In the first scandal to rock the Abbott government, Assistant Treasurer Arthur Sinodinos has stood down while his role in a business deal is probed by a corruption inquiry.
Senator Sinodinos, who was a right-hand man to former prime minister John Howard, told the Senate that he did not want the “sideshow” over his business dealings to distract from the important work of the government.
He has been dragged into a NSW Independent Commission Against Corruption (ICAC) inquiry into a huge business deal involving former state Labor powerbroker Eddie Obeid.
The inquiry has heard Senator Sinodinos – who in 2008 was NSW Liberal Party treasurer and a member of the board of Australian Water Holdings – stood to gain a $20 million windfall if the deal between the privately-held AWH and state-owned Sydney Water went through.
Senator Sinodinos will appear as a witness before the ICAC inquiry, but has steadfastly maintained his innocence.
Mr Abbott said the decision was the “right and decent thing” and he looked forward to Senator Sinodinos being restored to the frontbench once the ICAC matters were settled.
While stood aside, Senator Sinodinos won’t receive ministerial pay or expenses, won’t have access to ministerial staff and his responsibilities will be taken on by Finance Minister Mathias Cormann.
The ICAC inquiry has heard the Liberal powerbroker and former chief of staff to John Howard was paid $200,000 for 100 hours work a year with Australian Water Holdings (AWH).
It is alleged AWH took him on as a board member and later chairman to open doors to Liberal politicians.
Labor used parliament to raise questions about his role in a deal between AWH and state-run Sydney Water, as well as donations to the NSW Liberal Party allegedly disguised and charged back to Sydney Water as administration costs.
Senator Sinodinos denies any role in the awarding of the contract to Sydney Water and has no recollection of the political donations being discussed at a board level.
Labor senate leader Penny Wong said it appeared Senator Sinodinos, a former NSW Liberal Party treasurer and president, could have been both “payer and payee” of the donations.
The opposition also homed in on how Senator Sinodinos, having become AWH chairman on November 3, 2010, was not aware of a personal loan agreement entered into with the family of disgraced Labor figure Eddie Obeid a day later.
Senator Sinodinos told parliament in 2013 he had not been aware of the loan agreement at the time.
Labor senator John Faulkner said there was “incontrovertible evidence” that Senator Sinodinos’ 2013 statement to parliament was “not complete, not accurate and it cannot stand”.
Mr Abbott said he had no qualms about having elevated Senator Sinodinos to the ministry after the 2013 election.
“He is a man of great distinction and high competence … and he has demonstrated just what an honourable man he is by his actions.”
Opposition Leader Bill Shorten said Mr Abbott had failed to explain what had changed between Tuesday, when he stood by the minister, and Wednesday when he was content for the minister to step aside.
“The prime minister has consistently dodged questions about what he knew about this affair and when he knew it,” Mr Shorten said in a statement.
“The prime minister knows more about this affair than he’s telling Australians.”
Labor health spokeswoman Catherine King said Mr Abbott was showing double standards by keeping Assistant Health Minister Fiona Nash in her position.
Senator Nash’s chief of staff last month resigned over a conflict of interest scandal, but Labor says the minister has yet to accept responsibility.