Case dropped against Arthur Sinodinos over Australian Water Holdings

Senator Arthur Sinodinos outside ICAC last year. He was called to give evidence about Australian Water Holdings. Photo: Rob HomerLiberal senator Arthur Sinodinos is free of a major legal headache after shareholders in a company embroiled in a corruption inquiry dropped a costly case against him.

Senator Sinodinos, a former chairman of infrastructure company Australian Water Holdings, was one of several former directors being pursued by the disgruntled shareholders to recover their investment.

The company and former chief executive Nick Di Girolamo, a prominent Liberal Party fundraiser, were the subject of a high-profile Independent Commission Against Corruption inquiry last year into allegations the company improperly billed the state-owned Sydney Water for lavish expenses including limousines and airfares.

The inquiry crossed party lines and examined allegations that former NSW Labor ministers Joe Tripodi and Tony Kelly misused their positions in an attempt to benefit the company.

Australian Water assiduously lobbied the state Coalition government after the March 2011 election that swept Labor from power, and the commission was also investigating whether it paid $183,000 to an alleged slush fund set up by a former adviser to former minister Chris Hartcher.

The allegations of wrongdoing are denied and ICAC has yet to release its findings.

Senator Sinodinos is not expected to face any adverse findings but he was called to give evidence at the inquiry about the company’s expenses.

Justice Katzmann said in a preliminary judgment on Tuesday that the case against Senator Sinodinos had been discontinued and he was “no longer a party”.

Mr Di Girolamo and others – including former Labor treasurer Michael Costa, also a former chairman – are still being pursued in court. But Justice Katzmann has ordered that most of the shareholders provide a combined $2.4 million in security for legal costs to continue their fight. This could in effect bring the dispute to an end.

She said there was “credible evidence” that the companies bringing the case “may not be able to pay the respondents’ costs should their claims fail” and it was appropriate for them to provide security.

At the heart of the case is the allegation that Mr Di Girolamo and others persuaded the shareholders “to invest substantial sums of money only to squander their investments”, Justice Katzmann said.

Mr Di Girolamo’s brother-in-law, Danny Koutsogiannis, his school friend, Rod de Aboitiz, and the well-connected Navarra family, who run reception centres including Le Montage and Curzon Hall, are among the shareholders taking action. Mr Koutsogiannis, who is suing in his own name rather than through a company, was not ordered to provide security.

The case will be halted until the first tranches of the money are paid into court or a guarantee provided.