A Royal Commission into Corruption at Panthers

Editorial Introduction

In this chapter, Jennie Bentley examines the six allegations that formed the basis of the Temby Inquiry, questioning whether the information available to the Department of Gaming and Racing justified establishing an inquiry with powers comparable to those of a Royal Commission.

Her principal concern is not what Ian Temby QC ultimately found, but whether the allegations and the information available at the time justified establishing such an inquiry in the first place.

The chapter also examines Panthers’ Supreme Court legal challenge to the inquiry and reflects the author’s strongly held views about the government’s exercise of its investigative powers.

The original allegations

The six allegations examined in this chapter were formally set out in the Instrument of Appointment issued on 30 April 2004.

The original document, including the powers conferred on the inquiry, is available in the Digital Archive: The Temby Inquiry — Instrument of Appointment (30 April 2004)

The Instrument of Appointment issued by the Director of Liquor and Gaming, Ken Brown, appointed Ian Temby to preside over an inquiry under Section 41X of the Registered Clubs Act 1976, to investigate allegations of corrupt or improper conduct in relation to Penrith Rugby League Club Limited.

Six allegations are listed.

The first allegation was just a suspicion about the motive for cancelling an election. Incredible as it seems, the NSW Labor government had such disregard for natural justice that it allowed its officers to investigate complaints, find no evidence and turn their suspicions into allegations, to be investigated with the powers of a royal commission.

The motives for cancelling an election might be suspect. However, DGR officers had access to a legal opinion from a reputable firm which, as Temby found, provided the Board with grounds for cancelling the election. A suspicion that the cancellation was motivated by self-interest could never, in itself, justify an allegation of corruption or improper conduct. It is an obvious nonsense. In the report that was a catalyst for Panthers’ approach to the Supreme Court, counsellor Vicki Hartstein claimed that the cancellation was about self-interest. In Temby’s findings, he seemed to agree to a large extent.

Roger Cowan says, so what?

The legal advice was solid matter. Motivation is just mist of the mind which nobody can claim to know with certainty.

The second allegation concerned constitutional changes approved by Panthers members more than four years earlier. Those changes remained in the constitution, unaltered. The changes must have been legal then, and must still be legal.

True, the changes enabled proxies, allowed employees to vote and precluded ordinary members from voting directly. Everyone knew the effects long before the inquiry. There was nothing illegal about those effects. Yet somebody came up with the claim that this is an allegation about corruption or improper conduct. It is an allegation that a legally permissible action had caused legally permissible effects. As a ground for Temby’s inquiry, it makes even greater nonsense than the first allegation.

The third allegation was that the Board and/or Cowan had misled members of clubs amalgamated with Panthers about their continuing voting rights. What Cowan had promised members was set out in documents that were available all along to DGR investigators. Promises were broken, but not by Cowan. There may have been grounds for legal action by an amalgamating club sufficiently aggrieved by what had occurred. All of this was clearly known before the inquiry was called, yet nothing had been done about it.

The fourth allegation was that Cowan misled the Penrith Board as to the voting rights of amalgamating clubs. This was obviously untrue, as DGR inspectors would have known from examining Board documents, and as Temby subsequently found. In its absurdity it outstrips the first three allegations.¹

The fifth allegation was that information about Cowan’s remuneration and Phyro’s dealings with the Club had been withheld from the Board and members. That information had been withheld was already known; there was no dispute about it. The confidentiality clauses in the contracts meant that Cowan and Phyro were entitled to withhold the information. Temby found that it was true. But the practice involved no wrongdoing, so this was another allegation about legally permissible causes that had legally permissible effects.

Editorial note: Temby subsequently found that the confidentiality provisions in the Phyro contracts did not justify the extent to which information was withheld from directors. That finding concerned the adequacy of disclosure; it did not, by itself, determine whether the information available before the inquiry was called justified establishing it. (Temby Report, paragraph 9.27, page 84.)

How do you make some sense of this? The government was, in effect, saying:

‘We know it is true, but we also know it’s legal and we can do nothing about it. So, we’ll make it subject to Temby’s inquisition and be doubly sure it is true so that we can do nothing about it.

None of the first five allegations could possibly justify spending millions and endowing the inquiry with royal commission powers. Under normal circumstances the DGR officers would have taken less than an hour to see that allegations one, two, four and five were nonsense. Allegation three might have taken a few days.

So, were these five allegations simply padding — intended to convince the public that there was substantial evidence of serious wrongdoing to investigate? If so, and if the entire exercise were to have any credibility at all, the sixth allegation would have to be strong enough to justify the whole exercise.

The sixth allegation claimed that the Club had been, to a large extent, run by and for the benefit of Cowan and his close associates, including members of his family and Phyro Holdings, and not in good faith for the benefit of all members of the Club.

Imagine for a moment that this was a normal, justifiable Royal Commission — perhaps into organised drug crime. Imagine the evidence that would have had to be assembled to justify establishing it, and the witnesses who would be called to test that evidence.

This sixth allegation, the only possible justifiable grounds for an inquiry, was so important that there should have been a wealth of evidence waiting in ambush for the hapless defendants. Would there be links to organised crime or other forms of corruption of such seriousness that royal commission powers were needed to weed it out? How many witnesses were lined up to complete a picture of crime and corruption?

The answers? There was a vain — and blatantly unfair — attempt to discredit the decision to employ Max Cowan. Yet Max had more than established himself as a talented and productive contributor to the Club’s success, earning the respect of his peers in management.

Much of the inquiry was devoted to an unsuccessful attempt to establish that Phyro Holdings had received more than it was contractually entitled to. The maximum that Phyro could earn was in written agreements subject to audit by the Club’s auditors. Any questions could easily have been answered without further investigation.

There must have been more.

There wasn’t.

The inquiry was not genuinely about the allegations at all. The allegations were aimed at making people believe there was actually something to inquire into.

As the inquiry proceeded, a more realistic purpose became increasingly apparent: to uncover evidence that Cowan had been dishonest or had undisclosed conflicts of interest in areas previously unknown to the DGR and the public.

The government hoped he had something worth hiding. No evidence, just hope. Meaning that the inquiry was called for no valid reason at all.

After examining the Club’s affairs in extraordinary detail, it failed to substantiate the most serious allegation.

No wonder Bernard Coles QC commented soon after the inquiry was announced, ‘This is bizarre!’

But it is frightening too — not just for Roger Cowan, but for anyone who works in a state governed with similar standards of justice and integrity as those demonstrated by the NSW State Government led by Bob Carr.

The state government is able to legislate to give itself witch-hunting powers to inquire into allegations against anybody it sees as a useful target.

It is able to use unfounded suspicions from within its own cloisters to devise allegations. It is able to compel its victims to attend, to swear oaths and to place their private affairs on public record. And in this context it can make accusations about actions that are not even wrong, and can investigate accusations it already knows to be true or false.

When the Club challenged the inquiry in the Supreme Court, Justice Hamilton ruled on several questions concerning its powers. He directed that two remaining questions be heard separately:

• Whether the DGR could establish an inquiry under section 41X without first receiving allegations of corrupt or improper conduct.
• Whether the DGR had received allegations sufficient to justify establishing this particular inquiry.

To someone without legal training, the proceedings might seem difficult to reconcile with ordinary notions of fairness. The practical dilemma confronting the Club could be illustrated by an imagined exchange:

CLUB: We do not believe you have any allegations to support the terms of reference for this inquiry.

GOVERNMENT: It’s up to you to prove we don’t have allegations.

CLUB: We want to prove it. So we are asking you to show us some documents that are evidence of allegations.

GOVERNMENT: Tell us specifically which document you want to see.

CLUB: How can we do that? We don’t believe that you have any documents at all. How can we specify a document we don’t believe exists?

GOVERNMENT: If you can’t specify it, we can’t produce it.

The case was tossed out – and the result for justice in this state? It seems that an inquiry can be called by a government to investigate allegations that have absolutely no basis, and that there is no way for the accused person or organisation to prove this.

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1. Temby rejected the allegation that Roger Cowan had misled the Board about voting rights. He also found that Cowan had been authorised to make promises to members of amalgamating clubs, that subsequent Board decisions had broken those promises, and that no blame attached to Cowan. Temby expressed a preference for Cowan’s approach (rather the approach expressed by the five ex-Board members) to the rights of amalgamating club members. See Temby Report, paragraphs 7.16–7.17, pages 62–63.
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Commentary and Contributions