Corruption: The true Tasmanian Heritage Industry

I have just had published a historical article in the Tasmanian Historical Research Association, Papers and Proceedings.

This is a story of a reformist Liberal Government taking on the might of the tobacco industry. The full article is not available online. Those interested can contact the THRA http://www.thra.org.au/

[citation] Kathryn Barnsley, “Crony Capitalism or corruption? The curious case of British Tobacco and a Tasmanian Government”, Tasmanian Historical Research Association, Papers and Proceedings Volume 58, number 2 August 2011, pages 173-182.

“Abstract:

In the 1960s and early 1970s Tasmanian politicians became embroiled in events relating to land deals with British Tobacco, to allegations of bribery and to the demise of a Liberal minority Government. The scandals associated with these proceedings were front page news in Tasmanian daily newspapers. Criminal charges were laid against eminent Australian citizens, including the Chairman of British Tobacco and a former Tasmanian government minister.

The story unfolded from 1969 when, after thirty-five years of Labor Government, a minority Liberal Government was elected in Tasmania. In order to govern, the Liberals formed a coalition with the Centre party, the sole elected member of which was Kevin Lyons MHA. The incoming Government investigated actions of the previous government.

In the 1960s, as a result of arrangements with the Labor government, British Tobacco had amassed extensive land lease holdings in North-East Tasmania. The law had been designed to assist small, not large companies. The Crown Lands Act 1935 did not contemplate the prospect of large companies acquiring land in this way and so in order to provide legal certainty to British Tobacco an amendment to the Act was considered but rejected by the Labor government. The Labor Premier Sir Eric Reece and Minister Cashion ‘were against any such step because they could not see parliament agreeing to Wills or BT having a privileged position’. The Liberal government investigated these land transactions and found that there were breaches of the law.

In 1971 a criminal prosecution for conspiracy was launched against two British Tobacco executives, including the chairman, and others including a former Labor minister.

These charges were dropped in 1972 when the Liberal government found that British Tobacco had marshalled international resources and would be likely to escape conviction. In January 1972 a British Tobacco executive warned the Liberal premier that Kevin Lyons was willing to bring down the government, for a price. In the same year Kevin Lyons was paid $25,000 (equivalent to $212,500 in 2009 AUD) by British Tobacco for his memoirs. This fact was not disputed. The memoirs were never published.

In March 1972 Kevin Lyons, who held the balance of power, resigned thereby bringing down the government and causing an election to be held which the Liberals lost to the Labor Party. Prior to losing office the Liberals had prepared legislation to impose a tobacco tax. The tobacco industry has always strongly opposed tobacco taxes, as it adversely affects their revenue. A police enquiry cleared Kevin Lyons of bribery and corruption.

A special Act of Parliament was enacted in November 1972 to retrospectively validate the actions of British Tobacco and the government and to indemnify all the participants against prosecution. Agitation for a Royal Commission was not successful and no public enquiry was ever held.

The public servants involved in approving the land transactions were directly involved in the conspiracy. One senior public servant explained in 1971 that, after a meeting of officials with tobacco executives, it was recognised that it was highly undesirable for any persons other than those associated with the tobacco company to be able to access land grants in the designated area.

The public servant involved in facilitating this scheme placed on record the mechanism for achieving the purpose of the company to acquire the land, and for ensuring that ordinary members of the public were excluded from this opportunity. This illustrates the two factors identified by Beresford as leading to corruption; a powerful business lobby with close ties to government, and a lack of transparency in government processes.

At the time of the events recorded in this paper, in Tasmania there was a lack of transparency in government operations and there were few administrative checks and balances. There was no ombudsman, no freedom of information legislation, no Hansard, no public records of political donations and no Integrity Commission. The Director of Public Prosecutions was not independent, and prosecutions were within the control of a politician, the Attorney-General.”