduct in privatising Botany and Kembla to Newcastle's disadvantage - it is just one of a number of developments in what is already viewed as a landmark court case.
As well, the Herald has confirmed that the Danish-owned conglomerate Maersk, widely recognised as the world's biggest shipping line, is actively involved in a second Federal Court case being brought against NSW Ports.
This case has been brought by a company called Mayfield Development Corporation, which was negotiating with Newcastle Port Corporation to build a container terminal on the former BHP steelworks site before the government decided to privatise the ports.
It was filed in the Federal Court on May 31 and is being heard by the same judge, Justice Jayne Jagot, as the ACCC case.
Because of the similarities between the cases, the Mayfield Development case was put on hold last week until after the ACCC case is determined.
With that trial not due until October 2020, Newcastle Labor MP Tim Crakanthorp says it is time for the treasurer to "come clean" at Thursday's Budget Estimates and "answer these questions now, and not fob them off".
"We've known this deal was dodgy since Botany was privatised in 2013, yet it took until 2016, when the Herald obtained documentary proof of the situation, for the government to admit the bare facts," Mr Crakanthorp said.
"All up, Labor has asked almost 200 parliamentary questions, yet the Coalition is still persisting on taking the people of Newcastle for fools.
"Well, we are not fools, and Treasurer Perrottet has the ideal forum tomorrow to answer some very important questions for the economic health of this region, and this state.
"Why did the government privatise the ports the way they did, knowing that they were relying on a loophole of definition to say the Competition Act didn't apply to them at the time, when they knew that it should?
"To sit there saying 'there's a court case on, we can't talk about it', is just an excuse, and an insulting one at that, and we will not stop calling this out until they explain what Mike Baird, who was treasurer at the time, and his bureaucrats thought they were doing."
The simmering privatisation controversy ignited in July 2016 when the Herald obtained a copy of a "port commitment deed" proving that Newcastle would have to pay huge compensation to the NSW government, which would then pay the money to NSW Ports, if it set up a container terminal.
Court filings show the ACCC case has had 11 mentions since its first case management hearing on December 20, while NSW Ports brought a cross-claim against the Port of Newcastle, on July 18.
A spokesperson for the ACCC said the State of NSW had been named as a respondent in this cross-claim.
"As a consequence of that, the State has been added as respondent to the ACCC's proceedings," the ACCC spokesperson said.
"Separately, Mayfield Development Corporation has taken action against NSW Ports, and the ACCC is not a party to these proceedings."
A spokesperson for NSW Ports said it refuted the ACCC's allegations and would "continue to rigorously defend the case".
"The State of NSW is now a party to the proceedings, as the common party entering into both port commitment deeds and on the basis that the deeds mirror well-considered state port strategy," NSW Ports said.
"NSW Ports has cross claimed against Port of Newcastle as we maintain that any anti-competitive effect or likely effect results from the reimbursement provision in the Newcastle deed and not the Botany/Kembla deeds."
Mayfield Development Corporation declined to comment on its court case, but enough information exists on the public record - including the transcripts of the ICAC's Operation Spicer - to piece together at least some of the history.
Mayfield Development Corporation was set up in December 2011 by former P&O executive Richard Setchell, whose company Anglo Ports had teamed with Spanish port and rail operator Grup Maritim to build a multi-purpose shipping terminal on the steelworks site.
Although the container terminal plan had been undermined by Sydney Labor figures in the lead-up to the March 2011 election - the "Jodi's trucks" scandal - the Setchell/Grup consortium resumed negotiations with the new Coalition government, and was close to completing its deal with state-owned port corporation when the O'Farrell government began moves to privatise Botany and Kembla.
Although some observers have viewed Mayfield Development Corporation as "ancient history" since Newcastle was privatised in 2014 to an unrelated consortium, its Federal Court case, and an important corporate reshuffle, indicate otherwise.
In early 2016, Grup Maritim was sold to a company called APM Terminals, described as the "port and terminals" arm of the Danish giant, A.P. Moller-Maersk.
Grup was apparently extremely unhappy with the way things turned out in Australia, but corporate records show that Maersk has taken a direct - and apparently keen - interest in the situation here.
Records held by the Australian Securities and Investments Commission show that Maersk's chief legal counsel, Michael Villi Moller, was appointed as a director of Mayfield Development Corporation on June 7 this year.
Mr Moller, 59, has been described as "a seasoned business lawyer with a proven international track record". Although Mr Moller was originally thought to be a member of A.P. Moller's founding family, a company spokesperson clarified this, saying he was not, and that Moller was a common surname in Denmark.
Maersk, through its ownership of Grup Maritim, holds a 61 per cent share of Mayfield Development Corporation, with Mr Setchell's Anglo Ports holding the other 39 per cent.
At this stage, it is uncertain whether Mayfield has taken action against NSW Ports because Maersk is interested in building a container terminal in Newcastle, or whether it may be seeking to win financial damages if the ACCC wins its case against the Botany/Kembla operator.
Either way, the importance of the case is underlined in last Monday's Federal Court orders by Justice Jagot, which say the case has been put on hold until the ACCC case is settled. Trial dates for that case and the NSW Ports cross-claim are set down for 29 days in October and December next year.
Justice Jagot's orders say: "The parties have agreed to stay the Mayfield proceeding on the basis that the ACCC proceeding involves several issues for determination that are threshold issues with respect to the Mayfield proceedings, with significant overlap in the factual allegations."
Canberra consultant Greg Cameron, who was instrumental in the original BHP proposal for the terminal as the best use of the steelworks site, said yesterday that the pieces of the jigsaw were coming together.
"The government was already thinking about the infamous Newcastle container fee more than a year before Botany and Kembla were leased," Mr Cameron said.
"The ACCC took no action in 2013 because, like the public and the parliament, the ACCC believed it was government policy not to develop a Newcastle container terminal.
"The state terminated negotiations with Mayfield Development Corporation in November 2013 because the fee was likely to contravene the Competition Act.
"The ACCC confirmed the fee in 2014 but it was too late. As soon as the government decided to privatise Newcastle, the act no longer applied. As Mr Sims said later: "my hands were tied".
"If NSW Ports contravened the Act as the ACCC alleges, and Port of Newcastle did likewise, as NSW Ports alleges, it could be that all three port leases are invalid."
This year's upper house Budget Estimates Committee hearings start on Thursday with Treasurer Dominic Perrottet scheduled to answer questions, along with departmental officers, between 9.30am and 12.30pm. Departmental officers face further sessions from 2pm-5pm and 6pm-8.30pm.
The hearings are webcast to the public.
NOTE: This article was originally published without the clarification by Maersk relating to Mr Moller.
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