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Newcastle MP Tim Crakanthorp will stay in Parliament despite the Independent Commission Against Corruption finding he "knowingly failed to declare a conflict of interest" relating to family properties in and around the Broadmeadow and Hunter Park redevelopment area.
The NSW Cabinet Office released the ICAC investigation report on Thursday.
The corruption watchdog found Mr Crakanthorp knowingly failed to declare a conflict of interest in relation to Broadmeadow properties "held by him, his wife and his in-laws" and this failure "constituted a breach of public trust".
ICAC said in a public statement on Wednesday that it had terminated its investigation and was "satisfied that there are no reasonable prospects of finding Mr Crakanthorp's conduct is sufficiently serious to justify a finding of corrupt conduct".
The commission's statement left the door open for Premier Chris Minns to "take any action" he "considers appropriate".
Mr Minns, who sacked the Newcastle MP from his cabinet and referred him to ICAC in August, said on Friday that he would not seek Mr Crakanthorp's expulsion from the Labor party but he would stay on the backbench.
Mr Minns said ICAC's report validated his decision to remove Mr Crakanthorp from cabinet.
"They have found that there's been a breach of the public trust in relation to his failure to disclose conflicts of interest as a minister in my government and attending meetings without disclosing that conflict of interest to those ministers, and it's for that reason I wanted to declare today that Mr Crakanthorp will not be returning to the NSW cabinet," he said.
"It's not appropriate. We take these findings very seriously. This report to the NSW government is very sobering reading."
Mr Minns said Mr Crakanthorp had apologised to him and "to his credit" had given him permission to publish the ICAC report.
"He said he should have a disclosed [the properties] and he'd made a grave error, for which he's paid a price."
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Asked if someone who had breached the public's trust should remain in Parliament, the Premier said such decisions were "judgment calls" and he had been guided by ICAC's finding that Mr Crakanthorp had not engaged in corrupt conduct.
"I think he's got a long road to hoe in relation to his own constituents and rebuilding trust with them in particular," Mr Minns said.
"I'd encourage him to put his head down and do that as soon as possible."
Opposition leader Mark Speakman called on Mr Crakanthorp to resign.
"If he doesn't resign, the Premier should move to expel him from the parliamentary Labor Party and not rely upon his vote on the floor of Parliament," he said.
ICAC said in its report that Mr Crakanthorp had participated in meetings as Minister for the Hunter that could "affect his and his extended family's properties" and this conduct "constituted a breach of public trust".
It said he had "substantially" breached the NSW Ministerial Code of Conduct by failing to declare his conflict of interest and by participating in meetings with other ministers.
ICAC also investigated whether the Newcastle MP had claimed expenses for personal travel but was "not satisfied that Mr Crakanthorp engaged in any misconduct".
Note to wife
ICAC revealed in the investigation report that it had conducted a forensic analysis of Mr Crakanthorp's laptop and interviewed his chief of staff, Elliott Stein.
The Sydney media has reported that Mr Stein repeatedly urged Mr Crakanthorp to fully declare his family's property interests before taking the matter to the Premier.
The ICAC report notes Mr Crakanthorp's wife, Laura, is part of the Manitta family, who are "significant property owners within the Greater Newcastle area".
"The [Hunter Park] Precinct is bounded by Griffith Road. The distance from properties owned by the Manitta family to Griffith Road varies from 140 to 400 metres," the report says.
The investigation uncovered a "sticky note" in Mr Crakanthorp's parliamentary email account which "appears to be a draft to his wife, or part of an ongoing conversation with his wife, about properties held by his parents-in-law".
"You have always asked your father if you could buy a warehouse on Broadmeadow Road ... if you can't buy that one can you buy the one next to the mower shop?" the note says.
"The warehouses on Broadmeadow Road are going to be worth a lot more than the warehouse at Wickham and the warehouse at Sandgate is as they are going to develop all the land behind the panel beaters shop and also the Broadmeadows [sic] sporting precinct."
Metadata on the note shows it was created on March 30, five days after the NSW election but before Mr Crakanthorp was sworn in as a minister.
The ICAC report says Mr Crakanthorp disputed that date and believed it had been created much earlier.
"Regardless, the note shows Mr Crakanthorp was cognisant of the proposed urban renewal of the precinct and that it was likely to benefit the Manitta family," the ICAC report says.
Redevelopment meetings
Mr Crakanthorp made a disclosure to the Premier on May 1 regarding the Hunter Park precinct, noting his wife held a property in Broadmeadow "near, but not adjacent to" the redevelopment land.
This disclosure also noted that his father-in-law, Joe Manitta, owned property in Broadmeadow Road.
"As these properties are near to but not directly impacted by the proposed precinct, I do not believe that they pose a conflict of interest in the course of my Ministerial duties," he said in the disclosure.
"However, should there be any change to the proposed precinct or any arising perceived conflict of interest from the Precinct I will abstain from any cabinet decision on the Hunter Park precinct or related issues."
The report goes on to to detail how Mr Crakanthorp, then the Minister for the Hunter, was involved in five meetings in May and June with Housing Minister Rose Jackson, Newcastle lord mayor Nuatali Nelmes, Transport Minister Jo Haylen, Property Council members and Venues NSW representative John Quayle about matters related to the Hunter Park and Broadmeadow strategies.
He made a second disclosure to Mr Minns on June 30 detailing his actions regarding the Broadmeadow redevelopment strategy and declaring the properties held by his wife and in-laws.
The ICAC report says that, in this disclosure, Mr Crakanthorp said he would abstain from making representations to the minister responsible for the Broadmeadow housing strategy and any briefings or cabinet discussions on the matter "to mitigate the conflicts of interest".
The Premier wrote to Mr Crakanthorp on August 1 reminding him of his obligations and asked that he "take all reasonable steps to identify all property and other commercial interests of your family members".
Mr Crakanthorp made a third updated disclosure to Mr Minns on August 2 listing the properties and interests of the Manitta family.
The Premier responded by asking him to resign as a minister.
The ICAC report also reveals that Mr Minns ruled on May 5 that Mr Crakanthorp could maintain his shareholding and directorship of a company the MP owned with his wife called Carson & Yvette Pty Ltd.
The company owns a warehouse at Mayfield West rented to One Rail Australia, which offers haulage services for the coal industry.
Mr Crakanthorp sought to retain his directorship as "divestiture of this company would have real financial harm to my family, including a loss of approximately $480,000".
Submissions rejected
ICAC rejected various submissions Mr Crakanthorp made in response to the investigation, including that "he did not have to declare anything that may be a conflict of interest until it actually became one".
Mr Crakanthorp told investigators during a voluntary interview in January that he held concerns about potential conflicts of interest as far back as April last year.
"The Commission is satisfied on his own evidence that, as at April 2023, Mr Crakanthorp was aware that his in-laws had interests in properties in areas that were being considered for development by the government and that they stood to profit from such development," the ICAC report says.
"In his submissions, Mr Crakanthorp accepted that 'with the benefit of hindsight' he ought to have declared property interests held by his in-laws, although, he argued that there were property holdings of his in-laws of which he had no knowledge.
"Even if this is accepted, he had sufficient general knowledge of his in-laws' property holdings that could potentially be affected ....
"Mr Crakanthorp was aware of his duty to disclose his conflict and yet failed to do so while he participated in meetings about those developments and publicly supported the development."
ICAC rejected a submission by Mr Crakanthorp that he had participated in the May and June meetings "solely for the purpose of enabling him to identify and manage his potential conflict of interest".
"The Commission is satisfied that Mr Crakanthorp knew before the first meeting [with Ms Haylen] on 10 May 2023 that he had a conflict of interest," the investigation report says.
"It was not necessary for him to attend that or any of the subsequent meetings in order to identify that he had a conflict."
The investigators also found Mr Crakanthorp had "misconstrued" a section of the ministerial code which says conflicts of interest do not arise merely because a minister is part of a "broad demographic group".
"Mr Crakanthorp's wife and in-laws' property holdings or interests do not place them in 'a broad demographic group of the public'.
"They are significant property owners in a small geographic area.
"Mr Crakanthorp (or his family) would benefit should this area be developed. He had a conflict of interest. His submission is rejected."
ICAC found Mr Crakanthorp held a conflict of interest under the ministerial code "because there was a conflict between his public duty and private interest in which his private interest could objectively have the potential to influence the performance of his public duty".
The commission said it had stopped short of a corruption finding, which can be made in relation to breaches of public trust, because of the limited number of ministerial meetings involved, the lack of sensitive information passed to Mr Crakanthorp at those meetings, the "limited, if any, advocacy on his part", and a lack of any evidence of any adverse impact on the public interest.
"There is also no evidence to suggest that anything Mr Crakanthorp said or did at these meetings influenced or changed the course of decisions that had been already made as to the progress of the projects.
"In addition, the evidence does not show that Mr Crakanthorp made no disclosures at all; and his staff took measures in May 2023 to clarify issues relating to potential conflicts of interest."
'Deep regret'
Mr Crakanthorp issued a statement on Thursday accepting the ICAC findings.
"It is clear that I should have done more and for that I am deeply regretful," he said.
"This has been a difficult time for not only myself but for my wife and kids.
"My focus for the last 16 years has been to serve the people of Newcastle as both a councillor and a member of Parliament.
"Now that this report has been released, I will continue to represent my community to the best of my ability."
The government paused planning work on Hunter Park after the ICAC referral to conduct a review of "all current major Hunter region development processes involving state government agencies".
The review cleared the project to go ahead.
Mr Crakanthorp was appointed Minister for the Hunter and Minister for Skills, TAFE and Tertiary Education after Labor's win in the March election last year but survived only four months in the job.
The NSW Labor leadership last week froze branch membership applications in Newcastle and Wallsend electorates in response to prolonged infighting connected with speculation over Mr Crakanthorp's political future.