OzCar affair
Encyclopedia
The OzCar affair refers to a 2009 controversy in Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...

n federal politics, revolving around allegations made by then Federal Leader of the Opposition
Leader of the Opposition
The Leader of the Opposition is a title traditionally held by the leader of the largest party not in government in a Westminster System of parliamentary government...

 and Liberal
Liberal Party of Australia
The Liberal Party of Australia is an Australian political party.Founded a year after the 1943 federal election to replace the United Australia Party, the centre-right Liberal Party typically competes with the centre-left Australian Labor Party for political office...

 leader, Malcolm Turnbull
Malcolm Turnbull
Malcolm Bligh Turnbull is an Australian politician. He has been a member of the Australian House of Representatives since 2004, and was Leader of the Opposition and parliamentary leader of the Liberal Party from 16 September 2008 to 1 December 2009.Turnbull has represented the Division...

, that the Prime Minister
Prime Minister of Australia
The Prime Minister of the Commonwealth of Australia is the highest minister of the Crown, leader of the Cabinet and Head of Her Majesty's Australian Government, holding office on commission from the Governor-General of Australia. The office of Prime Minister is, in practice, the most powerful...

, Kevin Rudd
Kevin Rudd
Kevin Michael Rudd is an Australian politician who was the 26th Prime Minister of Australia from 2007 to 2010. He has been Minister for Foreign Affairs since 2010...

, and/or the Treasurer
Treasurer of Australia
The Treasurer of Australia is the minister in the Government of Australia responsible for government expenditure and revenue raising. He is the head of the Department of the Treasury. The Treasurer plays a key role in the economic policy of the government...

, Wayne Swan
Wayne Swan
Wayne Maxwell Swan is the Deputy Prime Minister of Australia and an Australian politician. He has been an Australian Labor Party member of the Australian House of Representatives from 1993 to 1996, and then re elected in 1998 till today , representing the Division of Lilley, QLD...

, had acted improperly on behalf of a Queensland
Queensland
Queensland is a state of Australia, occupying the north-eastern section of the mainland continent. It is bordered by the Northern Territory, South Australia and New South Wales to the west, south-west and south respectively. To the east, Queensland is bordered by the Coral Sea and Pacific Ocean...

 car dealer who was seeking financial assistance from a government agency called OzCar, and that they had misled Parliament. Central to this claim was evidence by Treasury official Godwin Grech before a Senate inquiry in June 2009 that a Prime Ministerial adviser had emailed him asking for preferential treatment for the dealer. When the email's text became known, the Prime Minister labelled the email a forgery, and a subsequent police investigation confirmed that the email was never sent. On 4 August 2009, Grech admitted to forging the email. The Auditor-General
Australian National Audit Office
The Australian National Audit Office is the national auditor for the Parliament of Australia and Government of Australia. It reports directly to Parliament but is administratively located in the Portfolio of Prime Minister and Cabinet....

 was also ordered to conduct an investigation. It found no evidence of corruption by the Prime Minister or the Treasurer or their respective offices, but did make adverse findings against Godwin Grech, and highlighted numerous administrative failings in the Treasury.

Background

In 2007 John Grant, a Brisbane
Brisbane
Brisbane is the capital and most populous city in the Australian state of Queensland and the third most populous city in Australia. Brisbane's metropolitan area has a population of over 2 million, and the South East Queensland urban conurbation, centred around Brisbane, encompasses a population of...

 businessman, donated a white 1996 Mazda Bravo utility vehicle
Utility vehicle
Utility vehicle is used to describe a vehicle, generally motorized, that is designed for a specific task.-Sport utility vehicle:Vehicles similar to a station wagon but built on a light-truck chassis, usually with off-road capability....

 (known in Australia as a "ute") to Rudd's campaign for use as a mobile electorate office during the 2007 federal election. Grant, a friend and neighbour of Rudd, is the proprietor of John Grant Motors in Ipswich
City of Ipswich
The City of Ipswich is a Local Government Area in South East Queensland, covering an area of along the coast about southwest of Brisbane, the capital of Queensland. The City of Ipswich has a population of 162,380 .-History:...

, a provincial centre 40 kilometres (24.9 mi) southwest of Brisbane
Brisbane
Brisbane is the capital and most populous city in the Australian state of Queensland and the third most populous city in Australia. Brisbane's metropolitan area has a population of over 2 million, and the South East Queensland urban conurbation, centred around Brisbane, encompasses a population of...

. Rudd accepted the donation and reported it on his pecuniary interests register.

In February 2009, Grant made an inquiry to Bernie Ripoll
Bernie Ripoll
Bernard Fernand Ripoll is an Australianpolitician. He has been a Labor member of theAustralian House of Representatives since October 1998, representing the Division of Oxley, Queensland...

, the Labor MHR for Oxley
Division of Oxley
The Division of Oxley is an Australian Electoral Division in Queensland. The current division is the second to bear the name, and was created in 1949. The division is named after the Australian explorer, John Oxley...

 which covers Ipswich, about possibly obtaining financial assistance for his car dealership under OzCar, a proposed government funding scheme for car dealerships that had lost access to financing as a result of the global financial crisis.
On 4 June 2009, Turnbull alleged that Rudd's office had contacted the Treasury
Department of the Treasury (Australia)
The Department of the Treasury is an Australian Government department. Its role is to focus and develop economic policy.-History:The Commonwealth Treasury was established in Melbourne in January 1901....

 in order to obtain preferential treatment for Grant. Turnbull also alleged that Swan had been acting on behalf of Grant. Rudd and Swan denied the allegations. Godwin Grech, the Treasury official in charge of the OzCar scheme, also gave evidence to a Senate committee hearing that day. It was later alleged in the media that Turnbull and Senator Eric Abetz
Eric Abetz
Eric Abetz , has been a Liberal Party member of the Australian Senate since February 1994, representing the state of Tasmania. He is currently Leader of the Opposition in the Senate. He was educated at the University of Tasmania and was a barrister and solicitor before entering politics...

 subsequently met with Grech.

Senate inquiry

On 15 June 2009, during Question Time in the House of Representatives
Australian House of Representatives
The House of Representatives is one of the two houses of the Parliament of Australia; it is the lower house; the upper house is the Senate. Members of Parliament serve for terms of approximately three years....

, Rudd denied that his office had ever contacted OzCar on behalf of Grant. Swan acknowledged that his office referred Grant to the department administering the program, but denied he had advocated on his behalf.
The following day, Senator Eric Abetz
Eric Abetz
Eric Abetz , has been a Liberal Party member of the Australian Senate since February 1994, representing the state of Tasmania. He is currently Leader of the Opposition in the Senate. He was educated at the University of Tasmania and was a barrister and solicitor before entering politics...

 (Liberal
Liberal Party of Australia
The Liberal Party of Australia is an Australian political party.Founded a year after the 1943 federal election to replace the United Australia Party, the centre-right Liberal Party typically competes with the centre-left Australian Labor Party for political office...

, Tasmania
Tasmania
Tasmania is an Australian island and state. It is south of the continent, separated by Bass Strait. The state includes the island of Tasmania—the 26th largest island in the world—and the surrounding islands. The state has a population of 507,626 , of whom almost half reside in the greater Hobart...

) moved that an inquiry into the OzCar scheme be conducted by the Senate Economics Legislation Committee and that, "the Committee should hear evidence from relevant bodies and individuals, including the Department of Treasury, about the operation and management of the proposed OzCar scheme." The inquiry was not initially related to investigating alleged improper dealings, but to examine the costs of the OzCar scheme and whether the parameters of the scheme's operation had changed from its original purpose.

The Senate inquiry convened on 19 June 2009. Grech testified that he had a "recollection" that a member of Rudd's staff, Dr Andrew Charlton, had sent him an email in February, asking that he provide preferential treatment concerning Ozcar to Grant.

Under questioning by Abetz, Grech said: "It was certainly my understanding that the initial contact I had with respect to John Grant was from the Prime Minister's office. My recollection may well be totally false and faulty - but my recollection, big qualification - is that there was a short email from the PMO [Prime Minister's Office] to me which very simply alerted me to the case of John Grant. But I don't have the email."

Abetz then read out the text of what he said was an email, which purported to ask for preferential treatment for Grant. Questioned by Abetz as to whether this was the email he recalled seeing, and whether the email he recalled seeing had come from Charlton, Grech declined to answer.

Grech also stated he arranged for Ford Credit to talk to Grant, in response to prompting from the Treasurer's office.

Ford Credit managing director Greg Cohen also appeared before the inquiry, and stated that Grech provided him with Grant's mobile phone number during a meeting in February 2009. The day after this meeting Ford Credit contacted Grant by phone. Cohen was not provided with phone numbers of any other dealers, and stated that Grant was the only dealer "substantially discussed". Cohen also stated that Ford Credit would not normally look after Kia
Kia Motors
Kia Motors , headquartered in Seoul, is South Korea's second-largest automobile manufacturer, following the Hyundai Motor Company, with sales of over 1.4 million vehicles in 2010...

 dealers such as Grant.

Corruption allegations

After the hearing on 19 June, Turnbull accused Rudd of corrupt conduct and lying to Parliament, since Rudd had previously denied in Parliament doing any favours for Grant. Turnbull stated, "The Prime Minister and the Treasurer have used their offices and taxpayers' resources to seek advantage for one of their mates and then lied about it to the Parliament".
The text of the email mentioned by Grech was widely published in Australian newspapers on 20 June 2009.
Also on 20 June, Charlton denied ever having sent Grech an email about Grant. Rudd instructed the Auditor-General, Ian McPhee, to investigate the allegations, as well as instructing the Australian Federal Police
Australian Federal Police
The Australian Federal Police is the federal police agency of the Commonwealth of Australia. Although the AFP was created by the amalgamation in 1979 of three Commonwealth law enforcement agencies, it traces its history from Commonwealth law enforcement agencies dating back to the federation of...

 to launch an investigation. Rudd repeated his denial of intervening on behalf of Grant and insisted the email mentioned by Grech did not exist. Rudd also demanded Turnbull's resignation, accusing him of using falsified evidence. Swan stated that although he had passed Grant's details on to Treasury, he had done the same for numerous other car dealerships, and that Grant did not receive special treatment.

Discovery of email

On 22 June the majority of Question Time in the House of Representatives was devoted to the "OzCar affair." At the same time, Australian Federal Police
Australian Federal Police
The Australian Federal Police is the federal police agency of the Commonwealth of Australia. Although the AFP was created by the amalgamation in 1979 of three Commonwealth law enforcement agencies, it traces its history from Commonwealth law enforcement agencies dating back to the federation of...

 raided Grech's home and found the original email. Forensic examination revealed the email was a forgery, and that it had originated within the Treasury Department and not the Prime Minister's office. Mr Grech, in his response to the Auditor-General's report, indicated that he had been advised by a senior Treasury officer that an IT system failure in Treasury had meant that searches for emails received by Treasury on 19 February 2009 were not likely to be successful. Previous searches for emails about OzCar conducted by Treasury also failed to discover the fake email created by Mr Grech, or any record of the fake email being sent to Mr Grech's home account. This is despite the use in all Government agencies of highly secure firewalls
Firewall (computing)
A firewall is a device or set of devices designed to permit or deny network transmissions based upon a set of rules and is frequently used to protect networks from unauthorized access while permitting legitimate communications to pass....

 and gateways
Gateway (computer program)
A gateway is a link between two computer programs or systems such as Internet Forums. A gateway acts as a portal between two programs allowing them to share information by communicating between protocols on a computer or between dissimilar computers....

, certified as 'fit for purpose' by the Defence Signals Directorate
Defence Signals Directorate
Defence Signals Directorate is an Australian government intelligence agency responsible for signals intelligence and information security .-Overview:According to its website, DSD has two principal functions:...

 that log all inbound and outbound traffic, and the extensive backups and fallback systems used in Treasury, particularly prior to the delivery of the annual Budget.

It remained unclear whether Grech was under suspicion of forging the email himself, or whether he had been the innocent victim of a forgery "scam" designed to incriminate Rudd. Rudd repeated his demand that Turnbull apologise and resign, a demand which Turnbull resisted.

On the evening of 22 June Swan released 22 emails, intended to demonstrate that the treatment received by Grant was not substantially different to the treatment received by other car dealers.
On 23 June, Turnbull admitted that there was no substance to his allegations against Rudd, but insisted he (Turnbull) had conducted himself in an appropriate manner. Turnbull also maintained that the allegations against Swan had yet to be resolved.

On 4 August 2009, Godwin Grech admitted that he had forged the email. He claimed that he believed a real email with similar content had been sent from Prime Minister Rudd's office, however conceded that this had not actually been found.

Political impact

The week after the events in Parliament, several opinion poll
Opinion poll
An opinion poll, sometimes simply referred to as a poll is a survey of public opinion from a particular sample. Opinion polls are usually designed to represent the opinions of a population by conducting a series of questions and then extrapolating generalities in ratio or within confidence...

s appeared simultaneously, all showing a drop in Malcolm Turnbull's approval rating, and a rise in Kevin Rudd's approval rating. According to Newspoll
Newspoll
Newspoll Market Research is an Australian company providing opinion polling and other market research services. Its chief executive is Martin O'Shannessy.Newspoll's surveys of voter opinion are published in The Australian....

, published in The Australian
The Australian
The Australian is a broadsheet newspaper published in Australia from Monday to Saturday each week since 14 July 1964. The editor in chief is Chris Mitchell, the editor is Clive Mathieson and the 'editor-at-large' is Paul Kelly....

, Turnbull's approval rating suffered the single biggest fall in the survey's 25-year history, while Rudd's preferred rating increased from 57 to 65 per cent. A Galaxy poll in News Limited
News Limited
News Limited is one of Australia's largest diversified media companies. The publicly listed company's interests span newspaper and magazine publishing, Internet, Pay TV, National Rugby League, market research, DVD and film distribution, and film and television production trading assets.News Limited...

 newspapers also showed Turnbull's support falling.

Commentators attributed these poll results to the OzCar affair. "Malcolm Turnbull's darkest hours as Opposition Leader is upon him with a new poll showing his standing has been dealt a hammer blow by the OzCar affair," wrote Phillip Coorey, chief political correspondent of the Sydney Morning Herald. "The Coalition and Malcolm Turnbull have received a devastating blow from the OzCar affair," said Michelle Grattan
Michelle Grattan
Michelle Grattan AO , Australian journalist, was the first woman to become editor of an Australian metropolitan daily newspaper. Specialising in political journalism, Grattan has written and edited for many significant Australian newspapers....

 in The Age
The Age
The Age is a daily broadsheet newspaper, which has been published in Melbourne, Australia since 1854. Owned and published by Fairfax Media, The Age primarily serves Victoria, but is also available for purchase in Tasmania, the Australian Capital Territory and border regions of South Australia and...

.

The polls also asked specific questions about the OzCar affair. According to Newspoll, voters, by a ratio of two to one, did not believe that Grant had received preferential treatment. 52 per cent said they did not believe Turnbull's claims, while only 24 per cent said they thought they were true. Newspoll also showed a large drop in the number of voters who thought Turnbull trustworthy, and an increase in those who thought him arrogant.

Adverse findings in Auditor-General's report

The Auditor-General cleared the Prime Minister and Treasurer of any wrong doing, but made a range of adverse finding about Godwin Grech and Treasury.

Godwin Grech

In relation to Godwin Grech, the Auditor-General found that his inquiry into the implementation of the OzCar scheme "raised serious questions as to whether the Code of Conduct has been breached by Mr Grech." Allegations made in the report against Grech included improper use of confidential information, inappropriate email communications and interactions, and preferential treatment to one applicant based on Grech's belief that they were a supporter of and donor to the Liberal Party.

Treasury

In relation to Treasury, the Auditor-General found that:
  • it did not develop any contingency arrangements for how to address the identified wholesale car finance market failure if there was a substantial delay in OzCar
  • it did not maintain accurate records
  • certain representations by dealers were treated differently to other dealers
  • during the procurement processes used for OzCar, Treasury did not record the circumstances that led to the decision to direct source of certain supplies
  • it did not make records about as to how the parties that were direct-sourced were identified as being the only party to be approached
  • it agreed to various engagements before it had obtained a quote or estimate from the contractor and this seriously weakened the Commonwealth’s negotiating position and provided little comfort that the Commonwealth was receiving value for money in agreeing to the contractual arrangements
  • once a quote or estimate was obtained, Treasury did not document the basis on which it was satisfied that the engagement terms represented value for money
  • it gave insufficient priority to documenting the engagement terms, resulting in extended delays in contracts being prepared and signed, and
  • it did not promote accountability and transparency for these procurements, with only one of the procurements published on AusTender.

Aftermath

A Senate committee, which reported in November 2009, cleared Grech of charges of contempt, but its report contained the text of hundreds of emails between Grech and third parties, and suggested Grech had been critical in briefing Steve Lewis of the Daily Telegraph
The Daily Telegraph (Australia)
The Daily Telegraph is an Australian tabloid newspaper published in Sydney, New South Wales, by Nationwide News, part of News Corporation.The Tele, as it is also known, was founded in 1879. From 1936 to 1972, it was owned by Frank Packer's Australian Consolidated Press. That year it was sold to...

 about the allegations, and had extensive communication with Liberal Party figures including Turnbull himself.

Turnbull's leader rankings never recovered from the affair in the opinion polls, and on 1 December 2009, he was defeated in a party-room ballot by Tony Abbott
Tony Abbott
Anthony John "Tony" Abbott is the Leader of the Opposition in the Australian House of Representatives and federal leader of the centre-right Liberal Party of Australia. Abbott has represented the seat of Warringah since the 1994 by-election...

as leader of the Liberal Party.

External links

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