Former NSW Liberal minister tells Icac ‘cult took over the party’

David Elliott tells inquiry of branch stacking and death threats as Catholic Schools NSW boss sacked after appearance

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A former New South Wales Liberal minister has told an inquiry he came to believe “a cult had taken over the party” after branch stacking by the religious right faction, while the chief executive of Catholic Schools NSW has been sacked following his appearance before the corruption watchdog.

Former Liberal minister and MP for the now-abolished seat of Baulkham Hills, David Elliott, told the NSW Independent Commission Against Corruption that after he opposed developments by fugitive property developer Jean Nassif, he was followed by private investigators and received death threats.

It came on the same day the chief executive of Catholic Schools NSW, Dallas McInerney, was sacked after appearing at the watchdog’s inquiry into allegations of corruption in the state’s Liberal party.

Icac is investigating the allegation that McInerney arranged and approved illegal political donations that were not declared and exceeded applicable donation caps from Catholic Schools NSW to lobbying companies controlled by a group of young Liberals known as the Reformers, to support the recruitment and renewal of members to the Liberal party. The practice, known as branch stacking, is not itself illegal.

Under a separate allegation, Icac is investigating whether Reformer Christian Ellis, and Liberal operatives Jeremy Greenwood and Charles Perrottet took donations from Nassif and his company Toplace in exchange for outcomes including damage to Elliott’s career.

Greenwood has denied payments to lobbying companies controlled by the Reformers were for factional work, while Ellis has moved to the UK and is not expected to give evidence to the inquiry. Charles Perrottet has previously denied any wrongdoing.

On Friday, the inquiry heard how when Elliott’s seat was abolished by the NSW electoral commission ahead of the March 2023 election, he retired from politics after he was unable to convince local branches to make him their candidate.

Elliott – part of the Liberals’ centre-right faction, which revolved at that time around the then prime minister Scott Morrison and the federal MP for Mitchell, Alex Hawke – said branch stacking efforts in the Hills shire “radically” shifted the balance of power, meaning Castle Hill would go to a candidate in the religious right of the party, associated with Dominic Perrottet, and linked to the conservative Catholic organisation, Opus Dei.

“It was all becoming evident to me that … a cult had taken over the Liberal party and particularly that electorate … in the Opus Dei faction, the religious right,” said Elliott.

The inquiry has previously heard legally intercepted phone calls featuring Nassif in which he claimed he had “forced the boys” to get rid of Elliott’s seat of Baulkham Hills, and had sent “Castle Hill fucking hundreds of new members”.

Elliott said that Nassif began to target him after he wrote a letter opposing an ultimately unsuccessful development proposal by Toplace in the northern Sydney suburb of Cherrybrook. “After that letter is when Nassif went nuts,” he told the commission.

Elliott has told Icac he was aware that private investigator Shane de Kauwe was surveying him, referring to him as “the Maxwell Smart of the NSW private investigator industry”. De Kauwe, who is not named in Icac’s allegations, is expected to give evidence to the commission.

Elliott said he began to receive death threats, but he was “not saying that [Nassif] was responsible for it”. He said Nassif had previously “left a message on my mobile that he was going to get me” in 2019.

“He didn’t speak English very well, so the threatening message probably went in one ear and out the other,” said Elliott. He said he had rejected two public attempts by Nassif to talk to him about developments.

Asked if Charles Perrottet was the “muscle” behind the scenes during the Perrottet government, Elliott said conservative right faction members would often say to him “I’ve got to check with Charlie”. Charles Perrottet, who has previously denied any wrongdoing, is the younger brother of former Liberal premier Dominic Perrottet, who has not been named in Icac’s allegations.

Elliott said he was aware of “speculation that Charles Perrottet and Jean Nassif were engaged in some way”.

Nassif, who fled Australia for rural Lebanon in 2022 after an investigation found dozens of defects in three separate residential developments constructed by the company, has previously denied any wrongdoing.

Elliott, who arrived at the inquiry on Friday telling Channel Nine “justice will prevail”, told reporters after giving evidence he planned to pursue his own legal action.

“And I must say also that it feels weird to be the first Liberal to ever be very happy to appear before Icac,” he said.

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In a statement shared on Friday, Catholic Schools NSW said its board had “unanimously determined that there is a loss of confidence in Dallas McInerney’s ability to lead the organisation into the future”.

“As such, the Board has now terminated Mr McInerney’s employment agreement with Catholic Schools NSW,” it said.

McInerney, whose Liberal party membership was suspended after the announcement of Icac’s inquiry, has insisted payments totalling $265,900 over four years to companies controlled by the Reformers were for genuine consulting work. On Wednesday, McInerney denied he performed a factory reset on a work phone and iPad over the weekend to wipe critical evidence.

McInerney, who is a factional ally of the federal opposition leader, Angus Taylor, has rejected that a message about a plan to “shake down Angus” referred to donations to the Reformers. Taylor is not named in Icac’s allegations and has repeatedly denied making payments to the Reformers.

In a statement provided to the Sydney Morning Herald on Friday, McInerney said: “When the inquiry started I said I would privilege the position of the company before my own. That is why I stood aside.

“I note the inquiry continues its important work and we are months away from findings and conclusions. I will forever remain grateful for the opportunity to serve, and hope I have made some positive contributions along the way.”

The interim CEO, Peter Yates, will remain in the role while a search process is conducted. The schools governing body said it would not make any statement about the inquiry or witnesses during public hearings, but said the allegations were of “deep concern” and it supported an “an externally conducted review of CSNSW’s operations”.

McInerney previously stood aside from his role as CEO of the governing body for 600 schools in NSW before the Icac hearings began “to allow the work of Catholic Schools NSW to continue its important mission”, he said in a statement. He was appointed as the inaugural CEO of the organisation in 2017.

On the inquiry’s first day, counsel assisting, Dr Peggy Dwyer SC, said it was not suggested that the schools governing body or its board were aware of the alleged actions by McInerney.

On Friday, Icac announced its witness list for next week, including Charles Perrottet and his wife, Anita Perrottet.

With additional reporting by Jack Larkin.